Returns now key to revenue retention and brand growth: Report

Analysing over 13 million returns across 4,000 Shopify merchants, Loop’s 2025 State of E-commerce Returns Report has revealed that return fees are now standard practice, exchanges are driving stronger loyalty, and merchants are finding new ways to protect margins in a high-cost environment.

About 70 per cent of merchants now charge return fees, up from 65 per cent last year. In Australia and New Zealand (ANZ), that figure climbed to 73 per cent, the highest of all markets. Rather than hurting customer loyalty, this move appears to be working. Loop brands have so far retained $516 million in revenue in 2025 through returns optimisation, and ANZ brands see the highest retention rate at 45 per cent.

“E-commerce brands face enormous challenges to maintain profitability in today’s economic climate,” said Hannah Bravo, CEO of Loop. “But Loop’s benchmark data shows that return fees are no longer taboo – they’re now the expectation as e-commerce matures. By investing in smarter sizing tools, optimising product detail pages, and delivering personalised return experiences, we’re confident the most proactive brands will emerge from this period of high costs stronger than ever.”

Loop’s report also found that merchants are tailoring return fees to their vertical industry to cover shipping costs, with some raising them on bulky items, like home goods, while others in competitive categories like accessories prioritising a low-friction customer experience. Likewise, more brands are embracing solutions like Checkout+, which allow shoppers to opt into return coverage at checkout for a nominal fee. These opt-in models are gaining traction with consumers to offset costs and are increasingly seen as a path to cost recovery without friction.

“The best brands aren’t avoiding returns, they’re leveraging them to improve the P&L,” said Alexis Perlmutter, head of data at Loop. “Our State of E-commerce Returns Report shows that when brands automate returns, incentivise exchanges, and think strategically about the entire customer experience, they retain more revenue and gain repeat customers. This is a clear moment of transformation in e-commerce operations, and it’s being led by brands that treat post-purchase like a growth engine.”

In a year marked by tariffs, economic uncertainty, and logistics volatility, e-commerce brands are tightening return policies not to punish customers – but to better serve them. The report also spotlights how flexible return policies, regional customisation, and automated workflows are helping merchants turn returns from a cost centre into a retention advantage.

ALCHEMPro News Desk (RR)