Managing returns in ecommerce is key to reducing costs and improving customer loyalty. With return rates exceeding 20%, effective returns management in ecommerce impacts profitability and operational efficiency. This article covers critical strategies and tools to optimize your returns process, from authorization and return transportation to using technology effectively.

Key Takeaways

• Peer-to-peer returns management enhances customer experience by reducing shipping delays and operational costs compared to traditional methods.
• An effective returns management process includes key components such as authorization and validation, efficient return transportation, and thorough inspection and grading of products.
• Implementing technology, including returns management software and data analytics, streamlines the returns process and boosts operational efficiency.

Understanding the Importance of Returns Management in Ecommerce

Returns management is the backbone of a healthy supply chain and a cornerstone of customer satisfaction. Efficient returns management in ecommerce reduces costs and enhances customer service by repurposing returned products. A streamlined returns process improves operational flow and boosts customer satisfaction, leading to better profit margins. With the average ecommerce return rate exceeding 20%, it’s evident that a robust returns management process is crucial for maintaining profitability and customer loyalty.

Streamlining customer returns reduces customer experience friction, enhancing satisfaction. A hassle-free returns experience builds trust and encourages repeat purchases, significantly impacting customer loyalty and retention.

Effective returns management reduces losses and frees up capital for investment, essential for long-term ecommerce success.

Key Components of an Effective Returns Management Process

An effective returns management process is built on several key components that ensure a smooth and efficient operation. The first step is authorization and validation, which involves setting up rules for accepting returns to protect the business from excessive returns and ensure compliance with return policies. This step maintains customer satisfaction and prevents return policy misuse.

Efficient return transportation is another critical component, involving the logistics of getting the returned items back to the business as quickly and cost-effectively as possible, including managing return costs.

Finally, inspection and grading of returned items help determine their condition and the appropriate next steps, such as repair, refurbishment, resale, or disposal. Each of these components plays a vital role in managing returns efficiently and maintaining inventory accuracy.

Authorization and Validation

Authorization and validation are pivotal in maintaining the integrity of the returns management process. Effective return validation includes assessing the product’s condition, confirming purchase details, and ensuring compliance with the return policy. This step helps prevent misuse of return policies and supports sustainable business practices, ultimately enhancing customer satisfaction.

Clear return business rules protect businesses from excessive returns while ensuring a fair customer process.

Efficient Return Transportation

Efficient return transportation focuses on logistics. It deals with moving items from the customer back to the business. This process is crucial for minimizing costs and maximizing speed, ensuring that items are returned to the warehouse promptly. The most popular method for ecommerce-only brands is for customers to return items to the warehouse or fulfillment center. Utilizing return software can help merchants establish specific rules for managing return shipping efficiently, reducing labor costs and improving overall efficiency.

Tracking return shipments ensures timely arrival and efficient logistics. Quick returns to the warehouse streamline the process and enhance customer satisfaction, minimizing delays to the next steps (refunds, exchanges, etc.).

Recommended practices for managing returns in an ecommerce business include using a fulfillment service for reverse logistics and employing effective returns management software to provide real-time analytics and understand return patterns.

Inspection and Grading

The inspection and grading process is a critical step in returns management, involving the evaluation of product condition and determining the next actions based on established criteria. Factors checked during the inspection include damage, defects, and discrepancies.

Accurate tracking of returned products enables the warehouse team to update stock levels, maintaining inventory accuracy. This process ensures that returned items are appropriately categorized for repair, refurbishment, resale, or disposal, optimizing the value recovery of returned products.

Leveraging Technology for Returns Management

Technology plays a transformative role in optimizing the returns management process. Automation based on store policies streamlines sorting, tracking, and refund processing, reducing errors and speeding up decisions. Automated inspection and evaluation systems expedite the assessment of returned products, enhancing overall efficiency and customer satisfaction. Modern returns management systems enhance visibility and efficiency throughout the returns process.

Open APIs facilitate seamless integrations for returns management, enabling efficient information exchange and enhancing operational flow. ReturnLogic, for example, provides a suite of features that align with integrated technology solutions, streamlining the returns management process.

AI-powered chatbots offer instant support for returns management, available 24/7, further enhancing customer satisfaction.

Returns Management Software

Returns management software is a game-changer for businesses, improving efficiency by streamlining logistics and reducing manual errors. Integrating such returns software reduces labor costs associated with managing returns and implementing a returns management solution.

Key features often include:

• Return authorization
• Shipment tracking
• Inventory management
• Customer communication

Specialized returns management software simplifies the assessment of returned items, allowing businesses to track inventory levels efficiently and enhance customer satisfaction.

Data Analytics for Returns

Data analytics tools in returns management allow businesses to uncover the root causes of returns and identify product relationships. Predictive analytics forecasts return volumes, allowing businesses to adjust strategies and improve decision-making. AI-driven analytics provide pattern recognition capabilities, enhancing insights from returns data and enabling strategic adjustments in inventory management.

Accurate data is essential for decision-making and process improvement in returns management. Returns data insights help merchants reward profitable customers with discounts, boosting loyalty. Returns analytics and reporting tools help identify trends in returns management, aiding in process refinement and enhancing overall efficiency.

Best Practices for Reducing Return Rates

Reducing return rates maintains customer satisfaction and minimizes operational costs. One of the most effective strategies is providing accurate product descriptions, as a significant portion of online returns is due to products appearing different in person compared to their online descriptions. Offering multi-channel support reduces frustration during the return process.

Accurate product descriptions, sizing guides, and customer education minimize ecommerce returns for online shoppers. Improvements in product descriptions, enhanced packaging, and better sizing guides can prevent future returns and boost customer satisfaction through online shopping.

By implementing these best practices, businesses can reduce returns, enhance customer satisfaction, achieve cost savings, and improve overall efficiency.

Accurate Product Descriptions

Inaccurate or missing product information is a common reason customers return products. Providing accurate product information minimizes dissatisfaction and helps customers make informed decisions. Clarity and accuracy should be prioritized in customer-facing product descriptions, and incorporating customer reviews can enhance customer confidence in their purchase.

Accurate product descriptions set correct expectations, reducing returns and boosting customer satisfaction.

Enhanced Customer Support

Offering multi-channel support enables customers to easily access assistance from our customer service team, reducing frustration during the return process. Effective customer support before and after online purchases reduces dissatisfaction and returns to an online store.

Timely and helpful support enhances the returns process, boosts customer satisfaction, and builds long-term loyalty.

Handling Returns to Boost Customer Loyalty

A well-managed returns process is essential for boosting customer loyalty. Effective reverse logistics can enhance customer satisfaction by providing a streamlined returns experience and promoting customer loyalty. Around 96% of consumers are more likely to make additional purchases if the return process is easy and hassle-free. A positive returns experience builds trust and encourages future purchases, leading to repeat customers.

Quick responses to customer concerns reduce return likelihood and enhance customer lifetime satisfaction. Post-sale follow-ups help ensure customer satisfaction and address customer feedback issues before they lead to customer dissatisfaction.

Loyalty programs that encourage repeat purchases can further improve customer loyalty regarding returns and promote repeat business. A good refund policy enhances customer shopping behavior by increasing the likelihood of repeat shopping.

Offering Store Credit and Exchanges

Offering store credit or exchanges provides an alternative to traditional refunds, allowing businesses to retain customer satisfaction while minimizing loss from returns. This approach helps retain sales revenue by encouraging customers to choose alternatives rather than seeking refunds, thereby promoting repeat purchases and strengthening the overall customer relationship.

Encouraging exchanges and store credit enhances customer loyalty and aligns with customer retention goals, ultimately improving customer lifetime value.

Transparent Communication

Transparent communication sets correct customer expectations during returns. Informing customers about their return status builds trust and enhances satisfaction. Transparency in the returns policy is essential as it fosters loyalty and may encourage future purchases.

Hassle-free returns and timely refunds significantly build customer trust. Timely, accurate refunds and delayed refunds maintain satisfaction and strengthen the retailer-customer relationship.

The Role of Reverse Logistics in Returns Management

Reverse logistics involves handling returned products, including:

• Collection
• Transportation
• Disposition
• Final destination

This process focuses on optimizing the value recovery of returned products and minimizing the negative impact of the ecommerce returns process on overall operations.

Implementing reverse logistics can enhance operational efficiency by providing valuable insights from data analysis and streamlining the reverse logistics process and the entire returns management process.

