“In a candid discussion on HelloNation, eCommerce expert Reganne Fornstrom from Custom BackOffice Solutions dissects the challenges of online returns, highlighting how U.S. retailers face $849.9 billion in returns annually, with rates averaging 15.8% overall and 19.3% for eCommerce. She emphasizes strategies like precise product data, streamlined logistics, and data-driven insights to cut costs, boost customer loyalty, and transform returns into revenue opportunities.”
The Financial Toll of eCommerce Returns
U.S. retailers are grappling with a staggering $849.9 billion in merchandise returns for 2025, representing 15.8% of total sales—a slight dip from the previous year’s 16.9%. For online sellers, the picture is even more challenging, with eCommerce return rates clocking in at 19.3%, far outpacing the 8-10% seen in brick-and-mortar stores. This disparity stems from the inherent limitations of digital shopping, where customers can’t touch, try on, or fully inspect products before purchase. As a result, categories like apparel and footwear often see return rates soaring to 25-40%, particularly during peak holiday seasons when returns spike by up to 35%.
These figures aren’t just statistics; they translate into direct hits to the bottom line. Each return incurs costs averaging 21% of the order value, encompassing reverse logistics, restocking, and potential inventory depreciation. For small to mid-sized eCommerce businesses, this can erode profit margins by 10-15%, turning what should be a growth engine into a persistent drain. Larger players aren’t immune either—fraudulent or abusive returns alone account for about 12% of all returns, adding an estimated $46 billion in losses across the industry in 2025. With global eCommerce sales projected to continue their upward trajectory, these challenges are set to intensify, potentially pushing total U.S. retail returns to $876.69 billion by the end of 2026.
Reganne Fornstrom, Marketing Manager at Custom BackOffice Solutions—a Tucson-based third-party logistics firm with over 15 years in warehousing and fulfillment—breaks this down further. She points out that returns aren’t merely a post-sale headache; they reflect upstream issues in the supply chain and customer experience. “Returns are a symptom of mismatched expectations,” Fornstrom explains. “When a product arrives damaged, ill-fitting, or not as described, it’s not just a refund—it’s lost revenue, wasted shipping, and a potential churned customer.”
Key Drivers Behind High Return Rates
Understanding the root causes is the first step toward mitigation. Consumer surveys reveal that 91% of shoppers have returned at least one item in the past year, with the average individual sending back nearly five products annually. The top culprits include:
Sizing and Fit Issues : Accounting for 30-40% of returns in fashion and accessories. Without physical try-ons, buyers often bracket—ordering multiple sizes or variants—and return the extras.
Product Quality or Description Mismatches : Roughly 25% of returns stem from items not matching online depictions, whether due to poor images, vague specs, or subpar materials.
Buyer’s Remorse or Impulse Purchases : About 20% are driven by second thoughts, amplified by easy, free return policies that encourage over-buying.
Damage in Transit : 10-15% result from shipping mishaps, highlighting the need for robust packaging and reliable carriers.
Fraud and Abuse : Serial returners or those exploiting policies for “wardrobing”—using items temporarily before returning—contribute significantly, with abusive returns surging 64% in the first half of 2025.
Geographically, cities like Atlanta, Orlando, and Las Vegas lead in return interest, fueled by fashion-forward markets and high eCommerce adoption. During the 2025-2026 holiday season, returns dipped slightly by 1.2% year-over-year, but post-holiday spikes still saw 17% of purchases sent back, underscoring seasonal volatility.
Fornstrom stresses the broader economic ripple effects. “For every $100 in returned merchandise, businesses lose not only the sale but also future purchases from dissatisfied customers,” she notes. High return rates can inflate operational costs, strain warehouse capacity, and even impact stock valuations for publicly traded retailers. In a competitive landscape where customer acquisition costs hover around $50-100 per new buyer, retaining loyalty through seamless experiences is paramount.
