Amazon is starting to charge a fee for some returns amid a crisis that's costing retailers millions every year

• Amazon has started charging a fee to return some products to UPS Stores.
• It appears to be part of a shift away from relying on UPS and an effort to cut costs.

The next time you return something to Amazon, it may not be free.

The e-commerce giant has started charging a fee for some returns made at UPS Stores. While customers used to be able to drop off their returns at a UPS Store free of charge, Amazon will now charge a $1 fee if customers have another free-return option the same distance away or closer.

Customers can still visit those other drop-off locations — including Whole Foods, Kohl's, and Amazon stores — and leave their packages for free.

"We always offer a free option for customers to return their item," Amazon spokesperson Steve Kelly told Insider by email. "If a customer would prefer to return their item at a UPS Store when there is a free option closer to their delivery address, a very small amount of customers may incur a $1 fee."

The company already charged customers to have UPS pick up returns from their homes or to drop off packages at UPS Access Points, which are located inside third-party businesses, The Information reported.

The new fee appears to be part of a twofold effort to trim returns costs and discourage customers from using UPS. While Amazon used to outsource the bulk of its parcel delivery, it's built up its own delivery business over the past several years — in 2021, then-Amazon exec Dave Clark said Amazon was on track to become one of the world's largest carriers thanks to its fleet of cargo jets and delivery vans and web of fulfillment centers worldwide.

In the process, Amazon has relied on UPS less and less. UPS earned 13.3% of its revenue from Amazon in 2020, but by 2022, that percentage dropped to 11.3%, according to a UPS securities filing. At the same time, UPS shifted its own focus toward smaller firms and more profitable deliveries.

Retailers grapple with a flood of returns

Meanwhile, returns have become an expensive headache for retailers – between the logistics of getting consumers' unwanted products back to their warehouses and the labor involved in transporting, sorting, and repackaging those goods. And shoppers are returning more products than ever: customers sent back about $218 billion in merchandise they bought online in 2021, up from about $100 billion the year prior, according to data from the National Retail Federation.

Retailers are losing millions of dollars every year processing all those returns, which has made several companies rethink the standard of free returns — a standard that, ironically, some experts attribute to Amazon. Now, with its new fee, Amazon joins the growing list of retailers starting to charge customers to ship their stuff back.