Third-party logistics providers can manage the entire order fulfillment process, including the reverse logistics of product returns, ensuring a smooth and efficient operation.

Returns management and reverse logistics teams must collaborate to set shared goals and improve process alignment. Integrating data and analytics enhances returns management and reverse logistics by streamlining processes and identifying improvement areas.

Receiving and sorting returned items is the first step in reverse logistics, crucial for inventory accuracy and value recovery.

Implementing Sustainable Returns Practices

Sustainable returns practices reduce the environmental impact of ecommerce returns. Approximately 5 billion pounds of returned goods in the US end up in landfills annually, emphasizing the need for improved returns management to reduce waste. Effective returns management identifies opportunities to recycle or reuse items, contributing to sustainability. Ecommerce returns result in 15% more waste in landfills compared to returns from physical stores, signaling an urgent need for eco-friendly practices.

Resale programs or donating returns to charities support sustainable returns management practices. Companies leveraging reverse logistics can minimize waste and adhere to sustainability practices by focusing on recycling and proper disposal.

Repair and refurbishment strategies extend product lifecycles, reducing waste and maximizing recovery value. The retail business is actively participating in the resale market, recognizing its importance for customer engagement and sustainability.

Peer-to-Peer Returns: The Future of Reverse Logistics

Let’s face it, traditional returns are broken. You ship an item to a customer, they send it back to a warehouse, it’s inspected and (hopefully) restocked. This double-shipping is expensive, wasteful, and painfully slow. That model wasn’t built for today’s ecommerce landscape.

Peer-to-peer (P2P) returns rewrite the script. Instead of sending returns back to a central hub, the item gets rerouted to the next customer who wants it. No warehouse stop. No redundant shipping. Just a smarter, faster, greener path to value recovery.

It’s not a tweak, it’s a transformation. Peer-to-peer returns reduce operational costs, eliminate reverse logistics bottlenecks, and increase resale speed. And when returns are handled swiftly and locally, customers are more likely to shop again.

Brands embracing this model aren’t just reducing costs, they’re future-proofing their businesses.

Localized Returns Hubs

Integrating localized returns hubs is a successful traditional reverse logistics method that enables businesses to optimize inventory levels, minimize excess stock, and enhance supply chain agility. Local returns hubs consolidate many small shipments into fewer large shipments, decrease shipping distances, reduce transportation costs, and improve inventory management.

Peer-to-peer returns take this concept further, turning every customer into a potential fulfillment node. Platforms like Cahoot facilitate this by matching a return with the next buyer based on location and SKU. The result is a dynamic, distributed network that scales with your customer base, not against it.

Sustainability Benefits

Peer-to-peer returns significantly lower shipping carbon emissions by reducing travel distances for returns. This approach can cut carbon emissions by at least half compared to traditional return methods, contributing positively to sustainability goals. Peer-to-peer returns also decrease packaging waste and reduce the number of items sent to landfills, supporting eco-friendly practices.

In an era when sustainability is a competitive differentiator, offering an eco-conscious returns model builds loyalty and strengthens your brand.

Future Trends in Returns Management

The future of returns management is being shaped by emerging trends such as AI and predictive analytics, and omnichannel returns solutions. Customer data revolutionizes returns management by providing insights into return patterns and reasons, enabling informed decisions and process improvements. The global reverse logistics market is projected to increase significantly, reflecting the evolving landscape of returns management. Efficient returns management solutions reduce costs through streamlined processes, impacting profitability.

Labor involvement in returns increases costs and burdens inventory management, necessitating innovative solutions to minimize manual intervention. Effective decision-making models and clear guidelines streamline the returns disposition process, enhancing efficiency.

AI and Predictive Analytics

AI and predictive analytics transform returns management by improving efficiency and enhancing customer satisfaction. Merchants can leverage AI algorithms to automate returns processes, analyze data, categorize items, and determine appropriate actions.

Machine learning algorithms examine return data, customer behavior, and product attributes. They use this analysis to offer personalized recommendations and predict future returns. AI technologies improve returns forecasting accuracy by analyzing historical data, helping ecommerce businesses optimize inventory.

Omnichannel Returns Solutions

Omnichannel approaches allow customers to initiate returns from any platform, enhancing convenience and satisfaction. This approach provides multiple return options across various platforms, improving the overall customer experience and ensuring a seamless returns process.

Omnichannel returns solutions offer flexibility and convenience, significantly enhancing customer loyalty and retention.

Summary

In conclusion, peer-to-peer returns management offers a modern, scalable, and profitable alternative to traditional returns methods. It minimizes cost, accelerates resale, reduces environmental impact, and enhances customer satisfaction. By leveraging smart routing, localized returns, and real-time analytics, brands can transform returns from a cost center into a loyalty and profitability engine. As ecommerce continues to evolve, those who adopt dynamic, distributed models like peer-to-peer returns will be best positioned to lead the future of retail.

Frequently Asked Questions

What is peer-to-peer returns management?

Peer-to-peer returns management allows customers to return items through local hubs or peer exchanges, minimizing shipping distances and costs while improving customer satisfaction. This innovative approach streamlines the returns process effectively.

How does returns management impact customer satisfaction?

Returns management significantly influences customer satisfaction by streamlining the return process, fostering trust, and promoting repeat purchases. Consequently, effective returns strategies directly contribute to enhanced customer loyalty.

What are the key components of an effective returns management process?

An effective returns management process relies on authorization and validation, efficient return transportation, and thorough inspection and grading. These elements are essential for ensuring a smooth and efficient return experience.

How can technology improve the returns management process?

Implementing technology such as returns management software and data analytics can significantly enhance the returns management process by streamlining logistics, minimizing manual errors, and providing real-time insights, ultimately improving efficiency and customer satisfaction.

Why are sustainable returns practices important?

Sustainable returns practices are essential as they reduce environmental impact and enhance brand image, ultimately fostering customer loyalty. By prioritizing recycling and reuse, businesses can align with broader sustainability goals.

The ecommerce order return process is not only inevitable but also a crucial part of the customer experience. A well-handled return process can improve customer satisfaction, enhance customer loyalty, and even drive future sales. However, poorly managed returns can lead to frustrated customers, lost revenue, and a damaged brand reputation. Additionally, hidden costs associated with ecommerce returns, such as shipping, restocking, and consumer behaviors like ‘bracketing,’ can significantly impact retailers.

To optimize this important aspect of the ecommerce business, more and more companies are turning to ecommerce return platforms. These platforms provide a comprehensive solution for managing returns management tasks and ensuring the returns process is as seamless as possible for both customers and businesses.

In this article, we’ll walk through the key features of ecommerce return platforms, explore what makes them a valuable tool for boosting customer loyalty and improving returns management, and highlight the benefits they bring to businesses in terms of efficiency and revenue retention. Whether you are a brand operator, a logistics expert, or a retail strategist, understanding the features that matter most in return platforms can help you make more informed decisions when choosing the right system for your ecommerce store.

Introduction to Ecommerce Returns

Ecommerce returns are an inevitable part of any online store’s operations. They can significantly impact customer satisfaction, revenue, and the overall success of an ecommerce business. Understanding the importance of customer satisfaction is crucial in managing ecommerce returns effectively. A well-implemented returns management system can boost customer loyalty, increase revenue retention, and enhance the overall customer experience. By streamlining the returns process and offering flexible solutions, businesses can turn returns into opportunities for building stronger customer relationships and driving future sales.

Understanding the Importance of Customer Satisfaction

Customer satisfaction is the backbone of any successful ecommerce business. It is essential to recognize that returns are not just a necessary evil but an opportunity to build trust and loyalty with customers. By providing a seamless and efficient returns process, online stores can demonstrate their commitment to customer satisfaction, ultimately leading to positive word-of-mouth, repeat business, and increased future sales. Effective returns management software can play a vital role in achieving this goal by streamlining the return process, offering flexible exchange options, and enabling customers to initiate returns easily through an online portal. This not only enhances the customer experience but also helps businesses manage returns more efficiently and retain more revenue.

Why Ecommerce Return Platforms Matter

The Challenge of Managing Returns in Ecommerce

Returns are a natural part of the ecommerce experience, with the average ecommerce return rate ranging from 15% to 30%, depending on the industry. While returns are often seen as a necessary cost, they can be a significant drain on profit margins if not handled efficiently.

