Returns have become a significant challenge for retailers over the past six years, with some seeing return rates as high as 40%. The average cost of processing a return is about 30% of the item’s price, with transportation accounting for most of that cost.
Key takeaways:
- Companies like Gap, American Eagle, and Best Buy are using AI-powered reverse logistics to manage returns more efficiently
- AI systems can reduce product “touches” by 50%, leading to cost savings of 5-45%
- Retailers are implementing stricter return policies and shorter return windows to combat issues like “wardrobing”
- Quality control challenges can lead to customer dissatisfaction and lost business
- Of items that can’t be restocked, 95% go to secondary channels, with only 5% ending up in landfills or donations
How reverse logistics can help retailers avoid ‘ring around the collar’
