As Delivery Costs Surge, Retailers Cut Back on Returns, Reveals Shippit Report
Australian retailers are scaling back free delivery and free and easy returns while delivery costs continue to climb according to the State of Shipping 2025 report from the industry-defining commerce delivery platform Shippit. The report, based on hundreds of millions of deliveries and insights from thousands of retailers, shoppers and carriers, reveals a growing gap between what customers expect, and what businesses can sustainably deliver.
“We’re witnessing a recalibration in retail. 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. What’s clear is that delivery is no longer invisible; it’s a visible, influential part of the customer journey. In 2025, fulfilment is a balancing act — between speed and cost, convenience and sustainability. The retailers who manage that tension best will earn trust, loyalty, and long-term growth,” said Rob Hango-Zada, Co-Founder and Joint-CEO of Shippit.
Delivery costs climb, but same-day gets cheaper
Retailers are grappling with rising delivery costs, particularly for standard and express services, yet there’s one bright spot; same-day delivery is getting more affordable, as networks mature, penetration of online shopping grows and fulfilment models evolve.
Standard delivery: Up from $10.26 in 2024 to $10.39 in 2025
Express delivery: Up from $14.24 in 2024 to $14.69 in 2025
Same-day delivery: Down from $18.26 in 2024 to $17.39 in 2025 — and almost half the 2018 cost of $31
“Demand for faster, more flexible delivery is only accelerating, especially for same-day and even sub-hour options,” said Will Glover, Head of Commercial at Uber Direct ANZ. “We’re helping retailers meet those expectations by tapping into our on-demand network, reducing delivery times without the need for costly infrastructure upgrades. As customers prioritise speed and convenience, same-day is moving from a premium service to a practical solution. That shift is helping to normalise faster fulfilment across categories and customer types".
Free returns on the decline, loyalty at risk
While customer expectations continue to grow, cost pressures are forcing many retailers to scale back return offerings. Just 14% of Australian retailers now offer free returns, down from 49% in 2018. The ease of returns is also declining, with only 58% offering simple, customer-centric return processes, compared to 97% in 2018. An ‘easy return’ typically means a prepaid return label, the ability to return in-store or via post without printing or repackaging, and clear communication throughout the process, all of which are increasingly rare.
The vast majority (92%) of customers are more likely to return to a brand offering easy returns, and in an era of rising acquisition costs, this could be the difference between a loyal shopper and a lost one.
The rise of local commerce
As delivery becomes more central to conversion, many retailers are transforming their stores into fulfilment hubs. The report found that 21% of retailers are investing in ship-from-store capabilities, enabling faster, more localised delivery — a strategic counterpunch to global giants like Amazon.
“The gap between what consumers expect and what traditional retail infrastructure can deliver is widening, and fulfilment is where that pressure shows up first,” said Ben Cook, Regional VP (APAC) at NewStore. “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. The benefits are twofold: consumers enjoy more agile shipping options, and retailers can offer more inventory through omnichannel capabilities like endless aisle. The result is happier customers, lower costs, and increased revenue. Everyone wins.”
At the same time, only 30% of retailers offer click-and-collect in Australia, compared to 44% in New Zealand. The data suggests that more Australian retailers could unlock growth by expanding fulfilment flexibility.
“Click-and-collect is really integral for us, especially during peak season, when our customers really need flexibility and convenience. On average click-and-collect accounts for about 25% of our total online orders, and that peaks around peak gift giving times. Take Christmas, for example. Unfortunately sometimes the delivery window can be gone, but because click-and-collect is still available to our customers they don’t miss out because of timing. It’s valuable all-year-round, but particularly at that time period when the stakes are highest,” said Ben Wapling, Head of Marketing and Digital at Intersport
Sustainability gap widens despite consumer demand
While 50% of Australians say sustainability influences their purchase decisions, only 12.4% of Australian retailers promote green delivery on their websites. In New Zealand, the figure is more than double at 27.8%
Investment is beginning to shift, with over one-third of retailers now prioritising eco-conscious shipping and returns, and 24.1% per cent working with sustainable carriers.
Still, sustainability remains a challenge. While many carriers are experimenting with EVs and alternative routes, only a minority have made significant shifts, and none of the surveyed carriers currently offer carbon-offset shipping. Infrastructure costs and limited retailer willingness to pay green premiums remain major roadblocks.
Global tariffs threaten cross-border growth, but retailers push ahead
Despite rising global tensions and newly imposed US tariffs, international expansion remains a top priority for retailers, with 83% of Australian and New Zealand brands stating it's a focus for the year ahead. With 3 in 4 global shoppers reconsidering purchases after being hit with surprise customs duties, many retailers are turning to Delivery Duty Paid (DDP) models to smooth the customer experience and maintain trust at the border.
Carriers under pressure, but rising to the challenge
Behind the scenes, carriers are responding to the demand for speed and precision. The biggest operational pressure cited by carriers was last-mile delivery costs, whether it’s rising labour and fuel costs, congestion in cities, the need to improve delivery density, or maintaining standards as volume and expectations increase, there are a myriad of factors contributing to this. Carriers are investing to meet rising expectations: 100% are increasing their fleet capacity, with 57.1% scaling up by 1–9%, and 43% expanding by more than 20%. Many are also adopting new technologies such as real-time tracking, returns optimisation, and AI-powered route planning to boost efficiency and performance.
AI emerges as the #1 retail trend for 2025
As retailers navigate rising delivery expectations and tighter margins, almost two-thirds (62%) have identified AI and emerging technologies as the most significant trend for the year ahead. While adoption was cautious in 2024, confidence has grown rapidly, with more retailers recognising AI’s ability to improve delivery reliability, speed up fulfilment, and drive operational efficiency.
Priority areas of focus include:
Delivery prediction and route optimisation
Inventory visibility and demand forecasting
Automation across fulfilment and last-mile logistics
Retailers are also exploring:
Personalisation and real-time communication tools to improve the post-purchase experience
Smarter returns management and cost recovery solutions, as free returns continue to decline
The shift signals a broader move toward leaner, tech-enabled operations, balancing evolving customer expectations with the ongoing need for speed, sustainability, and cost control.
Download the full report here