The returns process involves several steps that, when done manually, can become a time-consuming process for customer service teams. From receiving return requests to issuing refunds or store credit, and then handling shipping labels and reverse logistics, the manual handling of returns can quickly overwhelm a business. Many customers intentionally purchase items with the intention of returning some or all of them, adding complexity to the retail landscape. Furthermore, return fraud, inaccurate return shipping labels, and missed customer communication only add to the complications.

This is where ecommerce return platforms come into play. These platforms integrate and automate the returns management system, providing businesses with the tools they need to streamline the returns process and reduce costs while keeping customers satisfied.

Overview of Returns Management Systems

A comprehensive returns management system is designed to handle all aspects of ecommerce returns, from initiating a return to resolving the issue. This system should integrate with the online store’s existing tech stack, including popular apps and sales channels, to provide a unified and efficient returns process. Key features of a returns management system include automation rules, return shipping labels, and the ability to offer store credit or bonus credit to customers. By leveraging such a system, ecommerce businesses can cut costs, save time, and focus on what matters most: providing an exceptional customer experience. A well-integrated returns management system ensures that the entire returns process is streamlined, reducing the burden on customer service teams and improving overall operational efficiency.

Key Features to Look for in an Ecommerce Return Platform

When evaluating ecommerce return platforms, it’s important to focus on the features that align with your business needs and can provide the most value in terms of cost savings, customer experience, and operational efficiency. Here are the key features that matter most:

1. Comprehensive Returns Portal

A returns portal is the heart of any good returns management platform. This feature enables customers to initiate returns and track their return status without needing to contact customer support.

A self-service online portal makes it easier for customers to initiate a return at their convenience, select items they wish to return, and choose their preferred return method. Offering the option for store credit, exchanges, or refunds within the portal helps businesses offer flexible solutions without manual intervention. It also keeps customers informed every step of the way, from return request approval to final refunds.

What you should look for: An intuitive returns portal that allows customers to easily process returns, select return options (such as store credit or exchanges), and track the status of their returns in real-time. The more automated and streamlined the portal, the less burden it places on your customer service team.

2. Return Shipping Label Generation

A common pain point for businesses and customers alike is handling return shipping labels. A good returns management platform automatically generates return shipping labels, saving time for both the business and the customer.

Automated shipping labels also ensure that the correct return shipping carrier is used, helping to avoid delays or errors that can negatively impact the customer experience. Prepaid labels also allow the business to control return shipping costs, which is especially important when handling large volumes of returns. Introducing drop-off points as a convenient return method can further streamline the process, allowing customers to return items easily and without packaging.

What you should look for: Integration with shipping carriers to automatically generate return labels, as well as the ability to manage and track return shipping costs. Additionally, look for platforms that allow for multi-channel returns (e.g., returns through brick-and-mortar stores and online returns).

3. Fraud Prevention and Return Analytics

One of the most pressing concerns for ecommerce businesses is return fraud, which can take many forms, including customers returning used or damaged items, or even attempting to return stolen merchandise.

A robust returns management system helps detect and prevent return fraud by implementing automation rules to flag suspicious returns. Returns data analytics can identify patterns that point to fraudulent behavior or return abuse.

What you should look for: Fraud detection tools within your return platform that flag return requests based on customer behavior or item conditions. Additionally, platforms that offer return data insights allow businesses to evaluate return trends, identify areas for improvement, and track return volumes.

4. Customer Notifications and Real-Time Updates

Customer communication is essential in the returns process. Keeping customers informed about the status of their return requests, the progress of their returns, and when they can expect a refund or store credit reduces anxiety and fosters a positive post-purchase experience.

A good returns management platform sends automated status updates to customers, providing real-time information about their return status, whether the return has been accepted, and when they can expect their refund or store credit.

What you should look for: Automated notifications that keep customers informed about the status of their returns at each stage. The more proactive your communication, the better the customer experience.

5. Customizable Return Policies

No two ecommerce businesses are the same, and neither are their return policies. A flexible returns management platform should allow businesses to customize their return policy based on product categories, return windows, and customer behavior.

For example, you might want to offer different return options for products with limited shelf life, such as food items or electronics. A customizable system allows businesses to set specific automation rules for different categories of products. This is particularly useful for new Shopify store owners dealing with returns in foreign countries, as it helps manage a few returns efficiently with tailored return policies.

What you should look for: A platform that allows for custom returns policies that can be tailored to your business’s unique needs. Ensure that the platform supports different return policies based on factors like product type, seasonality, and customer segment.

Example Ecommerce Return Platforms

1. Loop Returns and Its Benefits

Loop Returns is a prominent returns management platform that offers a range of benefits to ecommerce businesses. It provides a comprehensive solution for managing returns, including product exchanges, return labels, and automation rules. Loop Returns enables customers to initiate returns easily and offers flexible exchange options, which can help boost customer loyalty and revenue retention. By integrating Loop Returns into their tech stack, brands can streamline their returns process, gain valuable insights into returns data, and make data-driven decisions to improve their business operations. This platform not only simplifies the returns process but also helps businesses retain more revenue by encouraging exchanges and offering store credit options.

2. Return Rabbit and Its Capabilities

Return Rabbit is another powerful returns management solution that aims to drive 5x ROI through returns management by providing automated processes, innovative technology, and world-class support. Return Rabbit offers a flexible returns management platform that helps merchants retain more revenue by converting returns into exchanges. It also enhances productivity, increases customer loyalty, and provides real-time reporting and data features. With Return Rabbit, ecommerce businesses can offer customers a positive returns experience, encourage exchanges, and ultimately reduce the number of returns. By leveraging the capabilities of Return Rabbit, online stores can optimize their returns process, reduce shipping costs, and focus on growth and scalability. This comprehensive solution ensures that managing returns becomes a seamless part of the overall customer experience, leading to higher customer satisfaction and loyalty.

How Ecommerce Return Platforms Impact Revenue and Customer Loyalty

1. Improving Customer Loyalty with Seamless Returns

The returns process is often seen as a pain point for customers, but it can also be an opportunity to build customer loyalty. A streamlined returns experience that’s easy and transparent increases the likelihood of repeat purchases.

By offering store credit or product exchanges through your returns platform, you keep revenue within the company, as opposed to issuing a full refund. This not only increases customer retention but also boosts future sales.

2. Revenue Retention through Efficient Returns Management

When returns are managed efficiently, businesses can reduce the lost revenue associated with returned merchandise. Using one tool for comprehensive software solutions, such as an automated returns system, reduces the time it takes to process returns, ensuring that products are quickly restocked or prepared for resale. This ensures that you recover as much revenue as possible from returned items, especially when they are still in good condition.

By integrating returns data analytics into your returns management platform, you can track return volumes, identify which products are most likely to be returned, and make data-driven decisions to adjust your product offerings and reduce return rates. Additionally, the platform integrates with existing systems to streamline operations, enhancing efficiency and user experience.

Summary

Investing in the right ecommerce return platform for your online store can help your business save time, cut costs, and boost customer satisfaction. From automating the returns process to providing real-time customer updates, returns management software plays a critical role in streamlining returns and enhancing the customer experience. Returns software is essential for managing ecommerce returns effectively, offering features like refund advances, box-free returns, and comprehensive management of the post-purchase process.

By selecting a returns platform with the right features, like automated return labels, fraud prevention, data analytics, and customizable return policies, you can provide a seamless returns experience that encourages customer loyalty, improves operational efficiency, and drives revenue retention. Whether you are a small ecommerce business or a large online retailer, an effective returns management system will help you navigate the challenges of returns while turning them into a competitive advantage.

Frequently Asked Questions

What are the key features of an ecommerce return platform?

An ecommerce return platform typically includes automated return label generation, real-time tracking, fraud prevention tools, customizable return policies, and self-service return portals for customers.

How can a return platform help improve customer loyalty?

By providing a seamless returns process, offering store credit or exchanges instead of refunds, and keeping customers informed with automated updates, return platforms help enhance the customer experience, which fosters customer loyalty.

Can returns management software reduce return shipping costs?

Yes, returns management software can optimize return shipping costs by selecting the most cost-effective shipping carriers, automatically generating prepaid return labels, and providing businesses with insights into shipping costs.

How does returns management software help prevent return fraud?

Fraud detection tools in returns management systems analyze return data, flag suspicious return patterns, and prevent return fraud by ensuring only eligible returns are processed.

What benefits does automating the returns process provide?

Automating the returns process reduces manual errors, speeds up processing returns, cuts down on operational costs, and improves the customer experience by providing a faster, more convenient returns journey.

