Retailers face a complex landscape of hidden costs associated with parcel shipping that can significantly impact their profitability and operational efficiency. Below, we explore these challenges and how retailers are attempting to address or offset them in 2025.
Package Theft and Loss
The surge in e-commerce has unfortunately been accompanied by a rise in package theft, commonly referred to as “porch piracy.” In the UK, incidents of parcel theft have increased by 500% since 2019 (Baker, 2024), leading to substantial financial losses for retailers who often bear the cost of replacements or refunds. Equally – for customers who expect a safe and secure parcel arrival – values added up to £376m in 2025 – a £200m+ rise from the year before (Tims and Jones, 2024). Retailers can attempt to mitigate this by ensuring robust, up-to-date package tracking, providing OOH pick-up points for customers, or ensuring that a signature is required on delivery. Integrating WhatsApp-enabled parcel tracking, such as AppFree, into the customer journey can reduce uncertainty around shipments, allowing customers to monitor their parcels easily and ensuring they arrive safely at the right destination.
Seasonal Surcharges
During peak shopping seasons, carriers often implement surcharges to manage increased demand. For instance, FedEx recently reduced its annual earnings forecast (Tiwary, 2025), citing challenges in the current operating environment and weakness in the industrial sector, which could lead to increased costs for retailers relying on their services. Fuel costs and labour dynamics have impacted as well, with Royal Mail, FedEx, UPS, and DHL updating their surcharges this year (ShipSaving, 2025). Negotiating fixed fees with carriers for sending and returns could have its advantages – the main one being not susceptible to surcharges and therefore potentially passing cost on to the consumer too. Solutions like Label Free, which remove the need for costly label printing and stamp purchases, also streamline shipping processes and reduce reliance on traditional label-based carrier pricing structures, potentially lowering overall costs.
Regulatory Compliance and Taxation
Furthermore, changes to international trade policies, such as the disruption of the de minimis rule affecting low-value imports, have led to increased tariffs and compliance costs, particularly impacting the fashion industry (Binns, 2025). Further impact on fashion could be felt with Temu and Shein at the heart of affairs – with the UK government being lobbied to close a ‘tax loophole’ and stop cheaper goods coming into the country (Butler, 2025). One solution? Manufacturing key products (“margin movers”) in multiple locations. This reduces the risk of supply chain disruptions and ensures there’s no single point of failure (Bowman, 2025).
Returns Management
The convenience of online shopping has led to higher return rates, necessitating robust reverse logistics systems. Processing returns involves additional shipping, restocking, and quality control expenses – with returns processing costing 20-65% of a return’s original value (Shopify, 2024). Moreover, frequent returns can impact inventory management and forecasting accuracy, leading to potential overstocking or stockouts (Retail Insights, 2025). To mitigate these challenges, retailers can introduce a well-defined returns policy – one which doesn’t allow consumers to “game the system” with appropriate fees where required. In terms of returns feedback, retailers can seek more granular, specific insights into why items have been returned, with M&S implementing this effectively (Davis, 2025). Simplifying the returns process by allowing customers to initiate returns and receive tracking updates via WhatsApp through AppFree, as well as eliminating the need for printed labels with Label Free, can make returns more convenient and cost-effective for both retailers and consumers.
Conclusion
References
- Baker, L. (2024) ‘The three key battlegrounds set to make or break retailers and carriers: Returns, friendly fraud and parcel theft’, Business in the News, 3 September. Available at: https://businessinthenews.co.uk/2024/09/03/the-three-key-battlegrounds-set-to-make-or-break-retailers-and-carriers-returns-friendly-fraud-and-parcel-theft/ (Accessed: 27 March 2025).
- Butler, S. (2025) ‘UK urged to close tax loophole to prevent ‘massive influx’ of Shein and Temu goods’, The Guardian, 7 February. Available at: https://www.theguardian.com/business/2025/feb/07/uk-tax-loophole-shein-temu-us-eu (Accessed: 27 March 2025).
- Davis, B. (2025) ‘In praise of Marks & Spencer’s online returns UX’. Available at: https://econsultancy.com/marks-and-spencer-returns-ux/ (Accessed: 27 March 2025).
- Reuters (2025) ‘FedEx shares slide as annual forecast cuts stoke worries on economy’. Available at: https://www.reuters.com/business/fedex-shares-drop-annual-forecast-cuts-stoke-worries-economy-2025-03-21/ (Accessed: 24 March 2025).
- The Times (2024) ‘Holyhead port damage ‘to push consumer prices up until spring”. Available at: https://www.thetimes.co.uk/article/holyhead-port-damage-to-push-consumer-prices-up-until-spring-sq8zlvd3d (Accessed: 24 March 2025).
- GOV.UK (2024) ‘New laws set to ban mandatory hidden fees from online shopping, saving money for consumers’. Available at: https://www.gov.uk/government/news/new-laws-set-to-ban-mandatory-hidden-fees-from-online-shopping-saving-money-for-consumers (Accessed: 24 March 2025).
- ShipSaving (2025) ‘Carrier surcharges and reasons’, ShipSaving. Available at: https://www.shipsaving.com/carries/carriers-surcharges-and-reasons (Accessed: 27 March 2025).
- Bowman, R. J. (2025) ‘Watch: How retail supply chains can withstand tariffs and trade wars’, SupplyChainBrain, 14 March. Available at: https://www.supplychainbrain.com/articles/41361-watch-how-retail-supply-chains-can-withstand-tariffs-and-trade-wars (Accessed: 27 March 2025).
- Tims, A. and Jones, R. (2024) ‘Police warn UK shoppers over “porch pirates” stealing parcels from doorsteps’, The Guardian, 20 December. Available at: https://www.theguardian.com/money/2024/dec/20/police-uk-shoppers-porch-pirates-parcels-doorsteps-black-friday-christmas (Accessed: 27 March 2025).
- Vogue Business (2025) ‘De minimis disrupted: The fallout for fashion’. Available at: https://www.voguebusiness.com/story/sustainability/de-minimis-disrupted-the-fallout-for-fashion (Accessed: 24 March 2025).
