Executive Summary In the most recent NRF and Happy Returns survey (the 2025 Retail Returns Landscape, October 2025), 82% of consumers cited free returns as a major consideration when making a purchase, up from 76% the year before, and 76% said they are more likely to choose a return option that provides an instant refund or exchange. At the same time, retailers that charge for returns cite higher processing costs (40%), higher carrier shipping costs (40%), and economic uncertainty and tariff risk (33%) as the top reasons. The result is an expectation gap: shoppers expect free, fast returns while the cost of providing them is rising. For cross-border sellers the question of who pays has additional dimensions—international freight, duty treatment, and a shopper base that, according to a DHL eCommerce survey, is less willing to buy from abroad when returns are costly. This analysis examines the expectation data, how retailers are responding, the policy design options for allocating return costs, and the cross-border considerations. A companion analysis covers the TikTok Shop–Happy Returns integration and the inspection and disposition side of returns.
The Free Returns Expectation: Who Pays for “Free” in Cross-Border E-Commerce
1 · What Shoppers Say They Expect
The U.S. Data: NRF and Happy Returns
NRF and Happy Returns’ 2025 report is based on two surveys fielded in summer 2025: 2,006 consumers who had returned at least one online purchase in the prior 12 months, and 358 e-commerce professionals at large U.S. merchants (over $500 million in revenue). Because the consumer sample consists of people who have returned online purchases, the figures describe returners rather than all shoppers.
| Finding | Figure |
|---|---|
| Consumers citing free returns as a major purchase consideration | 82% (up from 76% in the prior report) |
| Consumers more likely to choose a return option offering an instant refund or exchange | 76% |
| Consumers less likely to shop with a retailer again after a poor returns experience | 71% (up from 67% in 2024) |
| Consumers who say they would share a negative returns experience with friends and family | About four in five |
Source: NRF, press release of October 15, 2025, summarizing the 2025 Retail Returns Landscape
The Global Data: DHL eCommerce
DHL eCommerce’s Online Shopper Survey (February–March 2025; 24,000 respondents across 24 countries, each of whom had bought online in the prior three months) points in a similar direction globally, with some differences for the United States:
| Finding | Global | U.S. |
|---|---|---|
| Would abandon the cart if their preferred returns option is not offered | 79% | 71% |
| Won’t shop with a brand if they don’t trust the returns provider | 75% | 72% |
| Say “free” returns would improve their online experience | 53% | 46% |
| Mainly buy from retailers that offer free returns | 55% | — |
Source: DHL eCommerce, The Returns Landscape (2025). DHL sells returns services, and the survey’s own notes caution that country-level subgroups do not reach a level of statistical significance for definitive conclusions.
⚠️ Critical Takeaway: Different surveys, with different samples and wording, agree on the direction: return terms are part of the purchase decision. The exact percentages are not directly comparable across surveys.
2 · What Retailers Are Doing About the Cost
Why Retailers Charge
Returns were estimated at 15.8% of U.S. retail sales in 2025 ($849.9 billion; 2024: 16.9%, $890 billion) and 19.3% of online sales. In the NRF and Happy Returns survey of large merchants, the top reasons given for charging for returns were:
| Reason cited by retailers that charge for returns | Share |
|---|---|
| Increases in the cost of operations to process returns | 40% |
| Increases in carrier shipping costs | 40% |
| Economic uncertainty and the risk of tariffs | 33% |
Retailers surveyed named increasing online sales and reducing return rates as their top priorities for 2026, and nearly two-thirds (64%) said updating their returns process within six months is a priority.
The Tension
The same survey shows the tension directly: a majority of returners cite free returns as a major consideration and say a poor experience makes them less likely to return as customers, while retailers face rising costs and are adjusting policies. How a seller resolves that tension is a policy design choice with trade-offs, not a single correct answer.
3 · The Policy Design Menu
Sellers use a range of mechanisms to allocate return costs. The table summarizes common options and their general trade-offs; it is a framework, not a benchmark, and actual effects depend on the product category, margins, and customer base.
| Approach | How It Allocates Cost | General Trade-Offs |
|---|---|---|
| Free returns for all | Seller absorbs freight and handling | Strongest alignment with shopper expectations; highest cost exposure |
| Free in-person drop-off, paid mail-in | Customer pays only for the more costly path | Steers returns toward consolidated drop-off networks; requires access to such locations |
| Return fees or restocking fees | Customer shares the cost | Reduces cost per return; may deter purchases among shoppers who value free returns |
| Shorter return windows | Limits exposure period | Reduces tail volume; may reduce purchase confidence |
| Exchange-first or store-credit incentives | Retains the sale | Reduces refund outflow; depends on customer acceptance |
| Refund without return (“keep-it”) | Avoids reverse freight and handling | Can suit low-value items where return cost exceeds item value; can also create an abuse risk |
Choosing among these is a matter of margin, category, and customer expectations. The consumer data above suggests that the downside of a poorly judged policy is not limited to cost: 71% of surveyed returners say a poor returns experience makes them less likely to shop with a retailer again.