Returns used to be the headache nobody wanted to talk about. But in 2025, ecommerce returns are front and center, impacting profit margins, customer loyalty, and operational efficiency. With the average ecommerce return rate hovering between 15% and 30%, and return costs eating into revenue at every touchpoint, retailers are finally realizing that the right ecommerce returns solutions can make or break their business.

So, how do you stop bleeding revenue on returned items and start using returns to build stronger relationships with your customers?

Let’s dig into what works.

Key Takeaways

• Ecommerce returns are a major issue, with 30% of online products returned, leading to significant revenue losses, making effective returns management essential.
• Advanced returns management software can automate processes, prevent fraud, and integrate with existing systems to enhance efficiency and customer satisfaction.
• Implementing a customer-centric returns policy, including clear instructions, flexible windows, and incentives for exchanges, can significantly improve customer loyalty and reduce return rates.

Why Ecommerce Returns Matter More Than Ever

Returns aren’t just a cost, they’re a reflection of your customer experience. In fact, two‑thirds of online shoppers say they won’t come back after a bad return experience. For ecommerce businesses looking to grow repeat business and boost customer loyalty, that stat should ring alarm bells.

With ecommerce sales continuing to rise and online purchases becoming more frequent than in‑store shopping, the pressure is on for online retailers to offer seamless, fast, and transparent returns.

Common Causes of Ecommerce Returns

Returns in ecommerce often happen for predictable reasons:

• Wrong size or fit (especially in apparel and footwear)
• Product not as described
• Item arrived damaged
• Customer changed their mind

Most of these issues can be traced back to poor product descriptions, lack of sizing tools, or misaligned expectations. That’s where ecommerce returns solutions come in, not just to handle returns, but to prevent them in the first place.

Choosing the Right Ecommerce Returns Software

Today’s best returns management software does more than print a return label. It streamlines the entire post-purchase experience, from automating return authorizations to tracking inventory levels and preventing return fraud.

Key Features to Look For:

• Automation: Automate return approvals, generate prepaid return labels, and initiate refunds with minimal manual input.
• Integrations: Sync with your ecommerce platform, shipping carrier, inventory system, and customer service tools.
• Fraud Prevention: Flag suspicious return patterns and apply custom return rules.
• Analytics & Reporting: Gather data to understand your return rate by product, customer segment, and return reason.
• Flexible Refund Options: Let customers return for store credit, exchanges, or cash refunds.

If you’re not using returns software yet, you’re likely spending too much time and losing more revenue than you should.

Top Ecommerce Returns Solutions to Know in 2025

Here’s a quick rundown of a few standout solutions worth considering:

Cahoot

Cahoot’s peer-to-peer returns system is changing the game. Instead of sending returned items back to a warehouse, Cahoot enables the customer to ship directly to the next buyer. This cuts down on reverse logistics costs, shipping time, and inventory touchpoints, making it one of the most innovative ecommerce returns solutions today.

Happy Returns

This returns service offers box‑free, label‑free drop‑offs at thousands of Return Bar locations. With fast processing and free return shipping, it’s a hit with online shoppers who crave convenience and popular brands like Gymshark.

Loop

Loop’s software encourages customers to exchange rather than refund by offering bonus credit for swap‑outs. It is a popular tool used by big brands like Allbirds. It’s a clever way to increase revenue retention and minimize lost sales.

AfterShip Returns Center

AfterShip helps online retailers automate the returns process and centralize returns data. Their system supports international returns, custom returns policies, and integration with major ecommerce platforms.

Building a Customer-Centric Returns Policy

A great returns policy isn’t just nice to have, it’s a sales tool. The right policy can influence purchase decisions and increase trust with potential customers.

A few tips for building yours:

• Offer store credit for exchanges and incentivize it with bonus credit.
• Keep it flexible. A 30‑day exchange window is standard, but extending it during holidays or for loyal customers can boost satisfaction.
• Use clear language. Your return policy page should be easy to read, prominently linked on product pages, and backed up with a helpful FAQ page.
• Offer printable shipping labels via an online portal.

And don’t forget, returns aren’t always bad. Customers who return items and have a good experience often become your most loyal.

Sustainable Returns: Better for the Planet (and Your Profit Margins)

Returns management isn’t just about cost, it’s also about brand reputation. As shoppers become more eco-conscious, your returns process is part of your sustainability story.

Here are a few ways to make your returns more sustainable:

• Refurbish and resell returned products whenever possible (ReCommerce is booming).
• Use eco‑friendly packaging for both outbound and return shipments.
• Offer returnless refunds on low‑cost items to avoid unnecessary shipping and waste.
• Reroute returns directly to future customers, like Cahoot’s peer‑to‑peer model, to bypass the fulfillment center altogether.

Tech to Help You Reduce Returns (Before They Happen)

Reducing your ecommerce return rate starts before the checkout button.

• Improve product descriptions: Be specific. Include dimensions, materials, and fit notes.
• Add more product images: Show items from multiple angles, in use, and on real people.
• Use AR/VR tools: Let customers preview furniture in their home or try on virtual glasses or clothing.
• Collect customer feedback: Monitor reviews and return reasons to spot trends and improve listings.

Gathering returns data and acting on it helps prevent future returns, increases customer satisfaction, and improves your product offering over time.

Returns Don’t Have to Be a Loss

If you’re still treating returns as an operational headache, it’s time for a mindset shift. Today’s best ecommerce returns solutions help online businesses turn returns into a driver of customer loyalty and business growth.

Whether you’re a store owner, a logistics manager, or a brand strategist, your returns strategy should be just as thoughtful as your marketing strategy. Done right, it keeps customers happy, saves time, reduces costs, and unlocks more revenue.

Let returns be your competitive advantage, not your liability.

Frequently Asked Questions

What is the average ecommerce return rate?

The average ecommerce return rate is between 15% and 30%, though it can reach 60% or more in certain categories such as luxury apparel. This highlights the importance of managing returns effectively in different product sectors.

How do returns impact customer loyalty?

Returns can build loyalty if handled well. A smooth, transparent return process increases trust and encourages repeat purchases.

Should I offer store credit or cash refunds?

It depends. Store credit encourages repeat business, while cash refunds increase trust. Many ecommerce stores offer both.

What’s the best way to prevent return fraud?

Use returns software that flags suspicious patterns. Require original tags, verify billing info, and offer store credit for questionable returns.

How do I choose the right ecommerce returns solution?

Look for software that integrates with your platform, automates your return flow, provides fraud tools, and offers robust analytics.

In an era of rising costs, shifting consumer values, and intensifying environmental scrutiny, the way retailers handle returns is under the microscope. The traditional returns model is expensive, slow, and environmentally destructive, and is being outpaced by more nimble, sustainable alternatives. At the forefront of this evolution is peer-to-peer (P2P) returns, a logistics innovation that allows returned products to be sent directly from one customer to the next buyer.

This isn’t just a clever idea—it’s a fundamental rethinking of reverse logistics, and it may be the most impactful change to hit retail supply chains in decades.

The Broken Economics of Traditional Returns

E‑commerce return rates now average 20% to 40%, with fashion and footwear brands absorbing some of the highest costs. That’s double or triple the rate of brick-and-mortar stores. Brands are being crushed by the financial weight of reverse shipping, repackaging, restocking, and often, liquidation or disposal.

Returns are no longer a customer service cost; they’re a strategic liability.

• Nearly $900 billion in merchandise was returned in the U.S. in 2022 alone (NRF).
• Reverse logistics can consume up to 21% of total supply chain costs.
• Only about 50% of returned goods are resold at full value.

But it’s not just a financial problem. Each return shipped back to a warehouse represents wasted packaging, transportation emissions, and time-sensitive inventory that often goes unsold and ends up in a landfill.

Peer-to-Peer Returns: What It Is and How It Works

Peer-to-peer (P2P) returns flip the script by rerouting returned items directly from one customer to the next buyer, bypassing the retailer’s warehouse entirely.

Example:
Amy in Los Angeles, CA, returns a pair of jeans. Instead of shipping them back to the brand’s warehouse in Dallas, TX, a P2P system identifies a new buyer—Sarah in Casper, WY. Amy ships directly to Sarah. The brand handles the refund and inventory update digitally, all without the jeans going to waste or the seller having to touch them again.

