Finding profit in returns - turning a burden into opportunity for retailers

Heading into summer wedding season, excited revelers will turn to a popular shopping practice – order a half dozen new outfits in different sizes and styles, model them for friends, and figure out which ones to keep. Discards will be packaged up and sent back.

Billions of dollars in merchandise are returned every year, impacting retailers of all sizes. In a recent annual report, a major US retailer acknowledged the challenge of product returns by recognizing sales net of expected returns. The company estimated the cost of returns to be $170 million for the period covered.

This global giant is by no means alone, and lower revenues aren’t the only expense. Companies face mounting concerns from consumers and investors over the environmental impact of returns. More than five billion lbs (two billion kg) of unwanted merchandise end up in landfills each year, according to industry research. Additionally, consider the emissions ...