Reduce Return Costs in E-Commerce: 7 Levers That Actually Work

Returns have become a strategic cost factor in e-commerce

Returns are part of e-commerce. For many online merchants, however, they are no longer just a service topic but a substantial cost block that affects margins, processes and customer experience at the same time.

Recent data from the DACH market shows how relevant this is: only 18 % of surveyed merchants estimate up to 5 euros per return, 30 % are at 5 to 10 euros, and 26 % even at 10 to 20 euros per return. In individual cases, costs rise to 50 euros or more, according to industry data.

If you want to reduce return costs, you should think beyond return shipping fees. What matters is a systematic look at the actual cost drivers and the question of which returns are avoidable, steerable or processable more efficiently.

Why returns are so expensive

Many shops underestimate how many individual cost items are tied to a single return. In addition to return transport, there are internal efforts for inspection, quality control, refunds, restocking and refurbishment.

Industry data (incl. EHI 2024) clearly shows where the biggest burdens lie:

• 64 % of surveyed merchants see transport as a key cost driver.
• 67 % name inspection and quality control as particularly costly.
• On top of that come manual processes, value losses and additional warehouse coordination.

This problem intensifies in categories with higher return rates. In fashion and leisure, return rates exceed 25 % in some cases.

Lever 1: Analyse return reasons systematically

Reducing return costs starts with transparency. 81 % of merchants already capture return reasons systematically, and 67 % derive concrete measures from them.

This is a clear signal that successful returns steering works on a data basis. When merchants know whether returns are driven by fit, product quality, mismatched expectations or logistics issues, measures can be prioritised much more precisely.

In practice this means: return reasons must not only be documented, but regularly evaluated. Only then does returns processing become a steering instrument.

Lever 2: Improve product information

Precise product presentation is one of the most effective ways to reduce avoidable returns. The EHI study emphasises that a detailed and precise product description remains decisive for preventive returns avoidance.

This includes not only better copy but also clear sizing, meaningful images, material details and realistic expectation management. Especially in fashion commerce, returns drop when customers can better judge fit and appearance before buying.

Lever 3: Make return processes faster and more efficient

Not every return can be prevented. That is why process speed is a direct lever for cost reduction.

According to industry surveys, 55 % of merchants process returns internally within three working days, while 45 % need five days or more. Slow workflows not only raise internal cost — they also delay resale, refund and inventory correction.

The faster goods are inspected, classified and booked back in, the lower the economic damage. This is especially true for seasonal assortments and items with rapid value loss.

Lever 4: Reduce manual inspection effort

A substantial share of return costs is created not in package transport but in physical handling after goods arrive. Industry data shows inspection and quality control are among the largest cost drivers for 67 % of merchants.

That points to a clear angle: wherever inspection processes can be standardised, prioritised or automated, effort and processing time drop. This covers classification by return reason, assignment of inspection paths and decisions on whether items are routed to A-stock, B-stock or special handling.

For larger merchants, this lever becomes more important as volumes grow.

Lever 5: Do not treat all returns the same

Not every return has the same economic impact. A low-cost standard item with high resale value is different from a sensitive fashion item with quality inspection, possible value loss and high process load.

Many shops still operate with flat rules. From a business perspective this is often too coarse. Differentiated steering by category, return reason, customer behaviour and reusability is more effective.

Lever 6: Limit value loss actively

Return costs come not only from processes but from lost merchandise value. According to industry surveys, 71 % of companies cite quality defects as the reason returned products can no longer be sold as A-stock.

• 59 % use the B-stock market to realise residual value.
• 34 % donate non-sellable products.

The economic impact of a return depends heavily on how quickly and in what condition an item returns to inventory or to alternative recovery channels.

Lever 7: Do not pit customer friendliness against efficiency

Cutting costs must not mean making returns unnecessarily complicated. Recent DACH consumer studies show:

• 30 % of consumers buy less or hesitantly when return rules are complicated.
• 37 % switch to another retailer after a bad returns experience.
• 55 % want more transparency in the returns process.
• 58 % want additional options beyond "return for refund".

Merchants must think efficiency and customer experience together, not against each other.

What this means for online retailers

Return costs do not drop because of a single action. Returns management becomes effective only when merchants understand their return reasons, accelerate processes, reduce manual effort and make economically relevant differences between returns visible.

Market data shows clearly that the focus is shifting: away from pure processing toward data-driven steering. For many e-commerce companies, this is the biggest lever to protect margins while maintaining a strong customer experience.