The Benefits

• ✅ 64% lower cost per return (Cahoot data)
• 🚚 4× faster resale turnaround
• 🌍 2× reduction in carbon footprint (minimum)
• ♻️ Significantly less disposal and warehouse congestion

Why Now? Perfect Storm of Retail Disruption

1. Economic Volatility and Tariff Pressure

Recent tariff escalations—particularly under the 2025 trade policy agenda—have dramatically increased costs for imported goods, especially apparel from China. Brands reliant on low‑cost imports are feeling the squeeze as COGS climbs and shoppers resist higher prices.

P2P returns create a domestic redistribution layer, decoupled from global supply chains and insulated from trade disputes.

2. Rising Gen Z and Millennial Expectations

Today’s consumers value transparency, sustainability, and personalization. They’re comfortable with secondhand goods and expect brands to support a circular economy.

A staggering 68% of Gen Z consumers have purchased a pre‑owned item in the past year. They view circular shopping not as a compromise, but as a cultural norm.

“Today’s consumers don’t just want fast or free, they want ethical, efficient, and intelligent,” says Manish Chowdhary, Founder and CEO of Cahoot.

3. Environmental Urgency

Returns generate over 15 million metric tons of CO₂ emissions annually in the U.S. P2P models dramatically reduce transport distances, energy use, and landfill waste. In a climate‑conscious market, that’s a strategic differentiator.

The Bigger Picture: Connecting Thrifting to Logistics Innovation

To understand why peer-to-peer returns are gaining traction, consider the broader cultural and economic shift. Gen Z and Millennials are reshaping consumption: they prefer access over ownership, value over status, and sustainability over excess.

Peer-to-peer returns are the invisible backbone of this transformation. Much like Poshmark and Depop connect resellers and buyers, P2P returns introduce fluidity into e‑commerce, reducing friction, recovering value, and mirroring how people already engage with goods—agilely, communally, and with minimal waste.

This is where recommerce and reverse logistics converge. Resale and returns, once managed separately, are merging into one holistic circular ecosystem optimized for both financial and environmental performance.

Tech That Makes It Possible

• AI Matching – Identifies SKUs, sizes, and proximity matches in real time.
• Photo & Rating Verification – Maintains trust between sender and new buyer.
• Smart Labeling & Routing – Automates shipping based on live demand.
• Customer Identity Portability – Builds trust profiles like those on Airbnb and Uber.

Platforms such as Cahoot, Recurate, and Trove are embedding these capabilities into their networks, making P2P both possible and profitable.

Strategic Advantages for Retailers

• Profit Recovery: Cuts restocking and shipping costs.
• Customer Retention: Incentivizes returns through store credit or cashback.
• Inventory Fluidity: Speeds resale of seasonal or trending items.
• Brand Loyalty: Demonstrates a commitment to sustainability.

Peer-to-peer returns transform a sunk cost into a circular transaction.

Who’s Doing It Now?

• Cahoot: Pioneering peer-to-peer fulfillment and returns.
• REI & Patagonia: Piloting resale and trade‑in programs with potential P2P extensions.
• Recurate: Integrated resale and P2P for brands like Steve Madden and Cotopaxi.
• The RealReal: Luxury recommerce leader using AI authentication.

Challenges to Consider

• Trust: Will customers accept goods from other customers?
• Returns Triage: Not all items qualify; brands need a hybrid model.
• Logistics Support: Requires rethinking fulfillment, packaging, and service workflows.
• UX Consistency: Ensuring P2P experiences match the core brand promise.

None of these barriers are insurmountable. With clear standards, robust tech, and the right incentives, P2P can scale elegantly.

The Future: Circular, Connected, Customer‑First

Peer-to-peer returns are the next logical step in circular retail. They offer a sustainable, scalable, and consumer‑aligned solution to one of retail’s most painful problems. Forward‑thinking brands are already acting; those who wait may find themselves at a competitive and cultural disadvantage.

Peer-to-Peer Returns vs. Traditional Returns

Final Thought

Returns have always been the retail elephant in the room: expensive, wasteful, yet unavoidable. Peer-to-peer returns finally offer a model that’s smarter, cleaner, and aligned with how people shop today.

“Retailers that embrace peer-to-peer will discover that returns aren’t a liability—they’re a platform for innovation,” says Manish Chowdhary. “This is how we build a future where commerce and sustainability truly coexist.”

Frequently Asked Questions

Can peer-to-peer returns become the norm, not the exception?

Yes. Just as peer-to-peer marketplaces have redefined buying, the same mindset is now shaping returns. It reflects the shift from centralized, industrial systems to decentralized, digitally coordinated networks. Returns are no longer a dead end; they’re a point of redistribution.

What role does consumer trust play in scaling P2P returns?

Trust is critical but achievable. Just as ridesharing normalized getting into a stranger’s car, P2P commerce relies on ratings, AI verification, and transparency. Retailers must build trust into the experience, not around it.

Is P2P compatible with luxury or premium brands?

Absolutely. The RealReal and StockX have shown that trust, transparency, and resale value are central to modern luxury. P2P returns offer luxury brands a way to maintain equity while reducing costs and waste.

How does peer-to-peer returns strengthen supply chain resilience?

By creating a flexible, decentralized return path, P2P models reduce reliance on centralized warehouses and long‑haul freight—especially valuable during peak seasons, economic volatility, or shipping disruptions.

What mindset shift is needed for retail executives to embrace P2P?

Retail leaders must stop viewing returns as isolated losses and start treating them as recoverable assets. With the right tech and policy, a return isn’t the end of a transaction—it’s the beginning of another. That’s the real power of peer-to-peer.

[ProShip ParcelCast Unwined]
Episode 44: Today’s Broken Returns Model:
How Peer-to-Peer is Changing the Game

Ecommerce returns management poses significant challenges for online Sellers, impacting profitability and customer satisfaction. Traditional return processes often involve shipping items back to warehouses, leading to increased costs and delays, not to mention the negative impact on the environment. However, Cahoot’s innovative Peer-to-Peer Returns program is transforming this cumbersome and costly necessary evil into an automated profit center.

Understanding Peer-to-Peer Returns

Cahoot’s Peer-to-Peer Returns model enables customers to ship returned items directly to the next buyer, bypassing the warehouse. This approach offers multiple benefits:

• Cost Reduction: By eliminating the need to transport returns to warehouses and then reship them to the next buyer, Sellers save on 2 legs of shipping plus processing expenses.
• Faster Revenue Recovery: Items are restocked nearly immediately and resold more quickly (no touch), accelerating revenue flow.
• Environmental Sustainability: Reducing transportation steps lowers carbon emissions, appealing to eco-conscious consumers.

How It Works

1. Item Evaluation: Customers initiating returns submit photos and details of the product. If approved, the item is listed for resale in real-time at a discounted price.
2. Direct Shipping: Once sold, the returner ships the item directly to the new buyer using the original packaging, avoiding warehouse handling.
3. Buyer Confirmation and Rewards: The buyer inspects the received item. Upon confirmation of the condition, the returner receives additional cashback on top of their refund or exchange.

Benefits for Consumers

• For Returners: Holding onto items for up to seven days before shipping allows them to earn rewards, making the return process more valuable.
• For Buyers: Purchasing Like New condition returned items at ‘open box’ discounted rates offers savings that wouldn’t be available had the item been returned to the warehouse before shipping out again.

Summary

Cahoot’s Peer-to-Peer Returns model exemplifies innovation in ecommerce logistics, addressing the complexities of product returns by making the process more efficient, cost-effective, and environmentally friendly. This approach not only enhances operational efficiency but also aligns with the evolving expectations of modern consumers. For more information on implementing Peer-to-Peer Returns in your business, visit Cahoot’s official page.

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Transcript:

Katy Schroedl
All right, welcome back to another episode of ProShip Parcel Cast Unwined. Today’s episode is called “Broken Returns: How peer-to-peer is Changing the Game.” We’re tackling a topic that’s both a headache and a hotbed of innovation in ecommerce. We’re talking about returns. And this is not just the usual ship it back scenario. We’re diving deep into the world of peer-to-peer returns, a concept that’s reshaping how we think about reverse logistics. So joining us today, we have Manish Chowdhary from Cahoot, along with Justin Cramer from ProShip. Justin, you want to do a quick intro?

Justin Cramer
Sure. For those of you who don’t know me, I’m one of the co-founders of ProShip. I’ve been doing this for about 25 years, and in that duration, I’ve had the privilege of being able to work on some systems that span four continents, some systems that ship over 3 million parcels per day, and all of the systems from zero to that 3 million and beyond. So I’m very happy to be here today, very happy to be able to lend my expertise.

