No one in the retail industry questions the strategic and financial value of forward logistics. Retailers have rightly invested billions of dollars in creating optimized transportation and distribution networks dedicated to getting products to the right place, at the right time.
But reverse logistics—managing the journey of returned products—has historically received much less investment and attention. That’s changing, as product returns represented $890 billion in value in 2024 alone, or 16.9% of retailers’ sales for the year.
The majority of retailers are taking steps to manage this problem. Most are trying to minimize the number of returns—via tight returns windows, fees for returning merchandise or the use of virtual fitting rooms that help consumers choose the right apparel size.
But a Blue Yonder survey found these changes are largely ineffective in reducing the number of returns. While our study found 89% of retailers have changed their policies to minimize returns, 59% of those companies actually saw an increase, not a decrease, in returns following those changes.
Strict return policies can also reduce revenues by keeping shoppers from making a purchase in the first place. When Blue Yonder surveyed consumers, we found that 59% of shoppers are deterred by a restrictive returns policy.
Blue Yonder applauds any action retailers take to address the problem of product returns. But, in our view, most retailers are applying discipline and control in the wrong place—at the point of sale. The solution lies not in reducing returns upfront, but managing them better when they inevitably happen.
Stop treating reverse logistics as an afterthought
Just how big is the financial impact of returns for your business? If you’re a $5 billion retailer with 50% of your sales made online—and an industry-average 30% return rate—you have a $750 million returns problem. Let that sink in. If you presented that number to the C-level executives in your organization, would they agree that they’ve dramatically underinvested in this area? And would they recognize that it’s worth investing in optimizing those returns to increase their resell likelihood and value—and ultimately mitigating those losses?
Imagine, for just a moment, what would happen if your organization—and every retailer—treated reverse logistics with the same level of focus and investment as forward logistics.
What if retailers applied best-in-class digital solutions, created real-time visibility across the returns cycle, optimized returns transportation and labor, dramatically cut costs, and significantly improved service? What if they fully integrated reverse logistics into the end-to-end supply chain, creating a digital closed loop across a returned product’s 360-degree journey?
This scenario might sound unrealistic, especially when you consider that only 47% of retailers are using any kind of digital solution to manage returns today—and most of those are aimed at optimizing the consumer’s experience. But Blue Yonder’s returns management solutions are making this ambitious closed-loop vision a reality for leading retailers every day.
In most organizations, the returns management process exists outside the traditional forward-moving supply chain—supported by disconnected, specialized tools, processes and teams. But Blue Yonder customers have successfully integrated reverse logistics into their end-to-end, closed-loop supply chains, managed by solutions, processes and data that are fully connected with the larger operational footprint.
Because Blue Yonder’s retail solutions are fully interoperable, our returns management software can be integrated with every other relevant system—including inventory management and warehouse management tools—no matter the vendor. Real-time, end-to-end connectivity creates a powerful advantage as retailers strive to not only cut reverse logistics costs, but also maximize the chance for a product to be resold at full price.
