Warehousing Strategies for Returns

Returns are still treated like an afterthought at many fast growing apparel brands. That is getting expensive. In 2026, retail returns are projected to approach $900B, with roughly 17–20% of online orders coming back, compared to 8–10% in-store. At the same time, consumers are becoming more value-conscious, and online continues to grow. That makes one thing clear: Returns can no longer sit outside the inventory strategy. The faster a brand turns returned units back into sellable inventory, the more it protects working capital, margin and availability. But in many apparel businesses, returned units still: - sit in a separate queue - get processed too late - stay invisible in weekly demand planning - miss the full-price resale window A few practical shifts worth implementing: 1. Restock high-demand products fast If a core size comes back, every extra day in processing is a missed sell-through opportunity. 2. Create a 3-way routing rule Every unit should quickly be classified as: restock, resale or unsellable. 3. Track time-to-resell Return rate tells you volume. Time-to-resell tells you if you are protecting margin. 4. Include returns in weekly inventory decisions Availability, allocation, and markdown reviews should include returns, not just warehouse and store stock.

Last year I had a call with the VP of ecommerce of a $300M+ retail company who was convinced their 32% return rate was "just the cost of doing business" When I dug into their data I discovered that almost half of post-purchase revenue loss is preventable. This happens all the time, retailers are pouring their heart and budget into hitting sales targets, only to watch a third of that revenue disappear due to inefficiencies and refunds. It's demoralizing to be a retailer these days. It doesn't have to be this way! Here's the playbook we used to help that company recover over $6.8M in just 4 months: Most retailers focus on the wrong metrics, for example they celebrate $10M in sales while silently losing $3.2M to returns, and another $1M to operational inefficiency, plus $800K to return fraud and abuse. Quick observations: Your "best customers" are killing you! 37% of "VIP shoppers" are serial returners, they look great in your CRM but they're negative margin customers. We found one customer returning over $14K → this is totally preventable! This is our framework that we developed after working with hundreds of enterprise retailers in the past 5 years: Prevent returns Enable size/style swaps and allow for uneven exchanges (more expensive or cheaper options) Store credit options instead of refund Relevant product recommendations for exchange and upsell Analyze the return reasons by product - this can save you a lot of products from being returned! Results: Over 60% reduction in refunds b) Prevent fraud and abuse Fraud rules to prevent return abuse Automate policy enforcement and verification of product quality before the product is sent back Product inspection workflows at the warehouse level Results: the highest we seen last year for a customer was over 90% c) Streamline Operations Setup rules for returns routing to the closest warehouse or outlet stores Minimize clicks and enable a scan, scan, refund workflow Centralize all returns data and actions into one system, to prevent system switching Results: 42% faster processing Returns are not a cost of doing business. They're a goldmine of hidden opportunities. But here's the truth: Most retailers will read this and do nothing. They'll keep losing millions because "that's just ecommerce." The smart ones will see this as the competitive advantage it is. What side do you want to be on? P.S. If you're a retail executive seeing 20%+ return rates, DM me. I'll share our full framework as it’s way more detailed.

Most brands don't have a good returns process. The right technology makes it seamless. I have been in countless warehouses where the returned items are received at the furthest dock. Then put in the back of the building...in a pile...sorted through and processed over several days. Even to my surprise we did a project in the past where the customer said, “I don’t want the returns near the front of the building. It’s dirty and a mess.” (that statement started my mission to improve returns within the warehouse) Now with a combination of robotics and the right software, returns can be handled efficiently. It can become an asset to the fulfillment operation and the brand. 💰I did a study for an apparel brand which identified they could reduce inventory on hand by 10% resulting in a $5MM savings. They averaged 48 hours for processing returns. A shelf to person system like the one shown in the video incorporates all parts of the fulfillment operation. Inbound items are processed then put directly into the pickable location. The item is not touched again until an order is placed for it. The right software can work wonders. If a returned package enters the building that is currently out of stock or low on stock, it is given a high priority and routed by system directly to processing. A worker validates and processes the return then puts it into the pickable location. This puts the product back up on the storefront quickly for re-ordering. In stock items mean more sales for the brand and happier customers. Build a fulfillment system that works for every part of the operation, not just a happy path. Leave a comment or repost if you found this useful! ♻️ Q: Have you ever scrambled to find a product in a pile of returns?

