Product returns have become one of the most pressing—and expensive—challenges in modern retail. With the continued surge in online shopping, return rates have soared, with some categories seeing 5 to 10% of all sales coming back. For many retailers, the cost of managing returns is threatening profitability, straining supply chains, and complicating sustainability goals. But there is a path forward. By harnessing the power of data and digital innovation, retailers can not only minimize returns but also transform the returns process into a source of competitive advantage.
Returns are a two-sided problem: minimizing the number of returns in the first place, and reducing the impact—both financial and operational—when returns do occur. The first challenge is about ensuring customers get what they want the first time, while the second is about making the returns process as efficient and cost-effective as possible.
Data is the linchpin in the fight against unnecessary returns. Retailers that leverage data effectively can:
Even with the best prevention strategies, some returns are inevitable. Here, digital innovation can dramatically reduce costs and improve the customer experience.
Modern returns platforms can dynamically route returned items to the optimal location—whether that’s a warehouse, a store in need of inventory, or even directly to another customer. By printing return labels that direct products to where they’re most needed, retailers can cut down on unnecessary shipping and speed up restocking.
Emerging models are exploring peer-to-peer returns, where one customer can return an item directly to another who wants it, potentially at a discount. Community collection points—where neighbors consolidate returns—can also reduce shipping costs and environmental impact.
Retailers are increasingly using sustainability messaging to nudge customers toward lower-impact return options. For example, encouraging in-store returns (where the item can be resold immediately) or offering discounts for choosing more sustainable return methods. Some retailers even allow customers to keep low-value items rather than shipping them back, reducing waste and cost.
Not all customers are the same. Retailers can use data to offer differentiated return policies—rewarding loyal, low-return customers with free returns, while charging fees or limiting returns for those with a history of excessive returns. This approach balances cost control with customer satisfaction.
A critical insight from retail leaders is that the returns process is a key part of the overall customer experience. While it’s tempting to focus solely on cost reduction, a cumbersome or punitive returns process can drive customers away. In fact, research shows that 84% of shoppers will reject a retailer after a bad returns experience. The most successful retailers find a balance—using data to optimize costs while maintaining a frictionless, transparent, and even delightful returns journey.
Looking ahead, the most innovative retailers are reimagining returns not just as a cost center, but as an opportunity to build loyalty, gather insights, and drive operational excellence. By integrating returns data into broader analytics platforms, retailers can:
Retail strategists at Publicis Sapient emphasize that the returns revolution is about more than technology—it’s about organizational agility and a willingness to experiment. The most forward-thinking retailers are piloting new models, from dynamic routing to peer-to-peer returns, and using test-and-learn approaches to find what works for their brand and customer base. They are also investing in the foundational data and digital infrastructure needed to support these innovations at scale.
The returns problem is not going away—but it is evolving. Retailers that embrace data and digital innovation can turn this trillion-dollar challenge into a source of differentiation and value. By rethinking every step of the returns journey, from prevention to processing, the industry can move toward a more profitable, sustainable, and customer-centric future.
Ready to tackle your returns challenge? Connect with Publicis Sapient’s retail experts to learn how data and digital innovation can transform your returns process—and your bottom line.