The Challenges of Reverse Logistics in Retail

Spend time in stores - observe, ask questions, listen — and the story becomes clear. Returns aren’t just numbers on a dashboard. There are racks full of unsold product. Backrooms are filling up. Product returned, then re-ticketed, re-routed, or placed back out — often into assortments that don’t need them. And when you talk with store managers and district leaders, you’ll hear the same themes again and again: -Returns slow down the front end, especially during peak traffic, impacting CX -Product comes back that never belonged in the store to begin with -There’s little visibility into why items are being returned -And the product coming back isn’t moving out — it’s often marked down quickly or lingers until it’s cleared out. Stores are challenged as to where to merchandise it in the store. This is bigger than operational friction — it’s a profitability issue with roots far upstream. And the broader data confirms what the field already knows: -Returns are projected to hit $890B in 2024, or 17% of total U.S. retail sales (NRF + Happy Returns) -Returns cost $25–$30 per item, on average, in labor, freight, and inventory value loss (Narvar, Optoro) -Returned product inflates inventory and distorts category turns, making planning decisions harder -Markdowns accelerate, and stores become clearance zones instead of brand storytellers -Fit issues, unclear expectations, and poor spec execution are rarely detailed in return documentation, but show up everywhere on the floor. So what’s going on? Returns are often a symptom of upstream missteps: -Loose size specs and inconsistent fit -Product imagery that doesn’t reflect the actual item -Poor routing logic that pushes product to the wrong store -Weak capture of return reasons — “didn’t fit” isn’t enough We talk about “bracketing” as if it’s a customer quirk — but often it’s a direct result of inconsistent sizing or unclear fit guidance. That’s not behavior. That’s feedback. Here’s where brands can take control: 1. Tighten vendor tolerances for better consistency across styles 2. Upgrade product info and visuals — specs, lifestyle imagery, model sizing, real fit notes 3. Route inventory smarter, using returns data to avoid problem-SKU/store combos 4. Introduce store credit or exchanges as frictionless alternatives to straight refunds 5. Capture and act on return data beyond checkboxes — what came back, and why. The return may be the end of the customer’s experience, but the root cause usually started months earlier in specs, planning, and product decisions. The answers won’t come from a KPI report— they’ll come from listening closely to the floor. If you're close to this — in planning, stores, ops, or CX — what return signals are you seeing? And what’s working to reduce them? #retail #ecommerce #returns #storeops #customerexperience #retailstrategy #upstreamfixes #reverseSupplyChain

Last year I had a call with the VP of ecommerce of a $300M+ retail company who was convinced their 32% return rate was "just the cost of doing business" When I dug into their data I discovered that almost half of post-purchase revenue loss is preventable. This happens all the time, retailers are pouring their heart and budget into hitting sales targets, only to watch a third of that revenue disappear due to inefficiencies and refunds. It's demoralizing to be a retailer these days. It doesn't have to be this way! Here's the playbook we used to help that company recover over $6.8M in just 4 months: Most retailers focus on the wrong metrics, for example they celebrate $10M in sales while silently losing $3.2M to returns, and another $1M to operational inefficiency, plus $800K to return fraud and abuse. Quick observations: Your "best customers" are killing you! 37% of "VIP shoppers" are serial returners, they look great in your CRM but they're negative margin customers. We found one customer returning over $14K → this is totally preventable! This is our framework that we developed after working with hundreds of enterprise retailers in the past 5 years: Prevent returns Enable size/style swaps and allow for uneven exchanges (more expensive or cheaper options) Store credit options instead of refund Relevant product recommendations for exchange and upsell Analyze the return reasons by product - this can save you a lot of products from being returned! Results: Over 60% reduction in refunds b) Prevent fraud and abuse Fraud rules to prevent return abuse Automate policy enforcement and verification of product quality before the product is sent back Product inspection workflows at the warehouse level Results: the highest we seen last year for a customer was over 90% c) Streamline Operations Setup rules for returns routing to the closest warehouse or outlet stores Minimize clicks and enable a scan, scan, refund workflow Centralize all returns data and actions into one system, to prevent system switching Results: 42% faster processing Returns are not a cost of doing business. They're a goldmine of hidden opportunities. But here's the truth: Most retailers will read this and do nothing. They'll keep losing millions because "that's just ecommerce." The smart ones will see this as the competitive advantage it is. What side do you want to be on? P.S. If you're a retail executive seeing 20%+ return rates, DM me. I'll share our full framework as it’s way more detailed.

When a $30 AirTag Does What Your $3M TMS Can’t We love to talk about visibility. We build dashboards. We license enterprise platforms. We tell customers we have it all figured out. Here’s reality: A few researchers just exposed a massive blind spot in reverse logistics using nothing more than Apple AirTags and some curiosity. Yes. AirTags. The same ones we clip to our keys or toss in a carry-on. -The Experiment- Researchers embedded AirTags into packages moving through relief supply chains, simulating the unpredictable chaos of real-world returns, especially in decentralized systems. Then they tracked what actually happened. No integrations. No TMS. No enterprise tools. Just location data and a willingness to see where things broke down. What They Found. Packages looped through redundant routes before reaching their destination. Some sat idle for days in warehouses due to missing paperwork or miscommunication. Reverse deliveries often took two to three times longer than the original shipment. Most of the issues weren’t transportation, they were operational ambiguity. And these weren’t edge cases. This was how the system was designed to operate. Why It Matters This wasn’t a gimmick or PR stunt. It was a blunt, back-to-basics audit of reverse logistics, and the results should make anyone in the business uncomfortable. We spend millions on systems that claim to optimize every step of the journey. But when the shipment starts heading back to us? We lose the plot. -What to Do With This- Test your own process. Not with a vendor demo. Not with another PowerPoint deck. Test it like a customer would. Return something. Track it. Watch what happens. If a $30 AirTag can expose holes in your process, maybe it’s time for less talk and more operational truth. One Last Thing Reverse logistics isn’t just about damaged goods and return authorizations. It’s about the final impression your business leaves behind. And that impression is often formed in chaos, not in strategy meetings. The smartest logistics professionals I know aren’t waiting for the next tool. They’re already asking: What don’t we know about our own system? And sometimes, the answer costs thirty bucks and fits in your hand.