Katy Schroedl
Awesome. And Manish, let’s hear from you.

Manish Chowdhary
Well, thank you, Katy. Thank you, Justin, for having me. My name is Manish Chowdhary. I’m the founder and CEO of Cahoot. Cahoot is the world’s first peer-to-peer order fulfillment network. We launched the service in 2018 and we pioneered the peer-to-peer collaboration between brands and all the service providers that serve them. And I’m super excited to bring to you the extension of that technology, peer-to-peer returns in today’s podcast.

Katy Schroedl
Awesome. So thanks, gentlemen, for joining me today. And before we get started, we’ve got a cocktail. We’re gonna raise a quick glass. This episode’s special drink is the Pure Effect Return Old Fashioned. So, cheers, gentlemen. I know we’re having a mixture of cocktails today, but the original plan was this one had a little kick of coffee. Just like how our discussion explores traditional return methods and how they’re being revitalized by this fresh, forward-thinking concept of peer-to-peer networks. So, creating a truly peer-effect return experience. So let’s get started. Get right into it, Manish. Let’s start with the basics. What is the current state of returns? What are the pain points that we’re hearing from retailers and consumers, along with those traditional kinds of return processes?

Manish Chowdhary
That’s a great question, Katy. Returns, the way we see it, has been broken for a while. You know, just imagine yourself sending a return back to a brand or retailer. Brands or retailers have been forced in the age of Amazon to provide free and no-questions-asked returns, which is a huge drain on brands’ profits. We’re talking about, in certain verticals and categories like apparel, 20 to 40% returns is not uncommon. However, the brands have to bear the cost of reverse logistics, shipping the item back to the brand. So brands pay for shipping twice, once to send the item back to the consumer and then have it returned back at their own expense. Second, the brands have the burden of inspecting and restocking the items. And if the brand has their act together and they treat returns with priority, this can happen. Especially, the window to resell items is limited. When you think about apparel, let’s think about swimsuits or winter gear. Whether it’s sweaters, I’m not buying sweaters anymore in New York, that window’s over. So you can imagine this is a massive, massive problem. This is a $100 billion problem, and it is totally broken. So happy to dive in, but that’s the state of current returns. And finally, all the solutions that are available to the brands and consumers today only service the customer or the consumer. It just makes returns faster and easier at the expense of the brand. So, without any questions asked, brands and retailers are losing money. In an era of high inflation tariffs, when the profits are record low, we just cannot ignore 20 to 40% of the items that are being returned, and that’s a direct hit on the brand’s profit margins.

Katy Schroedl
Yeah. And Justin, from your perspective, how are these pain points kind of impacting the industry as a whole?

Justin Cramer
Well, as we look at the slow and inevitable push from all brick and mortar that we had 30 years ago to now, low 20s for ecommerce nowadays, that march is going to continue to go up. And whereas there is basically zero cost to a retailer to return in-store, right? It’s literally, it can be inspected by the person that’s there at the counter, and it can either be thrown into the recycle bin or into directly into the restock bin. Right. The incremental cost is so small. That is not the case with ecommerce. Right. We have the time off the shelf. We have whether or not it’s going to go out of season. We also have two legs of shipping associated with that. So as we talk to retailers, returns is one of the last frontiers, if you will, where something needs to be done to be able to get logistics costs under control. We’ve already worked at the forward logistics on making sure that we can meet an expectation. And we start all the way up in the shopping cart to set that expectation. So it’s very clear so that as it goes through picking, packing, sourcing, all of those things, we can meet that expectation at the smallest cost possible and really compete with our brick-and-mortar resources. But as soon as it leaves our warehouse, as soon as it leaves that ship from store location, all of a sudden it’s back to the wild, wild west. You might as well see tumbleweeds and the cattle skull sitting there because that’s what’s going to happen to your profit margin.

Katy Schroedl
And with these kinds of challenges in mind, we’ve heard rumblings from Cahoot of a unique solution, this peer-to-peer returns. Manish, can you explain what that is and then how it kind of addresses the issues that we’ve seen?

Manish Chowdhary
Yes, of course. Thank you, Katy and Justin, for that background. Well, the good news is the new frontier has arrived in the form of Cahoot peer-to-peer returns. The concept and the solution is very simple. Say I’ll use an illustration, I’ll use an example to bring it home. And just in your minds, folks, visualize the map of the U.S., and you want to stick around because this is unlike anything you’ve seen or heard before. So let’s take an example of a jeans, a women’s apparel, you know, one and a half pound ladies’ jeans. And Amy in Dallas, Amy in Los Angeles, California, wants to return this item for whatever reason, let’s say she didn’t like the item or for whatever reason, she has to ship the item back to the brand’s warehouse in Dallas, Texas. And it’s going to cost about $8.50 if the brand has optimized reverse shipping. And I’ve actually seen real-life examples where the brand is shipping via ground but asking the consumer to return via 2-day air, paying twice as much. So this is not unheard of, this is not unusual. This is all coming from the data. So now Amy in Los Angeles returning the item back to the warehouse. Now the warehouse has to receive the package, inspect the items, perhaps put it in new packaging if the tags were broken or the package was unsealed, and then put it back on the shelf for it to be picked and packed again. And let’s take an example that they do do that. Then Amy, who happens to be in Casper, Wyoming, buys the same identical item a week later. And then somebody has to go pick and pack the item and ship it to Amy in Casper, Wyoming, from Dallas again, $8.50 in shipping cost, which is again borne by the brand, and about $6.50. If you add up all the costs in the warehouse of receiving, opening the box, inspecting, refurbishing or whatever else you need to do, you’re talking about a significant expense and potentially the window to resell the item is limited. That’s if you’re lucky and you sell it to Amy in Casper, Wyoming. Otherwise, that inventory gets stuck, it loses value exponentially. Whereas with peer-to-peer, what Cahoot has devised is enabling Amy to ship the item directly to Sarah. So, from Los Angeles, California, the item will go directly to Amy in Casper, Wyoming, without going through the warehouse hop. And that shaves one entire leg of shipping, that shaves the entire burden of inspection, refurbishing, and putting the item back on the shelf, and picking and packing. And that’s the ingenious solution that Cahoot brings. So what’s the economic benefit? 64% less cost, 4 times faster returns processing, and more than double the carbon emission footprint savings. So this is a game changer for brands and retailers, especially the ones that have significant returns.

Katy Schroedl
Thanks, guys. Justin, this is pretty innovative compared to what we’ve seen currently available in the market. What are your initial thoughts, and why do you feel like this is gaining traction now?

Justin Cramer
So first, let’s look at what’s in the market right now, and we’ll just call them post-purchase care components. Right. Because they really, you know, they give you a portal that looks kind of like your website, allows you to pull a label. But it’s exactly what Manish said. Right. It’s going back to, it’s either going to be thrown away. Okay. Which is, that’s definitely not green. And I mean that, I mean that from a financial and an environmental method, right? It’s going to be thrown away, or it’s going to go all the way back to some facility to be sorted, put back on a shelf in a different SKU. Right. Because now it’s used, can’t be new. Right. So we got all of these other things that we now have to worry about even more. Carrying costs, all of that. And the only part that’s being taken care of is that it’s convenient for you or me to do. Okay. In no way, shape, or form does it take, does it actually help the retailer to do a better job with their inventory, to do a better job with their logistics spend? Okay, so this is a large piece that’s missing in the logistics world right now is a way to tackle that spend and a way to where it makes sense. Reward customers that still are going to bracket. If you’re in retail, you know what bracketing is, okay? That are still going to bracket. They’re never going to take those tags off the initial item. They’re going to try them on once. Go. No, this doesn’t quite fit the way I want it to. This size fits perfectly. Okay. These two are going back. Well, why go back when they can go forward? Okay. We already know that there’s a lot of technology out there right now to assist those return folks. As a matter of fact, there’s entire companies built around taking returns and determining whether or not they just go straight in the recycle bin, the goodwill bin, or whether or not they can be restocked as like new or slightly used. Right. So we already have AI technology that can help that part. So if you can put all these parts together, you can create a, create a new mode of shopping. Even where somebody basically wants to shop something that is semi-second-hand in their region of the country or globe. Right. Especially if we think about this globally. Right.

Katy Schroedl
Shopping someone else’s closet.

Justin Cramer
There we go. I mean, Plato’s closet. There’s a reason it exists.

