Amazon introduces $1 fee for sending back parcels via UPS: Is the era of free returns over?

Amazon has started charging consumers a $1 fee to send back some parcels - joining a host of retailers cracking down on serial returners.

The e-commerce giant slaps the sum on returns made to a UPS store when there is a Whole Foods, Amazon Fresh grocery store or Kohl's closer to the shopper's delivery address. 

But it is a relatively modest figure compared to other big brands which have increasingly begun implementing similar fees.

T.J. Maxx, for example, applies a $10.99 fee to online returns while J.Crew, H&M and Zara charge $5.95, $3.95 and $7.50 respectively.

In the past, shoppers have been able to return any Amazon product without charge. But it began charging some return fees in 2022 - for example when customers wanted items picked up directly from their home.

Now it is extending fees to those who use a UPS store to drop off the item when an Amazon-owned shop is closer.  

The move is part of the retailer's wider mission to slimline its operations after it laid off 9,000 corporate and tech workers this year.

It signals a dramatic shift in attitudes from the website which made its reputation for being extremely convenient and low hassle. 

Returns are an increasingly expensive headache for all retailers after they skyrocketed during the pandemic, when shoppers were forced to do all their shopping online - without being able to test products in-store.

Figures from the National Retail Federation show customers returned roughly $428 billion in merchandise in 2020 - accounting for 10.6 percent of retail sales in the US. 

More generally, the NRF estimates that the average retailer incurs $106 million in merchandise returns for every $1 billion it makes in sales.

This is because companies have to cover costly shipping fees for customers to send their products back.

Returned items also often have to be marked down to resell them - squeezing profits. 

Last month Amazon also launched a new 'frequently returned' warning on some of its products to reduce return-related expenses. 

But the new fee is aimed at deterring customers from using UPS when they have other choices. 

Amazon owns Whole Foods and Amazon Fresh and has a partnership with Kohl's.

It encourages customers to return their items by dropping them off at one of these locations - rather than incur shipping fees. 

Amazon has started charging a $1 fee on some of its returns made via UPS as part of its plan to slim down operations

H&M started charging $5.95 on its online returns in September 2022 

Amazon spokewoman Lauren Samaha told The Information: 'We offer convenient, easy returns to Amazon customers, with one or more options for label-free, box-free returns at no cost.' 

Zara first announced it would start charging customers for online returns in June last year.

It was shortly followed by H&M which made a similar announcement the following September.