Dive Brief:

• Retailers increasingly offer free online returns, despite increases in shipping costs; nearly half (49%) do so, according to a recent study by the National Retail Federation.

• Free returns, like free shipping, are a way to compete with brick-and-mortar retailers, which are able to take returns in store, in some cases even for online orders. 

• The option is seen as leveling an obstacle to purchase online, but costs are increasing, according to the Wall Street Journal.

Dive Insight:

Retailers like Zappos, Nordstrom, and L.L. Bean supply free returns routinely, with no minimum, no problem, all year—and more retailers are joining them. Research shows that e-retailers with liberal free return policies please their customers greatly —​ so much so that their customers are, in turn, twice as likely to shop through their sites and are also willing to spend more. Retailers who make returns cheap and easy are giving consumers an intangible that they value: the elimination of a layer of risk in completing their online purchase. 

Zappos spends a lot of money on returns, and, like many pure-play retailers, considers it a marketing expense. The company leverages information about its customers' orders to help cut down on the changes of mind that lead to them, using technology to give customers information about past purchases so that next time they’re more likely to make a purchase that will stick. If a customer consistently returns items that are too small, the program pops a question the next time the customer chooses that size, suggesting a larger one instead. 

And the company also spends more money on its free shipping to customers than it does on returns, which get slower, cheaper fulfillment. Technology can also help retailers determine how to ship their packages in an age of dimensional pricing and other shipping increases in the least costly way, says Jeremy Bodenhamer, CEO of logistics automation company ShipHawk

"When the retailer figures out these unknowns and finally knows what these costs are consistently, ahead of time, they can then make that decision about free or subsidized shipping. Then it’s a rational decision,” Bodenhamer told Retail Dive earlier this year.