Katy Schroedl
Yeah. Manish, trust is a huge factor here. What are the essential elements that need to be in place to create a really trustworthy and reliable peer-to-peer experience?

Manish Chowdhary
Katy, you’re 100% right. I mean, we pioneered, Cahoot, pioneered the peer-to-peer fulfillment when nobody thought that was possible. And Cahoot powers some of the most demanding fulfillment programs in the world that the traditional players would not touch, such as Amazon Seller Fulfill Prime. So we’ve already proven that through the use of clever technology and unique business processes, we can establish trust. And in the same exact way, trust is built into every return that Cahoot powers. Trust is the foundation of Cahoot’s peer-to-peer returns. Every return goes through AI-powered screening to verify quality. And both the sender and the next buyer, Amy and Sarah, rate each other just like they do on Airbnb, Uber, or eBay. This isn’t just about returns. Cahoot is building a trusted network where both brands and consumers benefit from safe and seamless transactions. And the more brands join, the stronger the network becomes. And in fact, Cahoot can weed out fraudulent returns far better and far more economically than the traditional solutions. And as Justin mentioned, the solutions that are available today to every brand, every solution out there, it’s only making things worse economically for the brand. You’re sleeping. And returns are piling up, and it’s just making things significantly easier. I’ll use an offline example. Let’s say you walk into Staples and buy a 99-cent paperclip, and you come back home and for whatever reason, you decide you don’t want that item anymore. You cannot call Staples and say, hey, I bought this $0.99 paperclip. Could you just, how do I process the return? They’ll say, hey, come back to the store. Only then return the item. Only then will you get 99 cents back. But. So why is it any different in the offline world? There’s so much chatter about omnichannel. But no, online returns do not mirror omnichannel. But because it’s broken, and that’s exactly what Cahoot has pioneered, that we should be treating our returns with the same care as we trade forward logistics and brands and retailers should be profiting better and not undertaking the entire burden of handling customers’ returns at no questions asked and shouldering the entire economic responsibility.

Katy Schroedl
Yeah. And Justin, what are the key benefits? I know we talked about trust, you talked a little bit about the economical benefits. What else do you see that this peer-to-peer returns model offers to retailers and customers?

Justin Cramer
Centralization. And this is one of those things where as I continue to shift more and more of my own shopping online, as I move around the country and do all these other things, I find myself leveraging products like Shop and like Shop Runner and all these others that help unify my data entry into small e-tailers, which means I’ve got a nice digital footprint. Which means if I’ve ever done a return and it happens to be through, it happens to be through one of these sites that Manish is powering, well then I’ve got a trail of trust, right? I don’t have to build trust at every single e-tail. I can carry my trust with me almost like a credit score. I’m not saying that’s what it is, but because I’ve, you know, I’ve bought beverages from over here, I’ve bought, you know, travel pants from over here, I’ve done all of these other things, I’ve built a history of being a trustworthy returner. So at this point in time when I go to a brand new place, let’s say it’s an electronics place, okay, and I have to return a larger item, I’ve built a series of trust and it makes it easier for that e-tail to at that point in time to determine do I trust this guy to pass on a multi-hundred dollar item to the next consumer, maybe with a little bit of pictures and things of that nature involved. But do I trust this guy to actually move this on or am I going to have to actually bring that back in, run it through a refurb, run it through a series of tests before I send it out? Okay.

Katy Schroedl
Yeah. And I think there is. I’m not sure if we talked about this, maybe in one of our previous discussions, but there’s some kind of incentive, right, for you to do that too. Manish, can you talk a little bit about that?

Manish Chowdhary
Yeah, absolutely. And to Justin’s point, most people are good. Maybe there’s 3 to 5% abusers out there. We are basically we’ve designed a returns framework with the abusers in mind, as opposed to the 90-plus percent of the people that are and can be trusted. And as Justin said, moving returns forward, not backwards. And that is exactly what Cahoot is doing. And through the use of technology, it’s like a Visa and MasterCard were to simply operate on fraud, strictly looking at transactions from that user on one store, they would never be able to catch the fraudster. So why are we treating returns any differently? Let’s say you have a history of returns, that returns goes with you to from Cahoot Merchant A to Cahoot Merchant B to Merchant C. You don’t have to start from ground zero. And that is what the foundation of our network technology is. And that’s why we say we are all in cahoots. That’s exactly where the brand name came from. But going back to your point, Katy, as to how do we ensure, first of all, it’s a myth that most returns are, you know, the 40% of the returns are for items that are brand new. In fact, 40% of the items are in pristine condition as though, you know, nothing happened to that item at all. And you’ll be shocked to learn that. And only 20% of the items. And this is based on our data and third-party and public domain information from that have basically packaging, and the product is still great. It just might have. Somebody has ripped open the packaging. But the item itself is in great condition. It’s only the 40% of the goods that may need to be dealt by a human in the warehouse before deciding whether it can be passed on to the Amy’s of the world. Sorry, Sarahs of the world. So, yes, we have added some incentives to ensure people behave as good web citizens. You know, when I’m returning the item to a brand, I have an obligation and a responsibility of making sure that I’m not destroying the item. However, Amazon, you know, not to single them out, but they have at the expense of the seller. They let the consumer do whatever they want, however they want, and they stick the bill to the seller because it doesn’t cost Amazon any money whatsoever. So we believe that that itself is broken. And the days of free, no-questions-asked returns are going to be over very soon, if they’re not already over. Number two. Yes, we have added some incentives for this dual rating system. So imagine Uber, you take your Uber ride, you’re going to rate the driver, but the driver is also going to rate you. And so we’ve added unique cashback incentives. So when Amy’s returning the item, we’re going to ensure that Sarah gets to rate Amy’s performance as a returner. And likewise, Amy gets to rate Sarah’s performance if Sarah is being truthful and honest. And that builds an additional layer of trust because we just don’t implicitly trust, but we verify using data, pictures, technology, the customer’s lifetime transaction history, how often do they return, when do they return? So all of those enable us to make the smart choice and smart decision to ensure that the package can be confidently passed on as opposed to pass backwards to the warehouse.

Katy Schroedl
Yeah, and I know that this idea is something that you guys have been working on for some time, and you kind of alluded to it, but where do you see this evolving in the next few years? What are the next steps?

Manish Chowdhary
Yeah, we think that this is going to be the new standard for returns because the current standards are completely unsustainable from an environmental standpoint, from a financial standpoint, and just being from logistics and rising cost of inflation. And Justin can tell you the GRI gross rate increase and parcel shipping carriers. So every day, every six months, UPS’s and FedEx’s and USPS are raising cost. Everything is going up. So, in the age of AI and technology, and when we can have autonomous vehicles drive ourselves, to me, the current state of returns feels archaic. It’s completely unsustainable, and it feels irresponsible, frankly. So peer-to-peer returns again, it’s not all or nothing. Remember, 60% of the items we believe are perfectly eligible for peer-to-peer. The items that need to go back to the warehouse for any form of processing, it will and Cahoot combines the best of all to bring this new solution that can have a profound impact on retailers’ profitability.

Katy Schroedl
Yeah. And Justin, what are your thoughts on this? Is there anything else you see coming?

Justin Cramer
Well, actually, I want to look back to the past. I want to look back to 2018, 2019. All right. Where anytime I went to a trade show, two words came out. Faster, freer. Right. That’s what every single customer was expecting. That was the, was the hook of, of ecommerce. But now, when we look at it, we’re not seeing that. We’re seeing, make me a promise and stick to it. You can sell me a better promise, but stick to it. Okay. We’ve gone from that faster, freer to predictability for value. Okay. And I think that that is exactly what we’re going to start seeing at the end of this, of this retail chain, is we need to see predictability and fairness. Predictability and fairness not only to the consumer, but also to the retailer themselves. So I do see this as an inevitable change because it is one of the few areas of logistics where it’s very difficult right now to predict what your costs may be. Okay. And more importantly, it’s very difficult right now to find a way to control those costs. We have spent the entire 25 years of the past year working on various ways to control those costs. Meet a customer expectation. We actually call it enforcing the customer’s expectation. Right. But that ends as soon as that package leaves the warehouse. There’s got to be new ideas, new features. And I think this is a great one, not only for the green bottom line, but for, you know, the green in the atmosphere. That we’re actually going to move this. I mean, to me, the perfect, the perfect thing is I’m shipping from the South. It makes it to the, to the Southwest, and then it goes to the Pacific Northwest. It’s always moved further away from its original point, but with the lowest carbon footprint and the lowest overall cost to that logistics chain as possible.

