Retailers aren’t sleeping well these days. And it’s not hard to see why.
According to the National Retail Federation, U.S. retailers processed $849.9 billion in returns during 2025, equivalent to 15.8% of annual sales. That’s not a rounding error. That’s a structural problem eating into margins across the entire industry.
But here’s where it gets worse: ecommerce retailers are getting hammered even harder. The NRF estimates that more than 19% of online sales were returned last year. Capital One research paints an even starker picture, showing ecommerce returns averaging 24.5% of sales compared to just 8.72% for brick-and-mortar purchases. When roughly one in four orders comes back through the door, the economics start to break down fast.
The business case for fixing this is straightforward: the longer returned merchandise sits in a warehouse, the faster it loses value. But execution? That’s where most ecommerce businesses are falling apart.
The Fashion Collapse
Fashion retailers have it worst. A Statista survey found that 25% of respondents returned clothing they bought online in the past year, with some estimates suggesting return rates can spike as high as 40% in certain segments. The culprits are familiar: sizing inconsistencies, free return policies that encourage “bracketing” (buying multiple sizes), and “wardrobing” (wearing an item once before returning it).
But there’s another factor that makes fashion returns particularly brutal: velocity. Trends fade fast on TikTok and Instagram. What’s hot one week is dead the next. Try selling returned sandals at full price in mid-September. The demand window has already slammed shut, and now you’re staring at discounted inventory that eats into profit margins.
The problem extends beyond fashion, though. Every ecommerce business is learning the same painful lesson: waiting weeks to process a return isn’t just annoying. It’s expensive.
The Spreadsheet Problem
Many warehouses are still running returns on spreadsheets, manual data entry, and undefined standards for what “resale-ready” even means. This works fine when you’re processing dozens of returns. It collapses when you’re processing thousands.
The complexity has multiplied. Returns now arrive from multiple sales channels, third-party marketplaces, and outsourced fulfillment operations. Without standardized workflows or clear visibility into what’s happening with each item, warehouses turn into black holes. Merchandise disappears into the system, nobody knows its status, and value evaporates.
The ripple effects are real. Inefficient returns processing disrupts picking operations, distorts inventory accuracy, and slows outbound fulfillment. It’s not just a returns problem anymore. It becomes an operational crisis.
Where Technology Enters
The retailers who are actually managing this well have one thing in common: they’ve invested in warehouse management systems (WMS) built for reverse logistics. A purpose-built system creates structured workflows, guides teams through each stage from receipt through inspection and disposition, and replaces guesswork with standardized decision-making.
Instead of tribal knowledge and manual checks, you get consistent evaluations that prevent inventory from sitting idle. Merchandise gets back into available inventory faster. It’s approved for resale sooner. Revenue flows again.
The impact isn’t marginal. When returns processing becomes systematic rather than chaotic, the entire supply chain feels the benefit.
The Real Question
Here’s what matters: as global ecommerce revenue is projected to hit $3.88 trillion in 2026, returns are only going to grow. More sales means more returns. More returns with manual processes means more losses.
The retailers who treat returns management as an operational priority, not a customer service afterthought, will protect their margins. The ones who keep hoping spreadsheets will scale? They’ll watch helplessly as their warehouses fill up and their profits evaporate.
The question isn’t whether you need to fix your returns process. It’s whether you’ll do it before your competitors do.