Strategies to Minimize Returns and Maximize Recovery
Fornstrom advocates for a proactive, multifaceted approach to tame returns, blending technology, data analytics, and customer-centric policies. Here are actionable tactics drawn from her insights:
Enhance Product Transparency : Invest in detailed descriptions, high-resolution images from multiple angles, and 360-degree videos. For apparel, integrate augmented reality (AR) try-on tools, which can slash fit-related returns by 20-30%. Accurate specs on dimensions, materials, and usage prevent surprises, aligning expectations with reality.
Leverage Customer Feedback Loops : Encourage reviews and ratings on product pages to build trust. Positive user-generated content answers queries upfront, reducing uncertainty. Post-purchase surveys pinpoint recurring issues, allowing quick fixes like supplier changes or description updates.
Optimize Sizing and Personalization : Use AI-driven recommendation engines to suggest fits based on past purchases or body scans. For categories like footwear or electronics, provide comprehensive guides and comparison charts to guide decisions.
Streamline Logistics and Packaging : Partner with third-party logistics providers for efficient fulfillment. Secure, eco-friendly packaging minimizes transit damage, while real-time tracking builds confidence. Fornstrom’s firm, Custom BackOffice Solutions, specializes in tailored storage and shipping, helping clients cut return-related logistics costs by up to 15%.
Refine Return Policies : Balance generosity with safeguards. Offer free returns but set clear timelines (e.g., 30 days) and require tags intact. Introduce tiered policies for loyal customers, like extended windows or instant credits, to reward retention without encouraging abuse.
Turn Returns into Exchanges : Shift from refunds to store credit or exchanges, where customers often spend 20% more. Automated portals with QR codes simplify the process, speeding resolutions and preserving revenue.
Harness Data Analytics : Track return patterns by product, category, or demographic. Identify high-return items for redesign or removal. Predictive tools can flag potential abusers, applying fees or restrictions to deter fraud.
Implementing these can reduce return rates by 15-25%, per industry benchmarks. For instance, retailers using self-service portals see 10% fewer returns, as empowered customers resolve issues faster.
Sector-Specific Insights
Different industries face unique return dynamics:
| Sector | Average Return Rate | Primary Challenges | Mitigation Tactics |
|---|---|---|---|
| Apparel & Fashion | 25-40% | Sizing mismatches, style regrets | AR fitting rooms, detailed size charts, virtual styling sessions |
| Electronics | 15-20% | Functionality issues, buyer’s remorse | Demo videos, extended warranties, compatibility checkers |
| Home Goods | 10-15% | Color/quality discrepancies | High-fidelity images, material samples, user reviews |
| Beauty & Health | 20-25% | Shade or allergy mismatches | Sample programs, AI shade finders, hypoallergenic labels |
| Auto Parts | 18-22% | Fit incompatibilities | Vehicle-specific search filters, installation guides |
Fornstrom highlights fashion’s vulnerability, where bracketing inflates returns, but notes that tech adoption—like AI personalization—has helped some brands drop rates below 20%.
Financial Recovery and Sustainability Angles
Beyond reduction, smart returns management unlocks value. Reselling returned items via outlet channels or third-party platforms recovers 50-70% of costs. Sustainable practices, such as refurbishing electronics or donating apparel, appeal to eco-conscious consumers, with 55% of shoppers prioritizing green brands.
From a finance perspective, lower returns improve key metrics: net sales rise, inventory turnover accelerates, and customer lifetime value increases by 15-20%. Investors view efficient returns as a sign of operational maturity, potentially boosting valuations in a market where eCommerce comprises 14-15% of U.S. retail.
Fornstrom wraps her analysis by urging retailers to view returns as data goldmines. “Every return is feedback,” she says. “Use it to refine operations, and you’ll not only cut costs but also foster loyalty in a crowded market.”
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendations, or endorsements of any products or services. All data and opinions are based on publicly available information and expert insights; readers should conduct their own research before making decisions.