Katy Schroedl
Yeah, yeah. And that’s great, Justin. And to wrap things up here, we’re going to play a quick game of this or that. I’m going to ask you guys a couple questions and have you pick your favorites. So we’ll start with just some fun ones before we get into stuff that’s more related to the topic. So, Justin, would you rather be able to live forever or travel to any place in the world instantly?

Justin Cramer
You know what? I’d live forever because I’ll get there eventually.

Katy Schroedl
How about you, Manish?

Manish Chowdhary
Well, I take the other option. If I could go any place, anywhere, instantly, I would have fulfilled my life’s outcome, and I don’t need to live forever.

Justin Cramer
Right, but then you miss the journey on the way there.

Katy Schroedl
That is true.

Katy Schroedl
All right, Manish, how about would you rather have a perfectly brewed craft IPA or 100-year-old vintage Scotch? What’s your beverage of choice?

Manish Chowdhary
Oh, wow, that’s hard, Katy, because I love both, so that is going to be a really hard one. God, can I have a little bit of both? I will never turn down a perfectly brewed IPA. I love IPAs. And Justin, it’s a very hard one. So both answers are equally right.

Katy Schroedl
Yeah, I know.

Justin Cramer
Hands down, it’s gonna be a whiskey, therefore, the scotch for me.

Katy Schroedl
All right, how about, Justin, you’re in the kitchen this time. Would you rather be able to cook any dish perfectly or be able to grow any plant?

Justin Cramer
Cook dish perfectly. Plants are there for oxygen.

Katy Schroedl
Yes. How about you, Manish, are you cooking or are you planting?

Manish Chowdhary
I think I want to plant and save the world because right now we are teetering at the end, and if we don’t reduce carbon emission, and that was part of the purpose behind Cahoot is to really create something that will be endearing and enduring. And I feel that our world is from a climate perspective. We’ve taken a backseat, we’ve gone backwards. So while Justin is enjoying his scotch, I want to make sure that he can live forever as long as the world is there for him to live in.

Katy Schroedl
Yes.

Katy Schroedl
All right, we’ll jump to some topic ones. So, Manish, would you rather integrate returns more tightly with resale marketplaces or keep them separate? What do you think about that?

Manish Chowdhary
I think we believe in open network. We believe in flexibility. We believe in more choices. So just to clarify, returns are not secondhand goods, folks. Returns have nothing. You may be getting an item from a brand, from a retailer that was previously returned by somebody. So, please do not confuse returns. They are perfectly good. As I said, 40% of the items are untouched. But nonetheless, making products available at more places where people shop, where the shoppers are, I’m all for that.

Katy Schroedl
Yeah.

Katy Schroedl
Justin, I assume you’d agree with this one, right?

Justin Cramer
I’m going to explain it a little bit differently, but absolutely, in the end, 100%. Agreed. Now, I believe in, and we’re going to go back to food here. I believe in the concept of deconstruction and isolation. Okay. Separation of concerns is a very core concept to software engineering. And so often, you have to break down the parts to figure out how they should go together. Because right now we have this big monolithic crappy part that says the retailer pays for everything. It always comes back or gets thrown away. Okay, so I think we need to break the little, the pieces apart, figure out where the value is and where the loss is in each of the pieces, whether it be from, from the actual shipping part, the inspection, the qualification, you know, so on and so forth. Break them apart and then bring more of it back together in a way that makes sense. So I’m all about bringing it back together, but you kind of got to deconstruct a little bit first.

Katy Schroedl
All right, and would you rather, here’s a good one, invest in more fraud prevention or focus on making those returns completely frictionless? Justin, I’ll go to you first.

Justin Cramer
Well, right now they’re frictionless to the consumer as it is relatively right. I keep it or I throw it back in a box that you provided the label for. So if given those two, I would pick, I would break trust. But in reality, the whole system is an open secret that is broken, and we just live with it. So I would go with the third one. I would try to fix the process.

Katy Schroedl
Yeah. How about you, Manish?

Manish Chowdhary
Well, for us, trust and safety are non-negotiable. So it’s, I don’t think it’s either or, you know, it’s like saying, hey, do you want an easier online banking or do you want to make sure your funds are secure? You know, I don’t think it’s a choice. In fact, I believe that a great system and technology offers both. And the point. Friction. Friction is. It’s not about friction. It’s about responsibility. You know, I think we’ve lost the art of responsibility. As a consumer, you know, when I buy something from a store, I expect to retain original packaging. I expect to not rip things off if I want to return it for full money. And, you know, restocking fees if it all applies. I think, you know, just like the sales tax, you know, in the early days of ecommerce and Internet, just to incentivize people to do more shopping online, there was sales tax incentives. And I think it’s the same thing with online returns. And I think it has gone too far. So for us, trust is non-negotiable, but we built a system that is equally frictionless. So, from a Cahoot solution standpoint, it is literally no difference in how Amy would return the item, and she’ll still put it in a bag or in a box and apply a shipping label. It’s as simple as that. It does not make things. It doesn’t add a layer of friction. And if anything, Amy gets an extra incentive for doing the right thing, which she would not get through the traditional channels.

Justin Cramer
Manish, I want to add to that. You mentioned the responsibility, and I’m pretty sure I’m the only person on my block that has a closet full of dated boxes. Okay. Why? Because anytime I buy a piece of electronics, I take its box, I write its date on it, right? And I keep it in that closet until at least 90 days past that initial warranty. Because if it breaks in the first 90 days, I can usually send it back to whoever I purchase it from. Beyond that, I’m going to have to send it back to the manufacturer. Now, that being said, how many items have I sent back in my 50 some odd years of life? Well, we can count them on one hand, but I still keep 90 days of that original packaging because if I have to, it’s the responsible thing to do. And it ensures that no additional damage comes to that goods on its way back to whether it be the original reseller or the manufacturer.

Katy Schroedl
So we’ve covered a lot of ground today, exploring the ins and outs of peer-to-peer returns and its potential to revolutionize the ecommerce landscape. To wrap things up, I’ll give you guys one more chance to share your final thoughts. So, Manish, we’ll start with you. What’s the key takeaway that you want everyone listening to?

Manish Chowdhary
Remember, Katy, I think this is a gift for brands and retailers in 2025 when they’re battling with tariffs, they’re battling with inflation, they’re battling with high freight cost, high shipping cost, high advertising cost. This is the one lever that they have that they can pull and impact their bottom line. So I invite brands and retailers to come check this out. Like any new technology, new solution, there might be some skeptics, and that’s okay. Just like Uber and Airbnb when they came out the very first time. So this is one solution that no brand, no retailer can afford to ignore. And you can get a lead over your competition. You can get an edge today that you cannot get with any other means. So come to Cahoot AI, fill out the Contact Us form and talk to us, and see if this is for you.

Katy Schroedl
Yeah, yeah, those early adopters get in there early. Justin, as we look ahead, what’s your final perspective on the future returns and the role of peer-to-peer here?

Justin Cramer
So, in my 25 years in this industry, change has been inconsistent, and the one thing that has changed has been the rate of change. We used to see interesting new technologies every five years for the first little while. Now we’re seeing new things come out on a near-annual basis, and new challenges come out on what seems like a monthly basis. Manish talked about tariffs, right? We see carriers starting to drop out of the business. We see combinations happening, we see stalwarts that we always thought would never be shaken, and well, let’s face it, people are running away from some of the big three carriers like, like a building on fire, right? We are seeing combinations of carriers that are able to replace the national carriers. Change is consistent. Really. It comes down to if you’re a retailer, are you going to lose money and wait for it all to suss out? Are you going to look at your data, prioritize your needs, and find the solutions that will hit those needs?

Katy Schroedl
Yeah, and right now, I mean, it’s March right now, so we’re still kind of in that post-holiday returns period, barely catching the end of it. But it is the time to so look ahead. It’s never too early to start prepping for peak to have that in place, you know, for when next peak season hits. So, thank you both for sharing your expertise and your insights. It’s been a great discussion, and to our listeners, we hope that you’ve gained a deeper understanding of peer-to-peer returns and its potential for the future. Here, as always, you can find more information at ProShip.com, check us out on LinkedIn. Until then, happy shipping, happy sipping, and cheers.

Justin Cramer
Cheers.

Katy Schroedl
Cheers guys.