Managing Product Returns in Supply Chain

“Happy (Product) Returns” - new cartoon and post https://lnkd.in/gvumTSby “Free Returns” has become the new “Free Shipping,” which is creating a massive logistical headache for retailers, particularly in the weeks after Christmas. This year, shoppers in the US returned 14.5% of the items they purchased, valued at $743 billion. That’s nearly double the return rates of pre-pandemic 2019. One third of shoppers now make returns part of their shopping strategy, buying multiple items, knowing they’ll return some later. As Gartner retail analyst Tom Enright put it in the WSJ a few days ago, “we’re headed for a trillion dollar problem here.” The economics of product returns are brutal. The WSJ reported that only 30% of all returned items are resold and Enright estimates that retailers are losing 50% of their margins on returns. A recent survey from logistics company goTRG found that 49% of retailers believe product returns are a “severe problem”, up from 2% just a few years ago. That has led some retailers like Zara and H&M to start cracking down on returns this year with shorter return windows, return fees, and even “keep it” policies. This will be a tricky challenge for brands and retailers to navigate. When shoppers have been trained to expect “Free Returns” as table stakes, it’s hard to pull back. And the returns process is every bit a part of the customer experience as the purchase. Like unsustainable price promotions, I think that “Free Returns” are emblematic of the “race-to-the-bottom” dynamic in retail. What starts as a point of difference becomes background noise. This is a good reminder for brands and retailers to think about what they stand for beyond the lowest price or biggest deal. For related cartoons and all the links in this post, click here: https://lnkd.in/gvumTSby To sign up for my weekly marketoon email newsletter, click here: https://lnkd.in/g9DBM6tD #marketing #cartoon #marketoon

One of our partner brands asked me to investigate a suspicious cluster–and we found more than two shoplifting articles tied to a single customer profile. What stood out wasn't just the old-school in-store theft and how those tactics have morphed online into what I call "digital shoplifting." Here's the story in four acts: Bots vs. Hype (2010s–Present) Remember the Kylie Lip Kit craze (I'm aging myself here… those were the days)? Automated bots wiped out stock in seconds. We saw the same playbook on Supreme drops, concert tickets, and even limited-edition sneakers–bots overwhelmed sites and left honest customers empty-handed. Return Floodgates Free, lenient return policies became a double-edged sword during the pandemic. U.S. returns hit $428 billion in 2020, with nearly 6% outright fraud. Opportunists treated refund windows like loopholes, turning returns into a stealthy shoplifting channel. "Inflation Hack" Rationales A Fortune study found that half of affluent Gen Zs and millennials admit to "digital shoplifting," often shrugging it off as an "inflation hack." With coupon stacking, inflated refund claims, and the cloak of online anonymity, bad actors feel emboldened, and brands feel the sting. The "Item Not Received" / Return Fraud Scam The most insidious trick is false "never received," "empty box," "Lost in Transit," or "It's delivered to your warehouse" claims. Fraudsters pocket the goods and the refund. Industry data shows that 32% of fraud attacks exploit this tactic, silently draining margins. What's the fix? You wouldn't let LP teams roam your website's aisles–so why leave your checkout and return process unprotected? Applying machine learning or a platform like Yofi with behavioral signals allows you to flag risky transactions before they hit the refund or checkout queue. Let's treat our digital storefronts with the same rigor as our warehouses. In a world where "I never received it" is the new shoplifting shout, data is your best Loss Prevention specialist. How are you defending your brand against digital shoplifting? #ecommerce #fraudprevention #onlineshopping #retailtech

Great retention isn't just about your email flows. It’s your returns experience. Think about it: A customer who returns but feels respected = still a potential repeat buyer. A customer who returns and feels punished = gone forever. Most companies send something cold like: “Your refund is being processed” That doesn’t leave much of a feeling. Here’s a warmer option: Subject: Thanks for giving us a try Body: We get it! Sometimes things don’t work out. That’s on us. If you’re up for it, we’d love to hear what didn’t work. If not, no problem. Thanks for letting us be part of your search. Then, a couple weeks later, you could send: “People who returned [product] often found [alternative product] worked better. Want to check it out?” A return doesn’t have to be the end. Handled right, it can be a fresh start.

Happy returns season! Return rates have been rising for the past ten years and are expected to top 35% this year. This is a massive cost to your brand, how can you reduce them? First the most popular advice going around right now is how to make returns harder.  -Charge a restocking fee -Keep a small returns window -Make them jump through hoops to force an exchange Do not do this. This is what my grandfather called being penny wise and pound foolish. Trying to save some money with combative customer service is only going to hurt you. 1. It doesn’t turn people away from returning, it makes them dig in   2. You will be remembered in their minds as an enemy making a stressful time harder 3. Paying a restocking fee on a gift you didn’t want is going to appear, at best, as greedy. This is a great way to obliterate future sales. What should you do? Make it as easy as possible. Counterintuitive but here is why: Someone looking to scam you is going to do it anyway. You aren’t deterring those people by making it harder. But, making it easier will create a sense of camaraderie and good associations, which you will benefit from down the line when you DO have something this person wants. Retention is notably difficult and one of the better ways to achieve it is to be known as a “good” brand. It is one of the few ways to create real loyalty in a product that isn’t addictive or one-of-one unique. It also makes people want to do you a favor. This is the more important part. If you lean in first, you can then: -Ask for feedback directly -Email more often -Get a better social following -Get better word of mouth This matters because it will help your actual problem, year round return rates. Gift giving season has high returns because it isn’t the user who is shopping. But high seasonal returns are hurting you because you also have high returns year round. To combat that you need to know what the problems are and the best way to get that is by having a good enough relationship with the customers so that they will tell you to your face. You have to give to get and to be able to afford that giving you need to have a year of profits that isn’t tanked by a month of high returns. TLDR: Short term: be super easy to deal with, build up your relationships Long term: fix the root issue (bad web UX, weird sizing, unclear use case etc) #ecommerce #retail #profitability

