The State of Returns 2024

This is an introductory excerpt from our most downloaded report, The State of Returns 2024. To access the full report, click here.

The current state of returns

Retail returns are in the most interesting state they have ever been in. For decades, returns have been viewed as a cost of doing business, and even an afterthought for retailers, brands, and third-party logistics (3PL) providers. But as the supply chain grew in complexity over the last five years, more organizations are shining a light on the inefficiencies, high costs, and margin-crushing impact of returns in retail. And with $743B in merchandise returned last year and average return rates for ecommerce as high as 17.6%, it's a sizable problem to solve—and too costly to ignore.

Additionally, shoppers often dread the returns experience: calling customer support to request a return, finding the original packaging, printing a label, finding time to drop off a return, and avoiding the sometimes-narrow time window to get a full refund. Throw in the recent trend of retailers charging return shipping or restocking fees, and a small inconvenience becomes a friction-filled experience that leads to unnecessary customer churn and low customer satisfaction (CSAT) scores. 

One conclusion is certain: As many pandemic-induced retail behaviors gain permanence, former norms are no longer true. A simple “return avoidance” strategy is no longer a sustainable lens through which to examine the returns challenge. 2024 prioritizes returns optimization, instead of curbing returns behavior. Knowing this to be true for 2024, this report delves into the details of the retail and shopper marketscape and how to facilitate performance improvement with returns management.  

Returns: the Roman Empire of Retail

Why are people constantly thinking about returns?

Up 50% since 2018, the rising cost of returns continues to be a serious concern. To use the viral social media “Roman Empire” trend, returns are a nagging thought for both shoppers and retailers. For retailers, returns are a business and operational headache that can crush margins and impact customer satisfaction. For shoppers, returns are the annoying thing on their to-do list that can deter them from shopping with a brand again—making convenience paramount. 

Why are returns a nagging thought? 

1. In 2023, there was  $743B in returned merchandise 

2. The return rate averaged 14.5% across channels

3. 9.5 billion pounds of returns ended up in landfills in 2022 — equivalent to 10,500 fully-loaded Boeing 747s

Given the projections that digital commerce and non-store sales will grow between 7 and 9% over the next year, returns will continue to be a challenge for retailers to either deal with or resolve—ideally profitably.

To tackle the problem of returns, naturally, the first go-to solution is to reduce them. Reducing returns is perennially identified as a top priority for retailers, and 3 out of 10 retail executives state that it is, in fact, their top priority. Yet, retailers also cite customer satisfaction and cost reduction as top priorities. Therein lies why returns are the Roman Empire of retail and supply chain—customer satisfaction is critical to revenue growth and cutting costs is critical to operational excellence and profitability. 

How can retailers and 3PLs tackle the returns dilemma without shifting the problem elsewhere?

83% of retailers say that returns are a concern when it comes to profitability - it costs $26.50 to process $100 in returned merchandise. 

The full State of Returns 2024 is available for free on this page. You will uncover