MCM CommerceChat: U.S. Spending on Returns Equals Public School Budget

With ecommerce returns close to a $1 trillion problem for retailers, companies continue to wrestle with ways to reduce the number of orders getting sent back. In many ways it’s a problem of their own making, with lenient policies and often free return shipping making it easy to do so, although that’s being dialed back. There’s also the scourge of “bracketing” in apparel: order multiple items, keep one and send the rest back.

Simone Theresa Peinkofer, Associate Professor of Supply Chain Management at Michigan State University, writes in Fortune that reverse logistics cost retailers roughly $816 billion in lost sales in 2022, nearly as much as the U.S. spent on public schools and almost twice the cost from just three years ago.

In this MCM CommerceChat podcast, Peinkofer shares insights from her research on retail supply chain management and fulfillment operations with a focus on returns management. Among other things, she discusses how retailers can use the returns experience as a way to build loyalty, and how more efficient returns management is becoming a higher priority for decision makers.

FYI: you may have noticed we’ve highlighted returns as a special focus for Q3, covering some of the innovative approaches to handling the ever-growing problem.