We've processed 147,124 Amazon returns. This year, we're on pace for a portfolio return rate of 14.99%. Most brands treat returns like a generic, unfixable cost. They burn six figures altering product engineering before they even check where the communication break is happening. We didn't protect our margins by guessing. We use a stage-gate framework to attack the data: 1. Expectation Realignment (The Listing Audit). Eliminate the gap between the screen and the box. We ran a foot massager brand where competitors added remotes. Customers assumed ours had one too, spiking returns. We simply added "No Remote" to the title. The bleed stopped in 24 hours. 2. Supply Chain Standardization (The Spec Sheet Check). Isolate true product issues. A brand we took over used a factory that secretly swapped virgin plastic for cheap recycled material. The quality drop triggered immediate return spikes. We introduced random 8-product pre-shipment audits to catch bad lots early. 3. Operational Friction Removal (The Journey Pivot). If an item arrives late or damaged via FBA, customers return it out of platform frustration. For high-ticket or fragile SKUs, we pivot to Fulfilled by Merchant (FBM). This gives us 100% control over the reverse logistics loop and partial refund options. 4. Structural Margin Factoring (The Category Assessment). Stop fighting immutable category behaviors. Dress shoes and seasonal items have high baseline returns. People buy three sizes to try them on. We build a 13% structural loss directly into our unit economics from day one, just like TACOS. We also stopped accepting Amazon's warehouse classifications. We found 70% of returns marked "unfulfillable" could still be sold. We pulled them back, graded them, and recovered up to 20% of retail value instead of paying destruction fees. The result? A projected 23% reduction in returns across our portfolio this year. That's how you scale to $20M without the bottom-line drain that kills most founder-led brands. Are you managing your returns with operator math, or are you letting Amazon warehouse workers dictate your profit? Full video breakdown of the return recovery framework is in the video below.

We do 8 figures in Amazon sales every year. The FBA returns are a real problem. 𝗜𝗻𝘀𝗶𝗱𝗲 𝘁𝗵𝗲 𝗔𝗺𝗮𝘇𝗼𝗻 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗦𝘆𝘀𝘁𝗲𝗺 – 𝗗𝗮𝘆 14 𝗼𝗳 100 One of the least sexy parts of ecommerce is managing returns. We all love to sell truckloads, but sifting through truckloads of individual returns to separate new vs damaged vs fraud? ↳ It's a headache. Yet ignoring returns means tossing 1-3% of revenue in the trash, so serious brands bite the bullet and create a system. Here are the best ways to manage FBA returns: 1️⃣ 𝗨𝘀𝗲 𝗔𝗺𝗮𝘇𝗼𝗻'𝘀 "𝗙𝗕𝗔 𝗚𝗿𝗮𝗱𝗲 𝗮𝗻𝗱 𝗥𝗲𝘀𝗲𝗹𝗹" 𝗣𝗿𝗼𝗴𝗿𝗮𝗺 Amazon will evaluate and relist unfulfillable items without them leaving the FBA network. They charge a per unit fee, which is offset by not having to pay a removal/disposal fee. Enrollment is managed on a per ASIN basis. This is a great way to cut down on the returns that come back to your warehouse, but will not be a 100% solution. Also, it means trusting Amazon to correctly grade your returns, which can be risky for some product types. 2️⃣ 𝗣𝗮𝗿𝘁𝗻𝗲𝗿 𝘄𝗶𝘁𝗵 𝗮 𝗥𝗲𝘁𝘂𝗿𝗻𝘀 𝗣𝗿𝗼𝘃𝗶𝗱𝗲𝗿 There are a bunch of great companies who will receive, inspect and relist products on your behalf. Some may charge per unit, which others get a cut of the revenue when the returns sell. It's by far the easiest way to manage FBA returns since the products never come back to your warehouse. They can often even put returns for sale on alternate channels (eBay, liquidations, etc). This can be a massive win for categories with high return rates. A few companies to consider (though I have not worked with them personally): AMZ Prep®, Return Helper. 3️⃣ 𝗕𝘂𝗶𝗹𝗱 𝗮𝗻 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗦𝘆𝘀𝘁𝗲𝗺 Some teams opt to run returns fully in house. Setting up designated workstations and a returns processing schedule can be a great long-term investment for any DTC brand looking to scale. If your warehouse has the capability to inspect and sort individual packages, this options provides the greatest control, but is the most intensive. We have found that 50% or more of the items returned from FBA as "damaged" are still brand new. We can ship them back to FBA immediately and recapture the revenue. Also, having an internal feedback loop has helped surface customer experience issues. We've added tutorials or important disclaimers to detail pages to ensure customers are informed before checkout. We've built internally at Ballard House because owning the returns process allows us to quickly identify and resolve any quality concerns or fraud. In the end, the important thing for every brand is to look the returns problem in the eye and choose a solution. How do you manage returns today?