In This Article
- Returns hit 743 billion dollars in 2024 and could hit 918M this year.
- Fraud now costs ecommerce brands over 100 billion annually
- Wardrobing, the practice of purchasing, using, and then returning items, makes up nearly 70 percent of fraudulent returns
- Brands are turning to platforms like Treet and Arrive to recover value on non-new items
- Smart fulfillment is key to minimizing losses and improving CX
Returns are no longer a footnote in your CX strategy.
They’re a full-blown margin leak, a customer loyalty risk, and a climate liability — all rolled into one expensive, unavoidable reality.
In 2025, returns are surging. Costs are spiking. Fraud is booming. And still, most brands treat them like an afterthought.
At Capacity, we work with brands that know better. Whether you’re losing sleep over wardrobing, battling seasonal return abuse, or drowning in unsellable inventory, it’s time to stop playing defense and start getting strategic.
Because this isn’t a minor inconvenience anymore — it’s a monster.
1. Returns Are Exploding
In 2024, U.S. retailers faced $890 billion in merchandise returns, accounting for a staggering 16.9% of total U.S. retail sales (NRF, 2024). In ecommerce, return rates average 24.5%. For apparel and footwear, they often climb above 40%.
Let that sink in: nearly one in four ecommerce purchases comes back. Every single one eats margin, ties up inventory, and puts pressure on your team—and your customers.
This isn’t just a logistics issue. It’s a full-scale profitability crisis.
2. Returns Fraud Is Now a Line Item
Returns abuse isn’t rare. It’s routine. Fraud is expected to cost brands over $100 billion this year.
Bracketing—where consumers order multiple sizes or styles with the intent to return most—remains widespread. According to NRF and Happy Returns, 51% of Gen Z say they bracket regularly.
Even more concerning: 60% have returned items after removing the tags, and 50% admit to returning items after wearing them. That behavior, known as wardrobing, now makes up nearly 70% of all fraudulent returns. Thirty-seven percent of consumers admit to doing it. And that number is still climbing.
This isn’t fringe behavior. It’s mainstream.
Other tactics include empty box scams, label tampering, and coordinated return rings that exploit generous policies and manual systems.
Fraud and abuse aren’t just irritating—they’re expensive. The National Retail Federation estimates that $101 billion in returns were fraudulent in 2023. That’s more than double the loss from 2020.
What leading brands are doing
- Tiered return policies based on customer behavior
Brands are segmenting return rules based on trustworthiness, not treating every shopper the same - AI powered fraud detection and pattern recognition
These systems flag unusual behavior before fraud happens, not after - Real time flagging before the item ever ships
Preventing losses by identifying abuse early, rather than reacting late
If your current policy treats loyalists and abusers the same, you are burning budget.
3. Returns Cost More Than You Think
The average return costs 20 dollars to process. That does not include lost inventory value, markdowns, or time out of stock.
Where the cost comes from
- Inbound shipping, often higher than outbound
- Labor for inspection, repackaging, and restocking
- Materials like boxes, tape, sleeves, seals
- Admin tools, platforms, and customer support
- Inventory lag, depreciation, and liquidation
- Unsellable items that go straight to landfill
Returns often cost more than 30 percent of the product’s original price*
* Based on industry data from Loop Returns, ParcelIndustry dot com, and Forbes
4. Customer Expectations Are Climbing Fast
Seventy percent of shoppers review a brand’s return policy before buying. A full 76% of consumers say free returns are a key deciding factor in where they shop, and 67% would abandon a brand after a poor returns experience. For younger consumers, a flexible and seamless return experience is non-negotiable.
Free returns. Clear instructions. Fast refunds. That is the baseline.
But here is the twist. You can protect your brand without giving everything away. Smarter return options do not have to mean looser policies.
5. Circular Recovery Is Getting Real
Returned does not have to mean lost. Brands are recovering value with strategies that protect margin and reduce waste. These are not vanity projects. They are margin savers.
Examples
- Refurb and resell programs
Slightly used or open box items are sold through outlet or recommerce channels at a controlled discount - Component harvesting for parts
Electronics and beauty tools can be dismantled and used to support repairs, kits, or bundles - Donation programs with ESG reporting
Unsellable items can still create impact when paired with nonprofit partnerships and sustainability goals - Tiered resale marketplaces
Brands are using platforms like Arrive to create branded resale storefronts that feel native to the customer
Through our partnership with Arrive, Capacity now supports fully branded recommerce programs that help brands resell non-new returns, excess, and damaged inventory for up to 70 percent of MSRP. There is no third party label. Customers stay within your brand experience.
Fifty percent of shoppers who buy from resale channels are net new. Thirty five percent go on to buy both new and non-new products. Recommerce is not just about sustainability. It is about smart acquisition and smart margin recovery.
With the right partners, circular recovery is no longer a tradeoff. It is a strategy.
6. Returns Intelligence Is a Competitive Edge
Returns used to be a black box. Not anymore.
At Capacity, we work with Loop, Two Boxes, Happy Returns, and Aftership to bring returns visibility into your fulfillment workflow. That means brands can now prioritize, process, and monetize returns in real time.
What that unlocks
- End to end visibility on why returns happen and what happens next
- Digitized SOPs that streamline processing and reduce training time
- Predictive insight into what inventory is likely to return and when
- Tools to identify fraud patterns and customer abuse early
- Reliable return to stock rates that help you order smarter
With platforms like Two Boxes inside our warehouses, we are cutting returns processing times in half for some apparel brands. That means faster restocks, lower costs, and less waste.
Returns are no longer just about logistics. They are about decision making. And we are building the infrastructure to make those decisions easier and more profitable.
7. Smart Returns Begin with Smart Fulfillment
At Capacity, we help high growth brands manage returns the same way we handle fulfillment. With precision, flexibility, and visibility.
What that looks like
- Capturing the right data up front
We help you log condition, reason code, and routing preferences at the point of return request so you do not fly blind - Automating routing and rules
Returns are routed to the right node or partner based on value, condition, and resale potential - Connecting with your returns management platform
Our tech team supports your systems, not the other way around - Reporting on recovered inventory and secondary strategies
We give you visibility into what was salvaged, what was scrapped, and what was monetized
This is not just plug and play. This is strategic fulfillment built around your brand’s goals. And it is already working at scale for brands across beauty, wellness, fashion, and more.
Ready to stop feeding the returns monster?
Capacity helps brands turn returns from margin killers into brand builders.
Smarter policies. Faster recovery. Better experiences.