A ‘recalibration in retail’: As costs rise, retailers are reviewing returns

Sean Cao

3rd Jul 2025

Retailers in Australia are scaling back on free delivery and returns amid the continued increase in delivery costs, according to a report from delivery platform Shippit.

The State of Shipping 2025 report finds that retailers are grappling with rising delivery costs, with standard delivery up from $10.26 last year to $10.39 this year and express delivery up from $14.24 to $14.69. Meanwhile, the same-day delivery cost has dropped from $18.26 last year to $17.39 this year.

To cope with this, many retailers have no choice but to scale back on free delivery and returns, despite growing customer demand. 

According to the report, only 14 per cent of Australian retailers now offer free returns, down from 49 per cent in 2018.

The ease of returns is also declining, with only 58 per cent offering simple, customer-centric return processes, compared to 97 per cent in 2018. An ‘easy return’ typically means a prepaid return label, allowing for in-store or postal returns without the need for printing or repackaging.

Meanwhile, 92 per cent of customers say they are more loyal to a brand offering easy returns.

“We’re witnessing a recalibration in retail,” said Rob Hango-Zada, co-founder and joint-CEO of Shippit. 

“The post-Covid delivery boom normalised fast, free, and flexible delivery, but rising costs, supply chain uncertainty, tariff pressure and heightened consumer expectations are forcing a rethink. Retailers are now weighing up what’s economically sustainable, not just what’s desirable.

“In 2025, fulfilment is a balancing act – between speed and cost, convenience and sustainability. The retailers who manage that tension best will earn trust, loyalty, and long-term growth,” he added.

The report also finds that retailers are transforming their stores into fulfilment hubs, with 21 per cent investing in ship-from-store capabilities to enable faster delivery.

In addition, the study points out the potential for growth by expanding fulfilment flexibility, as only 30 per cent of retailers offer click-and-collect in Australia.