Mastering eCommerce Returns and Reverse Logistics

As online shopping keeps growing, how companies handle returns has become just as important as how they ship orders out. Today’s customers expect easy, fast returns, and if they don’t get them, they’ll shop elsewhere.

For many retailers, returns are a costly, time-consuming, hard-to-manage nightmare, but they don’t have to be. With the right approach, returns can shift from a painful expense to a powerful part of the customer experience.

How a brand handles returns can build trust, drive loyalty, and set it apart from the competition. Returns aren’t just a problem to solve, but an opportunity to get smarter, more efficient, and more customer-focused.

The rising costs of returns

Returns are no longer just a customer service issue—they’re a major financial burden on retailers. In 2023 alone, U.S. consumers returned over $743 billion in merchandise, representing approximately 14.5% of total retail sales.

But the sheer volume of returns is only part of the problem. Processing a return can cost retailers anywhere from 20% to 65% of an item’s original sale price, once factors like transportation, repackaging, inspection, restocking, and potential liquidation come into play.

Retailers also lose a significant portion of revenue to return fraud. In 2023, $101 billion in returned merchandise was identified as fraudulent, accounting for about 13.7% of all returns that year.

These figures underscore the pressing need for businesses to not only streamline return operations, but to strategically manage and mitigate their impact. Inefficient reverse logistics inflate operational costs, distort inventory levels, and shrink profit margins. Without a clear returns strategy, companies risk eroding both financial performance and customer trust.

The bottom line? Returns are necessary, and are getting more expensive (especially around the holidays). But, you can take steps to improve your returns process and optimize your reverse logistics.

Streamlining eCommerce returns and workflows

In today’s online shopping environment, returns are part of the deal. But that doesn’t mean they have to be slow, frustrating, or expensive. When retailers streamline the returns process, they save time, money, and create a better experience for their customers.

A smooth return process starts with clarity and convenience. That means offering easy-to-understand return policies, providing pre-paid shipping labels, and giving customers access to self-service return portals. It also means keeping customers in the loop with return confirmations, refund updates, and real-time tracking.

On the backend, streamlining returns requires tight coordination between customer service, fulfillment centers, and transportation partners. Automating key steps like return approvals, sorting, and restocking can speed things up dramatically and reduce human error. Intelligent return routing, where items are sent to the nearest or most cost-effective processing location, can cut down on shipping costs and turnaround times.

Retailers that prioritize speed and simplicity in their returns process tend to see higher customer satisfaction, lower support ticket volumes, and improved loyalty over time. In fact, many shoppers now say that a hassle-free return experience is a deciding factor in whether they’ll buy from a brand again.

Want to dive deeper? Read our in-depth guide on How to Build a Seamless eCommerce Returns Process to explore return automation, smart routing, and post-return inventory strategies.

Reverse supply chain optimization

A well-structured reverse supply chain is the foundation of efficient returns management. iDrive Logistics engineers custom reverse logistics strategies that align with each client’s distribution model. This includes:

• Routing returns to the most efficient processing centers
• Leveraging regional consolidation hubs
• Implementing automation for returns inspection and sorting
• Coordinating with 3PLs for flexible handling capacity

With the right infrastructure, returns can flow with the same discipline and speed as outbound shipments—reintegrating inventory faster and keeping fulfillment costs under control.

Read more in our guide to reverse logistics.

Building sustainable return policies

Consumers are more environmentally conscious than ever, and brands must reflect this in their return practices.

Brands can make a significant impact by taking proactive steps to reduce unnecessary returns. This starts with providing clear, accurate product information (high-quality images, detailed sizing charts, customer reviews) to help buyers make confident decisions before they click “purchase.” The fewer unnecessary shipments, the lower the carbon footprint.

For low-value or non-resellable items, many retailers are embracing “keep it” policies. If returning an item would cost more in shipping and labor than it’s worth, offering the customer a refund without requiring them to send it back can eliminate waste and increase customer satisfaction.

Transportation also plays a major role in the environmental impact of returns. By using smart routing software and distributed return hubs, companies can reduce the distance products travel and the emissions generated during reverse logistics. Grouping returns regionally or partnering with eco-friendly carriers further enhances efficiency.

Finally, when products can’t be resold, brands can still keep them out of landfills by building partnerships with recyclers, refurbishers, or donation centers. This not only diverts waste but helps build a reputation for responsibility and integrity.

Sustainable returns not only protect the environment but also reduce operational costs and bolster brand image.

Want to take your sustainable return strategy further? Read our deep dive into building greener, smarter reverse logistics.

Refurbishment and resale of returned goods

Not every return has to mean a loss. With the right systems in place, returned products can be repaired, repackaged, and resold to turn potential waste into revenue.

This process starts with grading items upon return. Using clear criteria (like “new,” “like new,” “good,” or “for parts”), companies can quickly assess the condition of returned items and sort them accordingly. This allows for faster decision-making and automation of what can be resold, refurbished, or recycled.

Items deemed refurbishable can be routed into dedicated refurbishment workflows. Whether done in-house or by a third-party partner, this might include cleaning, replacing missing components, repackaging, or software resets (for electronics). The goal is to bring products as close to sellable condition as possible with minimal overhead.

From there, integrating refurbished items back into your inventory is key. These items can be sold through your main storefront as “open box” deals, routed to outlet or clearance sections, or listed on third-party platforms like Amazon Renewed, eBay, or Back Market. Each route offers a chance to reclaim margin and appeal to cost-conscious or sustainability-minded shoppers.

By investing in refurbishment and resale, brands can significantly reduce the cost of returns, lower environmental impact, and create new revenue streams.

Return fraud prevention

Return fraud can mean wardrobing (for example, buying the same shirt in multiple colors with the intention of returning colors they don’t like), receipt manipulation, and counterfeit product swapping. Return fraud eats into profits, complicates inventory management, slows down legitimate returns, and strains customer service teams.

To combat this, businesses are increasingly turning to smart return fraud prevention systems that balance security with customer experience.

Common tactics include:

• Data analytics to flag suspicious patterns: By analyzing historical return data, brands can identify unusually high return rates, serial returners, mismatched order histories, or inconsistencies that indicate potential abuse.
• Serial number and RFID tracking: For high-value or easily faked products (like electronics or designer goods), embedding serial numbers or RFID tags allows brands to verify that the returned item matches the original shipment.
• Digital receipts and order validation: Linking returns to original order numbers through centralized digital systems minimizes the chances of forged receipts, false claims, or “double-dipping” returns.
• Automated approval thresholds: Brands can set dynamic return rules—such as requiring additional review for expensive items, late returns, or frequent returners—without slowing down low-risk, routine requests.

By layering these tools, businesses can reduce fraudulent activity without punishing loyal customers. The key is using automation and data to detect abuse before it escalates, while keeping the returns process smooth and trustworthy for the majority of honest shoppers. With these controls in place, businesses can minimize abuse without alienating honest customers.

Master your eCommerce returns to improve your customer experience

Returns are a necessary cost of doing business, a critical touchpoint in the customer journey, and a powerful lever for operational efficiency, sustainability, and profitability.

By taking a strategic approach to reverse logistics, retailers can move beyond reactive return policies to build streamlined, customer-friendly processes that reduce costs, protect margins, and even unlock new revenue through resale and refurbishment. From fraud prevention and automation to sustainable returns and reverse supply chain optimization, mastering the returns process gives brands a real competitive edge.

At a time when customer expectations are high and margins are tight, returns don’t have to be a burden. With the right systems and strategies in place, they can become a lasting strength.

Explore our supporting guides above to dive deeper into best practices for returns automation, fraud prevention, sustainable logistics, and more.