Reverse logistics

Reverse logistics is moving goods backwards through the supply chain — from the customer or point of use to a retailer, warehouse, repairer or recycler — to recover value or dispose of them properly. Returns are its biggest flow: US retailers expected 15.8% of 2025 sales, about USD 850 billion, to come back.

What it covers

The classic definition, by Rogers and Tibben-Lembke, is planning and controlling the flow of materials, finished goods and related information from the point of consumption to the point of origin, to recapture value or dispose of them properly. Researchers since have widened it to any flow back to a point of recovery — so it takes in customer returns, repairs and refurbishment, unsold stock, and end-of-life recycling.

How big returns are

• The National Retail Federation and Happy Returns expected US consumers to return 15.8% of annual sales in 2025 — USD 849.9 billion — in a survey of large merchants.
• Online sales came back more often: an estimated 19.3%.
• About 71% of consumers said they were less likely to shop with a retailer again after a poor returns experience.

Rules that create return flows

In the EU, the WEEE Directive makes distributors take back an old electrical item, free, when they sell a new one of equivalent type, and requires shops with at least 400 m² of electrical sales space to take back very small items — no side over 25 cm — so reverse flows are a legal duty, not only a service choice.

Worked example: what returns cost

Suppose an online retailer sells USD 10 million a year at an average order of USD 80, sees the 19.3% online return rate, and spends USD 12 to receive, inspect and restock each return.

The mistake people make

Running returns as an afterthought to outbound. The returns process is part of the customer's experience — and in the NRF survey, a poor one cost repeat business.