Even in a strong retail season, there’s one predictable—and costly—problem that never seems to budge: returns. And they’re not just nibbling at retailer profits. They’re taking a massive bite. Returns now cost U.S. retailers an estimated $890 billion a year, eating up as much as a quarter of revenue.
That’s not a typo. Nearly one trillion dollars lost to products heading back to warehouses, fulfillment centers, and store counters.
A new report from Seel digs into why returns are rising, what’s pushing customers to send items back faster than ever, and how small retailers can brace themselves as we head into the heaviest shopping weeks of the year. The findings reveal a shift in shopper psychology—and a growing expectation that the return process should be fast, easy, and built into the buying experience itself.
Laura Huddle, Seel’s Chief Revenue Officer, says the goal of the report is to give retailers real visibility into what’s happening behind the scenes. “Between recession fears, job uncertainty, increased buyer’s remorse, and growing trends like ‘try before you buy,’ we’re seeing shoppers be more thoughtful and take extra time thinking through purchases,” she explains. “Post-purchase experience is playing an increasingly important role in a shopper’s view of the brand.”
That last point is key—because your return policy and post-purchase experience now directly influence whether a shopper completes a purchase in the first place.
Shoppers Want Confidence—and Returns Give It to Them
One of the most striking findings in the Seel report is that 74% of shoppers say they won’t complete a purchase unless a return option is available. That means returns—once seen as a problem to be minimized—are now part of the value proposition.
The report also found:
- The average returned item falls in the $100–$200 range
- Shoppers are increasingly choosing purchase protection, with a 50% rise in selections for items over $50
- Returns jump 16% during the holiday season, adding stress to already overloaded fulfillment teams
- Nearly one-third of shoppers return at least one item a year
In other words, this isn’t fringe behavior—it’s mainstream.
Where Returns Hurt the Most: Fashion & Accessories and Electronics
Returns affect every retail category differently, but Seel’s data reveals two areas facing the most pressure:
Fashion & Accessories: Delivery Problems Reign
Fashion saw massive spikes in delivery-related returns, including:
- 124% increase in late deliveries
- 42% rise in missing packages
On the positive side, fashion retailers improved accuracy, with a 47% drop in wrong-item deliveries.
Still, the takeaway is clear: delivery reliability is now a make-or-break factor.
Consumer Electronics: Quality Concerns Are a Growing Issue
Electronics saw a very different pattern:
- 33% increase in defective item returns
- 164% rise in defective product reports across computers and electronics overall
- 13% increase in undelivered items
The good news? The category did see a 45% drop in late deliveries.
For electronics retailers, product quality and reliability—not logistics—are the primary challenge.
Why Returns Are Increasing: A Shift in Shopper Psychology
Seel’s year-over-year analysis shows that the top two drivers of returns are:
- “Item defective”
- “Change of mind”
Both of these increased in 2025, with defective items returns up 14% and change-of-mind returns up 9%.
That second number is especially important. It reflects the growing sense of economic uncertainty among consumers. When people feel unsure—about their job security, their budgets, or the economy—they pause, rethink, and revise purchases.
That’s not a retailer failure; it’s a mindset shift.
The Post-Purchase Experience: Your New Competitive Advantage
If there’s one clear message from Seel’s findings, it’s this: the post-purchase experience can no longer be an afterthought.
Returns, refunds, tracking, and communication aren’t just operational tasks. They shape how customers feel about your brand, whether they shop with you again, and whether they recommend you to others.
In an environment where shoppers expect instant refunds, easy processes, and clear communication, small businesses that make returns simple will gain trust—and loyalty.
And the brands that don’t? Shoppers move on quickly.
The Bottom Line
Returns aren’t going away. In fact, they’re becoming an integral part of how consumers shop—especially during peak seasons. Small business owners who understand the “why” behind return behavior, invest in stronger post-purchase experiences, and tailor solutions by category will be far better positioned to protect revenue and build long-term customer relationships.
If 2025 taught us anything, it’s this: returns aren’t just a cost of doing business. They’re a window into what customers value—and what they expect. Retailers who respond thoughtfully will be the ones who win the season.
You can find more information in the State of Returns and Refunds Report.
Rieva Lesonsky is the founder of Small Business Currents, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
Photo courtesy Getty Images for Unsplash+
