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Many online merchants make a familiar offer – free shipping, either as a limited offer or a regular thing, and free returns. How effective is that offer, in attracting your business? Before answering, reflect upon the fact that nothing’s really free; the UPS charges don’t come out of corporate profits, they’re included in the prices of the goods. And if you live in New England, then LL Bean (in Maine) is sticking you with the same markup as a customer who lives in LA. Is that fair? Elaborate.


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Reverse logistics, in particular the processing of returned products, incurs costs such as hiring employees to deal with returns. Processing returns may even open up new opportunities for customers who may try to defraud the company by returning a different item. As a result, a company will need to carefully consider if implementing a free return policy is feasible.

Retailers in businesses that have low profit margins often do not have a free return policy. Having a free return policy projects a certain business image. Businesses that sell high-cost or specialty items, such as wedding dresses, may lose customers if the business does not have a free return policy. Customers may …

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