LONDON, Sept 11 (Reuters) - The returning boss of

Boohoo-owned online fashion retailer

prettylittlething.com is bringing back free returns ahead of the

holiday season, accepting a drain on profitability widely viewed

as necessary to be competitive.

On Tuesday, Umar Kamani, prettylittlething.com's (PLT)

founder who left the business in 2023, announced his return on X

and said: "one of my first changes will be to reintroduce free

returns for our royalty customers, a step I believe is vital to

making your shopping experience more seamless and enjoyable."

PLT, which did not respond to requests for comment, said

earlier this year customers needed to pay 1.99 pounds ($2.60) to

return clothes, with the cost deducted from their refund. The

charge also applied to the brand's 'Royalty' scheme members, who

pay 9.99 pounds a year for unlimited deliveries in the UK.

The news comes after bigger rival ASOS on Friday

rolled out a new policy that targets people who make frequent

returns, charging some of them a 3.95-pound ($5.17) fee to send

products back to warehouses. ASOS declined to say how many

returns a customer could make before facing the charge.

The companies' different approaches towards free returns -

made the norm by the likes of Amazon.com ( AMZN ) - reflect the

difficulties of tackling a problem that eats into profit

margins, frustrating investors.

"The online companies have to manage it more carefully,

given they have a lower profit pool to play with (than retailers

with stores)," Deutsche Bank Research analyst Adam Cochrane

said.

"There is a proportion of (ASOS's) customer base who have

been costing them a lot of money by buying products when they

are only on promotions and then returning them very frequently,"

Cochrane said. "(PLT's) Kamani thinks getting rid of free

returns is one of the reasons their customers have been

purchasing less ... it is a barrier to entry."

According to Signifyd, which operates an e-commerce fraud

protection platform, 76% of European consumers consider return

policies critical when choosing a retailer, and 94% value ease

of returns for a positive shopping experience.

"This situation highlights that returns are not 'one size

fits all'. Penalising customers for high return rates can harm

brand reputation and customer loyalty," Amal Ahmed, director of

financial services and EMEA marketing at Signifyd, said.

"The update of the returns policy serves as a reminder of

the potential reputational costs of inadequate return

management," Ahmed said.

Sweden's H&M last year faced a backlash after

deciding to charge return fees in some countries including the

United States and parts of Europe, and told Reuters on Monday

that a rollout of those fees was continuing into more markets,

but declined to disclose which ones.

($1 = 0.7634 pounds)