Australian retailers are pulling back on free delivery and easy returns as rising costs reshape the e-commerce landscape, according to the State of Shipping 2025 report from delivery platform Shippit.
“We’re witnessing a recalibration in retail,” Shippit Joint-CEO Rob Hango-Zada says.
“The post-COVID delivery boom normalised fast, free, and flexible delivery, but rising costs, supply chain uncertainty, tariff pressure and heightened consumer expectations are forcing a rethink.
“Retailers are now weighing up what’s economically sustainable, not just what’s desirable. Some are scaling back returns and delivery incentives, while others are reengineering their networks altogether.”
While delivery costs continue to rise, with standard shipping now averaging $10.39, up from $10.26 last year, and express climbing to $14.69, same-day delivery is becoming more affordable, dropping to $17.39 from $18.26 in 2024, and nearly half the 2018 price of $31.
“Demand for faster, more flexible delivery is only accelerating, especially for same-day and even sub-hour options,” Uber Direct ANZ head of commercial Will Glover says.
“We’re helping retailers meet those expectations by tapping into our on-demand network, reducing delivery times without the need for costly infrastructure upgrades.”
Free returns are also in retreat, with just 14 per cent of Australian retailers offering free returns, compared to 49 per cent in 2018. Only 58 per cent of Aussie retailers provide easy return processes, down from 97 per cent seven years ago despite 92 per cent of shoppers saying hassle-free returns make them more likely to shop with a brand again.
As global players like Amazon raise the stakes, retailers are turning local stores into mini warehouses to improve delivery speed. The report shows 21 per cent of retailers are investing in ship-from-store capabilities.
“The gap between what consumers expect and what traditional retail infrastructure can deliver is widening, and fulfilment is where that pressure shows up first,” NewStore regional VP APAC Ben Cook says.
“We’re seeing more retailers rethink the role of the store, evolving it from a purely transactional space into a strategic hub for flexible fulfilment.”
However, Australia lags New Zealand in click-and-collect adoption, with only 30 per cent of local retailers offering the service, versus 44 per cent across the Tasman.
“Click-and-collect is really integral for us, especially during peak season,” Intersport head of marketing and digital Ben Wapling says.
“On average click-and-collect accounts for about 25 per cent of our total online orders, and that peaks around peak gift giving times… because click-and-collect is still available to our customers they don’t miss out because of timing.”
Meanwhile, sustainability efforts remain patchy. Although half of Australian shoppers consider sustainability when buying, only 12.4 per cent of retailers promote green delivery options online. In New Zealand, the figure is more than double at 27.8 per cent.
International ambitions persist despite challenges like new U.S. tariffs and rising cross-border delivery costs, with 83 per cent of retailers still prioritising global markets for growth.
AI has emerged as the retail industry’s biggest trend for 2025, identified by 62 per cent of retailers as a key focus to improve efficiency, optimise routes, and enhance personalisation.
“The retailers who manage that tension best will earn trust, loyalty, and long-term growth,” Shippit Joint-CEO Rob Hango-Zada says.
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