Retailers are in a race to the bottom when it comes to free returns a retail expert told Business Insider Customers are expecting free returns when they order online but thats costly for retailers themselves As a result many are consulting with third-party reverse logistics firms on how to keep free return costs An error has occurred Business Insider Sign up for our best stories delivered to your inbox By clicking Sign Up you agree to receive marketing emails from Insider Inc and accept our Terms of Service and Privacy Policy Free returns are becoming the norm for most retailers But theyre not at all free for the retailers themselves Many are consulting with third-party reverse logistics companies on how to keep costs down and some even track which customers are abusing returns said Pete Madden a director in the retail practice at AlixPartners XPO Logistics says reverse logistics is one of the fastest-growing areas in the industry Retailers need to put some guardrails around free returns Antony Karabus CEO at HRC Retail Advisory told Business Insider Theyre beginning to realize that free returns and free shipping is killing them Three-quarters of Americans who returned a purchase online shipped it back to the retailer rather than taking it to the store according to a UPS study Shipping back returns costs retailers twice as much than the customer taking it back to the store themselves According to AlixPartners the returns process costs retailers 3 per package when customers return them to a store or up to 6 per return when shipped to a distribution center It costs 8 per return when returned to a third-party processor That adds up quickly On Dec 19 alone customers returned 15 million through the mail UPS said Between 10 to 30 of goods purchased online are returned depending on the sector according to an XPO study Read more UPS said 15 million packages were returned in one day and it reveals a troubling reality for retailers about the future of holiday shopping It started with Amazon as it often does in the world of shipping Retailers were forced into it because Amazon has created the expectation of free returns Karabus said Amazon set the bar very high that resulted in retailers feeling that they better follow suit in order to to avoid losing the customer Now following in the steps of free shipping a stores return policy is crucial to win over customers Optoro a firm that helps retailers optimize their returns has found that 79 of consumers check return policies before buying products Theres a mentality fairly pervasive viewpoint in retail that you have to save the sale whatever it takes to grow top line Madden said To minimize the ultra-costly returns process Madden said retailers are taking steps to reduce the returns in the first place Clothing websites have made it easier to check sizes and fit Brick-and-mortar stores might offer gift cards if you return in store And if its not possible to offer in-store returns Madden said retailers will consult with third-party reverse logistics firms to optimize the returns network A more extreme example Madden said is using third-party tracking to see which consumers are abusing the returns policies Restoration Hardware and Lululemon are offering loyalty programs with a membership fee Karabus said That offsets free shipping and returns Retailers have to provide something better and different in order to avoid a race to the bottom Karabus said If retailers give everything away for free theyre not going to make it