The second half of 2024 was one of return volumes holding steady but was a mixed bag for returns costs, according to the Reverse Logistics Association’s (RLA) returns index.

“It seems we're holding steady despite sales volume increases,” one survey respondent noted. Indeed, businesses have been managing volumes better and focusing more on the costs through changes in returns policies and technology investments.

RLA’s research team conducted a returns policies study using the National Retail Federation’s (NRF) top 100 retailers list as the basis. Of the top 100 retailers, 30% charged restocking fees and 75% of retailers limited what could and could not be returned. An interesting trend noted was better return options such as free shipping and longer periods to return items through subscriptions such as Target’s 360 and Home Depot’s branded credit card.

The RLA research team predicts that customized return policies will become increasingly sophisticated and widespread over the next decade. Currently, nearly 20% of retailers offer return benefits to select, potentially more trusted customers. In addition, some retailers also provide more lenient return policies for their in-house brands.

While businesses aim to reduce the total number of returns, they are also facing an increase in fraudulent returns, which are driving up returns volume for some businesses and costs for all. According to an NRF survey, a majority (93%) of retailers said retail fraud and other exploitative behavior is a significant issue for their businesses.

Some retailers are telling shoppers to keep their unwanted merchandise to reduce return costs. A 2023 survey on holiday shopping trends by ReturnPro found that nearly 60% of retailers have keep-it policies for items that aren’t financially viable to ship back. Others, like H&M Group, are turning to technology. The Swedish fashion retailer is investing in software that uses artificial intelligence to generate personalized shipping and return fees.

In addition, 3PLs and technology companies are expanding their returns management capabilities by acquiring specialized providers.

For example:

• Blue Yonder acquired Doddle in 2023. Returns are a big problem in retail, especially after the holiday season. When a customer initiates a return through Doddle, they are asked specific questions about the condition of the item and packaging, given choices on how and where to return it, and given the sustainability impact of the different return options.
• Also in 2023, Accenture acquired OnProcess Technology. The acquisition will enhance Accenture’s supply chain capabilities, specifically in asset recovery and service supply chain management, “making it easier for clients to manage service orders, drive returns, track movement and ensure the appropriate reuse, disposal or recycling of assets,” according to its press release.
• UPS acquired Happy Returns in 2023. The acquisition provides customers with an online portal returns portal allowing customers to make a box-free return at a convenient location and have their item shipped, sorted, and returned to the merchant.
• The most recent acquisition is DHL Supply Chain’s announcement to acquire Inmar Supply Chain Solutions to advance its returns processing in North America to include product remarketing, recall management, and supply chain analytics.

Managing the reverse logistics process is complex. When comparing forward to reverse logistics, the differences are apparent, NRF vice president of corporate social responsibility and sustainability, Scot Case told the publication DC Velocity. “When you think about forward logistics, you’re shipping goods to a store, all in uniform-sized boxes, but when items are returned, they have to be separated, sorted, and handled in some way, and pallets could be filled with a mix of products that are not packed efficiently,” he explained. “You could be spending large sums of money to bring back low-value products.”

As we all know, supply chains are not linear but instead circular. When businesses focus on improving efficiencies and lowering costs in their overall supply chain, they need to also consider reverse logistics costs.

Tony Sciarrottta is Executive Director, Reverse Logistics Association.

This article originally appeared in the January/February, 2025 issue of PARCEL.