It couldn't come at a worse time. Just when retailers after facing three years of surging costs - from soaring freight rates, rising wages, increasing materials prices - were hoping to raise selling floor prices, inflation hit. Not only was it clearly a bad time to roll out price increases, a mountain of excess inventory forced many retailers to offer steep discounts to reduce stock levels. However one area where retailers are taking what might appear to be an unpopular stance is on e-commerce. The objective of driving online sales regardless of the costs is no longer viable. Now the need to drive profits is as important as driving sales. For brands and retailers, e-commerce costs, especially those associated with the movement and processing of returned merchandise, are skyrocketing. One by one brands are becoming emboldened to put an end to free returns. As more brands announce they are doing this, even more will join in. Zara and Uniqlo imposing a fee for returned items, and Bath and Body Works tightening up on its “no questions asked” returns policy. In the UK online retailer Boohoo now charges £1.99 for returns. <h3><b>Lessening Losses</b></h3> Even charging a fee for returned items does not cover the entire cost of restocking an item, according to goTRG, a reverse-logistics specialist. The charges are small in order to get consumers used to paying to return an item, said goTRG, adding that those might increase in the future. Some retailers might waive the return fee if the item is returned to a store. After all, if a customer purchases an item in a store and then returns it there is no fee. However, return fees are not only seen as a way to reduce the reverse logistics costs. There’s also the cost to retailers of consumers ‘bracketing’ - buying one item in several sizes since they are unsure of what size will fit. This is a big driver of returns and also means that retailers constantly have inventory that is neither sold nor available to be sold. It’s simply ‘on hold’ in someone’s home or office waiting to eventually be returned. <h3><b>A Sign of the Times</b></h3> Although the timing is not ideal, it is a clear signal that retailers are starting to look beyond driving top line growth. This could be the turning point that spearheads a new, more cost-conscious approach to e-commerce. The cost of logistics continues to rise - from warehousing costs to work wages. The challenge is that consumers favor online stores with liberal return policies. Knowing that they can easily return an item reduces the friction of purchasing something without seeing it in person, touching it and feeling - and in the case of apparel - trying it on. Will sales be lost because consumers won’t want to risk buying something that doesn’t fit or that they don’t like and then have to pay a fee to return it? Or will this prompt more consumers to simply shift apparel and similar purchases back to physical stores? After working hard to lure customers to shop online, retailers now have to encourage them to shop in physical stores.