Returns Are Killing Retail Margins—Recommerce Offers A Solution

Forbes

5 hours ago

Roy Avidor, CEO & Cofounder of Cymbio, a marketplace and social commerce automation platform enabling brands to scale their digital sales.
Returns have become one of retail's most visible and costly challenges. Once brushed off as a cost of doing business, they've long eroded revenue, stained operations and limited growth at scale. In 2024, American consumers returned an estimated $890 billion worth of merchandise, accounting for 17% of total U.S. retail sales. That's over one in every six dollars spent, returned. The cost is steep: Brands lose $145 million for every $1 billion in sales.
The ripple effects go beyond profit loss. Warehouses built for outbound shipping are overwhelmed by the flood coming back in. Return fraud is rising too, with nearly 14% of returns in 2024 deemed fraudulent, costing the industry $101 billion. The environmental toll is equally staggering: Roughly 80% of returned items are never resold and end up in landfills.
If returns are so damaging, why do brands continue to offer them? Returns are now baked into how people shop. The smart move for brands isn't to eliminate them or burden the consumers with the cost—it's to turn returns into a growth strategy that recovers margin, deepens loyalty and creates new value.
Returns Have Become A Feature Of How Consumers Shop
Consumers don't just appreciate flexible return policies—they depend on them. In a 2023 survey, 72% of U.S. shoppers said they sometimes or always shop with the intent to return some goods.
And returns are now built into the retailer-selection process. According to 2024 research, 76% say free returns influence where they shop.
This shift has helped marketplaces surge. Platforms like Amazon, Alibaba and our partner ASOS are widely perceived as offering easier, more generous returns. A 2024 BCG survey confirmed this trend: Marketplaces outperform traditional e-commerce on six of the nine factors shoppers value most, including 'attractive returns.'
The Real Opportunity Begins After The Return
Fully eliminating returns isn't realistic or strategic, as they're a core part of how and where people shop today. The real opportunity lies in what happens after, and that's where recommerce comes in.
Recommerce, or reverse commerce, refers to reselling items that aren't new, including refurbished, pre-owned, unpackaged and gently-used inventory, through organized take-back, trade-in or refurbishment programs. It turns ROI-negative returns into revenue-generating assets by giving products a second life. Iconic brands have introduced such programs, notably, including Patagonia, whose Worn Wear take-back initiative offers store credit for used items, which are then refurbished and resold to new buyers.
What was once considered a niche is now scaling quickly. ThredUp projects global secondhand apparel sales will reach $367 billion by 2029, "growing 2.7 times faster than the overall apparel market." And brand adoption is also rising fast. Approximately 80% of existing resale programs were launched between 2022 and 2023—a clear signal that retailers are moving fast to meet shifting consumer expectations.
The consumer demand is already here. In eBay's 2024 Recommerce Report, 86% of shoppers said they bought or sold a pre-owned product within the previous year, and over 70% said they plan to continue doing so. For Gen-Z shoppers in particular, recommerce aligns with their values around affordability, digital-first shopping and sustainability.
It's also a way to reach new audiences. Recommerce lets brands connect with eco-minded and budget-conscious customers without slashing prices on their main product lines. It builds loyalty by giving smarter, more flexible options.
So, What's Holding Recommerce Back?
Despite growing momentum, many brands still struggle to make recommerce work at scale. And one of the biggest hurdles isn't consumer demand; it's internal readiness.
Too often, returned items show up untagged, unscanned and essentially invisible, known as 'blind returns.' Brands don't know what's coming back, what shape it's in or whether it's even worth reselling. That uncertainty causes delays, clogs up warehouses and shrinks resale windows. A jacket that sits for two weeks waiting to be inspected might miss the season entirely.
The fix starts with return visibility and automation. First, brands need systems that allow them to track and assess returns the moment they're initiated. The next step is having the right automation in place to avoid starting from scratch with every step required to get a product sold online, ensuring that the process is worthwhile. With the right intelligence, every returned item can be routed quickly to the best possible outcome: taking back profits.
Recommerce Is A Smart Way To Grow
More and more, what shoppers want lines up with what recommerce offers. It cuts down on waste, supports sustainability goals and turns losses into new revenue.
Still, technology remains a hurdle. Many brands don't yet have the systems to track returns, assess an item's condition, ensure updated data or route products efficiently, making recommerce difficult to scale without operational and technical upgrades. The good news? With the right infrastructure in place, recommerce becomes more than a fix for returns—it becomes a growth engine. As the challenge of returns grows, so does the opportunity. Now's the time to invest.
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