Customer Returns Hurt Everything You Care About
Margins
Returns punch a hole straight through the P&L. Retailers typically lose 60–70% of an item's value by the time a return is processed, marked down, or liquidated. Add in return fraud that is roughly $14 lost per $100 returned and the margin bleed becomes enormous.
In today’s high-cost logistics and capital environment, returns represent a hundreds-of-millions annual hit for large retailers. It's one of the most material drags on profitability.
Capacity
Returns require 3× more space than traditional retail and are projected to add 400M sq. ft. of new warehouse demand in the next five years. Many DCs are clogged with returned loads that are waiting to be processed, tying up labor, working capital, and capacity.
Nearly half of warehouse operators say returns are now their top operational challenge. Every square foot and labor hour spent on returns is one not used to fulfill new sales.
Sustainability
Returns now carry a massive and visible carbon footprint. Billions of pounds of returned goods end up in landfills each year, and reverse transportation alone generates 15M+ metric tons of CO2 annually. In 2023, unsold returns created 9.5M tons of landfill waste.
Regulators, consumers, and ESG auditors are scrutinizing diversion rates and holding brands accountable. For many retailers, returns have become a direct hit on sustainability KPIs and a growing regulatory risk.
Brand Equity
Poorly controlled returns undermine brand equity. Unvetted discounting and gray-market resale erode pricing power, break MAP, cannibalize new product sales, and strain channel relationships. Most brands already police unauthorized resale to protect positioning, returns follow the same rules and carry the same risks.
Sustainability now shapes perception as well. Brands destroying returns invite public backlash, while those enabling circular resale gain credibility. Returns don't just sit in the background, they directly influence brand value and customer trust.
What Worked for Returns in 2008 Breaks in 2026
Return volumes have grown four times since 2008, yet the industry is still stuck with outdated disposition solutions.
