When shoppers click “buy,” the real cost clock starts ticking. Shipping rates have jumped and carriers rolled out new surcharges for 2025. At the same time, the U.S. is preparing to impose a 30% tariff on European imports starting August 1, and the de minimis exemption will be eliminated by July 2027. These changes will increase the total cost of getting goods into the country and eliminate duty-free status for small packages. Layer in record-breaking return volumes and a surge in return fraud, and your profitability starts to vanish before the order even arrives on your customer’s doorstep.
Here’s what’s driving these costs—and why it matters now.
The biggest profit drains start early in the fulfillment process. When retailers display inaccurate delivery dates at checkout and fail to keep customers informed about the status of their orders during fulfillment and delivery, it results in an influx of customer service calls.
I hear these concerns regularly in conversations with retailers. Another problem is when retailers fail to choose the most cost-effective shipping option that still meets the delivery promise. These issues can lead to increased costs and potentially lower customer satisfaction, ultimately impacting future sales and margins.
Delivery costs keep climbing
Carrier rate increases aren’t slowing. UPS, DHL, and FedEx announced 5.9% base rate hikes for 2025, while USPS and DHL added seasonal and handling surcharges.
While costs rise, consumers still expect timely delivery. Consumers want convenience, and delivery speed matters. The Rithum 2025 Global Returns & Profit Impact Report found that 54% of consumers consider shipping time as a key reason they buy from a specific retailer or brand.
Retailers are focusing on providing faster delivery for their customers, but this must be balanced with the higher shipping costs that come with expedited services.
Tariffs and supply chain disruptions reshape cross-border costs
Delivery expenses are increasing as new tariff rules add pressure. For retailers, cross-border ecommerce is becoming more expensive and complicated, requiring sourcing strategies that adapt quickly to protect margins.
The retailers I work with are deeply concerned about the upcoming tariff and trade deadlines. They are genuinely worried about the potential for increased costs and disruptions in the supply chain.
These uncertainties make it challenging for retailers to plan inventory levels and make pricing decisions for the rest of the year and the holiday peak selling season. Some of the latest developments include:
- May 2025: The U.S. ended de minimis eligibility for shipments from China and Hong Kong.
- August 1, 2025: A 30% baseline tariff on EU imports will take effect if no trade deal is reached.
- July 1, 2027: The U.S. will repeal de minimis entirely, ending duty-free status for packages under $800.
Free shipping isn’t free
Consumers expect convenience, but it comes at a high cost. 72% of global shoppers say free delivery would improve their online shopping experience, according to DHL. In response, retailers are:
- Raising thresholds for free shipping
- Adding per-order fees or loyalty-based discounts
More retailers are considering reducing free shipping offers, particularly due to the uncertainty surrounding cost increases associated with tariffs and trade issues. Some of the options being considered include increasing the minimum order value that qualifies for free shipping and introducing tiered shipping costs. This cautious approach is driven by concerns about managing expenses and maintaining profitability in an unpredictable economic environment.
Returns are costing retailers
Returns are no longer a background cost. They can be one of the biggest profit drainers for retailers. In 2024, U.S. retailers absorbed $890 billion in returns, representing 17% of retail sales. Returns are also shaping consumer behavior before a purchase even happens.
According to the Rithum 2025 Global Returns & Profit Impact Report of 6,000 global consumers:
- 60% of consumers returned at least one online order in the past year
- 36% intentionally over-order, a practice known as “bracketing,” especially in categories like apparel and footwear
- For Gen Z shoppers, bracketing behavior jumps to 50%, indicating a generational shift toward pre-planned returns
These patterns create a ripple effect. Bracketing drives up reverse logistics costs and ties up inventory. Poor product content adds to the problem: 61% of shoppers cite incorrect fit as the top reason for returns, and a third say items did not match descriptions or photos.
Return policies now influence purchase decisions. 88% percent expect free returns, and nearly half have stopped buying from a retailer because the policy did not meet expectations. Free returns cut into margins, but restrictive policies risk losing customers.
Returns are no longer a minor cost. They affect revenue, loyalty, and operations. Retailers that improve product content, delivery accuracy, and policy clarity can protect margin and retain shoppers.
Fraud increases the pressure
Retailers lost $103 billion to return fraud in 2024, including wardrobing and empty-box scams, according to Appriss Retail and Deloitte. Fraud includes empty-box returns, item swaps, and increasingly wardrobing, which is when shoppers buy an item, use it for a short time such as a special occasion, and then return it for a full refund as if it were new.
Ecommerce can enable this behavior because refunds are often processed before returned items are fully inspected. Retailers then absorb the loss with little chance of recovery. Many companies are tightening return policies to combat fraud, but stricter rules can create friction for honest customers and harm loyalty.
How retailers can stay ahead without adding complexity
Margin pressure is coming from every direction. Technology can’t erase shipping surcharges or tariffs, but it can help retailers make smarter decisions that limit unnecessary costs and protect revenue.
Rithum helps retailers do that by introducing tools designed to improve efficiency inside existing workflows. Shipping Optimization identifies the most cost-effective delivery option without sacrificing promised delivery dates. End-to-End (E2E) Monitoring provides real-time visibility across the order journey, helping teams act on potential delays before they affect customers.
One large omnichannel retailer I work with is collaborating with Rithum to ensure a faster delivery promise while managing the increase in shipping costs. They’re’ doing this by using Shipping Optimization to upgrade shipping only for orders that cannot be delivered on time using ground service.
Both solutions work with systems retailers already use. The result is lower shipping costs, fewer late deliveries, and more accurate performance insights without slowing growth or adding complexity. Margins aren’t lost at checkout, they disappear in the steps that follow. Retailers who act now to control costs and gain visibility are poised to maintain profitable growth. Learn more about how Rithum can help here.
Stan Antonuk is a Client Executive at Rithum.