4 · The Cross-Border Dimension
Who Pays for International Returns
For a seller whose customers are in another country, the cost-allocation options in the table above carry additional considerations:
- Freight. A return across a border is typically more expensive and slower than a domestic one, and the cost varies widely by lane and carrier. Sellers often consider local return addresses or drop-off and consolidation options so that a return does not have to cross a border twice; whether that is feasible depends on the lane and the volume.
- Duty and tariffs. Duty treatment of returned goods depends on the direction of movement and the goods’ origin, and in some cases duties paid may be recoverable (for example, through drawback for foreign-origin goods later exported). The conditions are specific, and sellers typically confirm treatment with a customs broker.
- Low-value parcels. The de minimis exemption has been suspended for all countries since August 29, 2025, and CBP made the suspension indefinite through interim final rules published June 24, 2026; Congress has separately repealed the exemption effective July 1, 2027. As a result, low-value cross-border parcels now enter with entry filings and duty, which changes the economics of any return that does not recover that duty.
The Demand-Side Effect
DHL’s global survey also suggests the cost of returns affects willingness to buy across borders: 33% of global shoppers say they won’t buy from other countries because of returns costs, and 46% say they would buy from abroad if free returns are offered. These are survey responses, not observed purchasing behavior, and they come from a company that sells returns services. They do indicate that, for sellers who rely on cross-border demand, return terms may influence conversion as well as cost.
⚠️ Critical Takeaway: For cross-border sellers, the question is not only whether to offer free returns but where a return can land at an acceptable cost. The answer shapes both the cost of a return and the willingness of foreign shoppers to buy.
5 · Policy Design and Abuse
Free and frictionless return policies can be misused. The NRF and Happy Returns report estimates that 9% of all returns are fraudulent, and that close to two-thirds of consumers admit to at least one costly returns behavior, such as wardrobing, bracketing, or sending back different items or empty boxes; 45% believe “bending the truth” is acceptable when making returns, especially if unsatisfied. Other vendor reports cite higher fraud estimates, and the estimates differ because definitions and survey designs differ.
For policy design, the implication is that the more a policy removes friction, the more it may rely on verification and risk controls elsewhere in the process. The companion analysis of the TikTok Shop–Happy Returns integration looks at drop-off verification as one example.
6 · Conclusion: A Cost Allocation Decision
The free returns expectation appears durable in the survey data: 82% of surveyed returners cite it as a major consideration, and shoppers in DHL’s global survey link return terms to both purchase and cart abandonment. At the same time, retailers cite rising operating, carrier, and tariff costs as reasons to charge. Returns policy is therefore a cost-allocation decision among the seller, the customer, and, in cross-border cases, the lane and customs treatment.
Key Takeaways
| Factor | Detail |
|---|---|
| Free Returns as a Major Consideration | 82% (NRF/Happy Returns 2025; up from 76%; sample of consumers who had returned online purchases) |
| Instant Refund or Exchange Preference | 76% |
| Less Likely to Shop Again After Poor Returns Experience | 71% (up from 67%) |
| Top Reasons Retailers Charge | Processing costs (40%), carrier costs (40%), economic uncertainty and tariffs (33%) |
| Return Rates (2025 estimates) | 15.8% of U.S. retail sales; 19.3% of online sales |
| Cross-Border Demand Effect (DHL, global survey) | 33% won’t buy from other countries because of returns costs; 46% would buy from abroad if free returns are offered |
| Fraud Estimate (NRF/Happy Returns) | 9% of returns |
| De Minimis | Suspended since Aug. 29, 2025; made indefinite by CBP rules published June 24, 2026; statutory repeal effective July 1, 2027 |
| Next NRF Update | Holiday returns insights expected mid-December 2026 |
The Bottom Line
For cross-border sellers, free returns can be viewed as a cost-allocation decision rather than only a customer-service setting. The survey data show that shoppers value free returns and respond to poor returns experiences, while the cost data show retailers facing rising pressures; the policy options in between involve trade-offs that each seller weighs against its own margins, categories, and lanes.
The message is clear: “free” is free to the customer. For the seller, it is a cost that has to be allocated somewhere, and the policy design determines where.
This analysis reflects the NRF and Happy Returns 2025 Retail Returns Landscape (October 2025), the DHL eCommerce Online Shopper Survey on returns (February–March 2025), and CBP’s interim final rules on the de minimis exemption (91 FR 37789 and 91 FR 37801, June 24, 2026). Return-rate figures are 2025 survey estimates, and NRF has indicated it will release new holiday returns insights in mid-December 2026. The policy options described are general frameworks; effects vary by product category, lane, and seller operation. Sellers should consult with their logistics partners and customs advisors for guidance tailored to their returns profile.