Why most brands lose customers after the first order. And don’t even realize it. It comes down to these 4 overlooked factors in your returns process: 1. Return = Emotion, not logistics When customers return, they’re not just returning a product. They’re returning an experience, one that fell short. If your return flow feels cold, rigid, or punitive… They won’t come back. Even if they got a refund. 2. Hidden friction kills future purchases Forced emails. Confusing portals. No clear timeline. Each step adds mental drag. The more clicks, the less chance of re-conversion. Fast, self-serve, no-questions-asked returns win loyalty. 3. No post-return nurture = missed CLTV After a return, most brands go silent. But that’s when retention magic should begin. We helped a brand recover 28% of returners with a simple 3-email “win-back” flow. 4. Data black hole Returns are feedback goldmines. But most brands don’t tag reasons or track SKU patterns. Fixing top-3 return reasons improved product margin by 11% for a client in just 60 days. The most surprising finding? Customers who return and buy again often become your most loyal buyers. If you make the process painless, they trust you more. Fix your return experience, and you don’t just lower costs. You increase lifetime value. P.S. What’s one return experience you loved (or hated) as a shopper?

One of our merchants noticed a quiet but scary spike in refunds. After digging in, they realized they lost over $15K last quarter. Mostly on <$100 items from returns that were refunded before anyone opened the box. It wasn’t chargebacks. It was a pattern of return label abuse: 1. Shopper prints a label, 2. Package arrives, looks normal, 3. Refund auto-triggers on scan, 4. QC opens it… knock-off hoodie inside And this wasn’t a one-off. Returns fraud is up 29% YoY in apparel, per Shopify Plus benchmark data. I can’t believe that many RMS flows still refund on first carrier scan, which was designed for CX speed in like 2018, long before swap-for-fake rings exploded in Telegram groups. So what do you do? Well, this merchant turned on Frate Returns' AI-powered image verification (shoutout Bailey). It shifts the QC to "immediate", instead of days later. Fraud refunds dropped 73% in 30 days. NPS held steady, same fast refund experience. Returns fraud is evolving quickly. If you’ve seen sketchy return behavior (empty boxes, fake swaps, or odd refund triggers) happy to share what we’ve learned.

3 metrics all distributors and manufacturers should be tracking TODAY as related to returns: 1) Time delta from customer "Return Request" to "Return Authorized". (most important as It relates directly to NPS). 2) Defective/damage by vendor (including carrier) or product line (for manufacturers) 3) Returns by order taker (including e-com and Automation tools) and filter out ONLY defective/damage returns. Doesn't matter if the reasons are 'picked wrong' vs 'entered wrong' vs 'customer ordered wrong' just simply break It down by order taker and see what you learn. Yet so many distributors track 1 metric --- Returns as a % of total transactions. So little to learn there.... besides a pat on the back.

I don't think we spend enough time talking about returns when brands are looking to optimize their e-commerce experience. As important as it is to talk to your customers to understand their wants, needs, and desires to drive conversion, who cares if they don't keep the product? Return trends can shed light on actionable opportunities to improve. Here are a couple of scenarios: ❌ Most protein powders arrive with a big open space at the top of the container. Customers return the product saying it's defective and they didn't get enough. The truth is, the powder settles and that's how every container arrives. So, make sure every customer knows what to expect before they buy! ❌ A shoe brand sees a high number of boots being returned at an uncomfortably high rate, but about half of the customers buy a bigger size. When they add a question to the return process, they learn that most customers wear the boots in colder months with thick socks. They fit fine, but they need the extra room to be comfortable. So, make sure every customer knows to size up if they're thick-sock lovers! What was the last return you made? Was it a product issue or something that could have been prevented with an update to the website pre-purchase? 🏹 In preparation for BFCM: 1) If you have data on returns, take a look to see what you can optimize to reduce returns post-holiday. 2) If you aren't gathering data on return reasons, make sure to have this in place asap.

Retailers hate returns. 🚨Return-fraud is now a $103 B problem. Merchants can’t keep treating “free, no-questions-asked” returns as a loss-leader anymore. The latest BI piece (link in first comment) makes it painfully clear why. When even otherwise honest shoppers are bragging on TikTok about “wardrobing,” swapping items, or shipping back empty boxes, we’re not talking about edge-case crime. This is an epidemic that erodes margins, skews demand-planning data, and ultimately forces every customer to pay more. Why does this keep happening? Because most e-commerce and returns workflows still rely on weak signals — a shipping label and a self-asserted identity. Fraudsters exploit that gap at scale. Here's how to flip the script: 🔐 Biometric authentication at checkout ties every purchase (and every return) to a living, breathing human — not just a tracking number. 🤖 Real-time risk scoring & network tokenization flag anomalies before a refund is released, slashing “empty box” and “item switch” claims. 🛡️ Chargeback-insurance & AI-driven dispute workflows turn what used to be a sunk cost into a contained, auditable process. Early pilots show that when merchants add biometric step-up for high-risk returns, fraudulent claims drop 40-60 %, and genuine customers still breeze through in under two seconds. Return policies shouldn’t turn retailers into unsecured lenders — and they don’t have to. Identity-first payments can protect revenue and keep the honest majority delighted. #ecommerce #biometrics #payments Wink