Technology As A Game-Changer For Brands Facing High Return Rates

As e-commerce continues to grow, so does a problematic trend that impacts brands' bottom lines: returns.

- AJAY RAO

Without the tactile, in-store shopping experience, customers often resort to "bracketing"—ordering multiple sizes or styles and returning the ones that don't work for them. While this practice makes sense from a consumer standpoint, it poses significant challenges for retailers. E-commerce return rates average 15–30%, nearly three times higher than in-store returns, which are around 8–10%. In 2022, the cost of online returns amounted to a staggering $212 billion, marking a significant financial drain on brands.

Returns can be essentially impactful for direct-to-consumer (D2C) brands, particularly startups operating on tight margins and limited resources. High return rates also affect third-party logistics (3PL) providers, amplifying costs, lowering customer satisfaction, and complicating operational efficiency. As returns increasingly threaten profitability and contribute to environmental waste through added packaging and transportation, technology has emerged as a crucial solution. Leveraging technology at every stage of the order and return process enables brands to streamline returns, reduce costs, and foster customer loyalty. Here's how: