Australian ecommerce hit a record $69 billion last year — but with an average return rate of 16.9% in 2024, the industry faces a costly challenge. Free returns, once a competitive must-have, are now financially unsustainable. Even global giants like ASOS have cut back free returns and restricted habitual returners.
The good news? Returns don’t have to drain profits. Smarter reverse logistics allows you to cut costs, recover value and transform your returns into a competitive edge.
In this guide, we’ll explore the ins and outs of reverse logistics, key pricing drivers and practical strategies to optimise e-commerce shipping, from first mile to last.
What actually is reverse logistics? Isn’t it the same as standard returns management?
No, but it’s understandable why you might think that.
Reverse logistics encompasses the entire process of moving goods from the customer back through your supply chain, not just accepting returns. It includes inspection, refurbishment, restocking, recycling or controlled disposal.
Standard returns management often focuses solely on authorising and receiving returned items. Optimise your reverse logistics and you’re able to lower expenses, maximise the resale potential of returns and keep your customers happy.
Why Returns Are So Expensive for Retailers
In 2018, nearly half of retailers offered free returns; today, just 14% still do. Yet customers haven’t become less demanding. Sixty-five per cent of Australian shoppers still expect “friction-free” returns.
Rising labour, fuel and shipping costs mean every return now eats into profit:
- Shipping costs
Free returns surged during the pandemic, but the cost curve caught up. Today, return shipping is one of the biggest drains on margin. Australia Post reports businesses charging 30% more for return shipping year-on-year.
- Handling and labour
Processing each return costs between $7 and $11, covering collection, sorting, inspection and repackaging. Every touchpoint adds time (and cost!) especially when logistics networks aren’t automated or integrated.
- Restocking and resale losses
Returned goods don’t always make it back to the shelf. Damaged or unsellable items often end up written off or even sent to landfill — with up to 30% of returned clothing discarded. Each delay or disposal represents lost revenue and rising waste.
The Reverse Logistics Process
Reverse logistics is everything that happens after a customer clicks “return.” The process looks simple, but each step adds cost and complexity:
- Return initiated – The customer requests a return online or in-store.
- Collection & transport – Items are picked up, consolidated and sent to a warehouse or returns centre.
- Inspection & sorting – Products are checked for condition, authenticity and resale potential.
- Restock or refurbish – Saleable items go back into inventory; others are repaired or repackaged.
- Disposal or recycling – Unsellable stock is handled sustainably (or, in inefficient systems, sent to landfill).
How Efficient Reverse Logistics Reduces Costs
When you consider that retailers who re-list returned stock within 48 hours often recover significant margins, it means that improving speed and structure make all the difference.
Here’s how smart reverse logistics turn loss into recovery:
- Automation reduces manual handling and speeds up approvals.
- Integrated systems link returns directly to inventory, getting stock back online faster.
- Use data insights to reveal patterns — repeat returners, sizing issues or damaged packaging — so you can fix problems at the source.
- Incentivised options that turn refunds into future sales, improving cash flow and retention.
For example, the Byron Bay-based sustainable brand Afends provides free returns when shoppers opt for a store credit rather than a refund. Similarly, some retailers provide free returns when customers drop off online orders at a physical store.
Best Practices for eCommerce Returns Management
| What to do | Why? |
| Keep return policies clear and visible Use real-time tracking for customer transparency. | → Clarity reduces confusion and frustration. |
| Analyse return reasons | → Regularly refine sourcing and sizing. Find tools, like sizing suggestions, that support the customer experience. |
| Offer different types of returns — free in-store, paid postal (if you can) | → Balance cost and convenience. Show your customers that you’re flexible and they’ll appreciate it. |
| Integrate sustainability | → Repair or repurpose unsellable items. |
How AMS Helps Retailers Optimise Returns & Reverse Logistics
At AMS eGroup, we simplify returns through integrated fulfilment, warehousing and reverse logistics. Our connected network means faster inspections, smarter routing and real-time visibility — from return initiation to restock.
By combining logistics expertise with data-driven optimisation, AMS helps you cut costs, recover value and maintain customer trust, without sacrificing efficiency or experience.
Take control of your returns – see AMS eGroup in action today.
FAQs:
What best practices improve returns fulfilment without eating into margins?
Segment returns by product type, condition and reason for return. You should also find ways to automate inspections and restocking, and consolidate low-value items for bulk processing. This reduces labour and transport costs while ensuring high-value or fragile items are handled appropriately, preserving both margins and operational efficiency.
How can I leverage ecommerce returns management to protect cash flow?
Effective returns management combines visibility, automation and data-driven decisions. Track return trends, identify frequent issues and reroute items to resale, refurbishment or disposal channels efficiently. This strategic oversight ensures refunds are processed quickly, reduces overstock and safeguards your cash flow without sacrificing customer satisfaction.
Are there ways to integrate returns into existing supply chain software?
Yes. Modern 3PL or logistics software can handle inbound returns, automate restocking and sync with warehouse inventory. Integration allows full visibility of stock movements, faster processing and more accurate reporting, letting you scale returns handling without adding manual overhead or errors.
