Small Retailers Can Now Recoup Customer Returns Losses

Improved returns processes builds customer satisfaction, cost optimization, and brand competitiveness.

Nov. 10, 2023

2 min read

Small Retailers Can Now Recoup Customer Returns Losses

Small and midsize retail businesses (SMBs) are facing a perfect storm of rising product return rates, coupled with growing consumer expectations for eco-friendly practices. To address these issues, 93% of SMB retailers are prioritizing sustainability when managing customer returns, and 58% say inventory cost optimization is a benefit of their current returns process. This data is from a new survey from Software Advice's 2023 Retail Returns and Sustainability Strategies Survey.

SMBs have focused on a variety of tactics to improve their returns strategy–from logistics to packaging:

59% of SMB retailers use environmentally friendly logistics, compared to 43% last year.
49% partner with third-party experts to manage product returns, a jump from 31% in 2022.
63% use right-size packaging, and 55% of SMB retailers use recyclable/reusable shipping boxes.

Smaller retailers are increasingly recognizing that returned products, if triaged appropriately, can be resold or recycled, reducing waste and recovering some lost sales. In fact, 51% of retail SMBs report recycling as a top action when managing returned items, followed by repackaging and refurbishment. Due to these tactics, 35% say they can recoup over half of the cost of a returned product.

“The research shows not only are recovery efforts effective in recouping costs, but that there’s a reliable consumer market for recycled and refurbished items,” says Olivia Montgomery, associate principal supply chain analyst at Software Advice, in a statement. “This strategy is expected to continue growing in popularity as more third-party recycling centers open up.”

Beyond recouping costs, an effective and sustainable returns process can support a retailer’s standing in the market. This year, 41% of retail SMBs say their current returns process has increased their brand competitiveness. Nearly two in three (64%) cited increased customer satisfaction from their current returns process, a significant jump from 35% in 2022.

While sustainability efforts are linked to customer satisfaction, 63% of SMB retailers admit their company’s actions don’t align with their public messaging, a rise from 46% in 2022.