Views: 21
Summary – Facing the surge of e-commerce returns (over CHF 20 per unit, logistics bottlenecks, a fivefold carbon footprint, eroded margins), the reverse cycle drains cash flow, IT, customer service and sustainability efforts. Siloed processes and isolated tools generate hidden costs, record delays, poor inventory management and lost loyalty. Solution: establish cross-functional governance, a central data bus and a modular microservices platform interoperable with ERP/WMS, backed by a comprehensive audit, journey redesign and unified oversight to transform returns into a sustainable, profitable driver.
The constant rise in e-commerce returns now weighs heavily on margins, overloads warehouses, and increases retailers’ carbon footprint. With an average cost per return of around CHF 20 and packaging waste up to five times greater than for an in-store purchase, the issue quickly becomes a strategic challenge.
For IT leaders, transformation managers, and executive teams, it’s no longer a matter of passively absorbing a cost center but of transforming this reverse cycle into a lever for economic performance and sustainability. A systemic, coordinated, data-driven approach is essential to reimagine returns as an optimized process—from product recommendation to reverse logistics.
Logistical and Environmental Challenges
Return volumes have exploded, straining logistics capacity and customer service. Direct and hidden costs are overwhelming budgets and eroding margins.
Surge in Return Volumes and Logistical Burden
With the democratization of online shopping and free returns, the number of packages to process in reverse has doubled for some retailers in under two years. Warehouses—often sized for initial distribution—struggle to absorb this growing flow, creating bottlenecks and delaying restocking for subsequent orders.
Each returned item requires a quality-control cycle, restocking, or refurbishment. These tasks tie up staff, storage space, and processes that weren’t part of the original logistics design. The lack of advanced automation, compounded by poor coordination between warehouses and e-commerce platforms, only worsens the situation.
Beyond simple sorting, returns trigger complex operations such as cleaning, repackaging, relabeling, and sometimes destruction. These steps add weight both to reverse transportation costs and to financial reporting, as every movement hides costs in ill-suited ERP systems.
Direct and Indirect Costs of a Siloed Process
The average cost of a return often exceeds CHF 20, including shipping, handling, and administrative fees. But that figure doesn’t account for stockouts, depreciation during storage, or potential discounts offered to clear unsold inventory.
In a siloed scenario, marketing doesn’t see the impact of free-returns campaigns, finance struggles to manage the associated budget, and IT faces surging return-management requests without the ability to reprioritize. Management becomes opaque, and no one holds a comprehensive view of the reverse cycle.
This fragmentation hits cash flow and conversion rates directly: customers who experience poorly managed returns place fewer future orders, eroding loyalty and increasing churn, which is costly to recapture.
Environmental Impact and CSR Pressure
Beyond budgetary concerns, multiplying returns produces vast amounts of packaging waste and additional transport legs that can quintuple the carbon footprint of an in-store purchase. Retailers are now judged on their CSR performance, with investors and consumers scrutinizing these metrics.
To address this, some brands have conducted internal environmental audits to compare outgoing versus incoming recycled cardboard tonnage. They discovered most returned packaging wasn’t reusable due to inadequate refurbishment processes and ended up shredded—undermining their emissions-reduction goals.
For example, a fashion retailer found nearly 60% of its returns were deemed non-recyclable for lack of proper sorting. This highlighted the urgent need for a systemic collection, sorting, and refurbishment process to meet CSR commitments and minimize site pollution.
Limitations of Point Solutions
Standard return-management platforms offer basic features but remain siloed and disconnected from cross-functional concerns. Without ecosystem integration, gains are limited to superficial KPIs.
Limited Features and an IT Silo
White-label return tools let customers generate return labels but often don’t integrate stock management, packaging traceability, or predictive analysis of return reasons. They usually follow a linear workflow, ignoring multiple variations (extended warranties, refurbishment, donations).
In many cases, the solution is deployed as SaaS without real connectors to local ERPs or warehouse management systems (WMS). The returns service remains an isolated application, offering no real-time feedback to business teams that continue running marketing campaigns without precise data on success rates or regional disparities.
The absence of an extensible API for real-time reverse-logistics data fragments the information chain. Each department keeps its own dashboards and metrics, stifling any initiative for global optimization and preventing the unified view needed to allocate budget and resources effectively.
Lack of Contextual Personalization
Standard solutions offer basic configurations (return windows, statutory conditions, shipping rates) but don’t account for assortment complexity, dynamic pricing policies, or third-party locations (drop-off points, stores) unique to each retailer.
A bulky, fragile, or seasonal product may require specific handling that no point solution natively anticipates. Exceptions get handled manually, generating support tickets and ad-hoc operations that weigh down responsiveness and final consumer satisfaction.
Without a contextual rules engine, return conditions tighten or loosen arbitrarily, causing confusion and frustration. Retailers lose sight of their sustainability and profit goals, replaced by low-level operational logic disconnected from business priorities.
No Cross-Functional Cycle Visibility
A point tool doesn’t connect the purchase journey, reverse logistics, finance, and CSR. It cannot correlate customer feedback with logistics costs or anticipate future returns through behavioral analysis and product recommendation.
The goal isn’t merely to make the return widget more elegant; it’s to reengineer the reverse cycle as a full-fledged component of the value chain. Without a shared orchestrator, each department reinvents its processes, wasting resources and time.
For example, one retailer deployed a standard tool for bulk returns, but the lack of integration between the platform and financial system prevented automatic recalculation of per-unit costs. As a result, over 10% of returns were billed at a loss in one quarter, proving a point solution falls short for a cross-functional need.
Edana: strategic digital partner in Switzerland
We support companies and organizations in their digital transformation
An Integrated Ecosystem Approach
Return management must become a collaborative process co-managed by logistics, marketing, IT, finance, and CSR. Each department contributes essential data for global optimization. Only an integrated ecosystem ensures effective governance.
Aligned Objectives and Cross-Functional Governance
A dedicated governance body—bringing together CIOs, supply chain leads, marketing, finance, and CSR—defines shared KPIs: cost per return, packaging reuse rate, post-return satisfaction, and carbon footprint. This body steers prioritization and ensures consistency in return policies.
IT becomes an enabler by implementing a centralized data bus where each event (return request, quality approval, restocking) is logged and shared. Business teams access a unified dashboard to monitor workflows, identify savings opportunities, and adjust automation rules in real time.
Unified Data Streams and a Modular Platform
Orchestrating the reverse cycle requires an agile, open-source, modular technical foundation interoperable with existing ERP and WMS. A micro-services architecture simplifies adding features: return-reason scoring, refurbishment-potential prediction, or automated refusal handling.
Each micro-service communicates via standardized APIs, ensuring full traceability of operations and smooth collaboration between teams. This approach avoids vendor lock-in, supports A/B testing of new processes, and scales without major overhauls.
Concrete example: an electronics platform deployed a micro-services orchestrator for returns. Within weeks, it added an automatic sorting module and an open-source rules engine for routing to workshops or recycling centers—demonstrating how modularity enables continuous system evolution.
Key Transformation Phases
To shift from cost center to strategic lever, three key phases are needed: a global assessment, return-journey redesign, and ecosystem platform implementation. Each phase builds on the last for sustainable results.
Cross-Functional Assessment and Global Audit
The first phase is a comprehensive audit of existing processes—from reverse logistics flows to information systems and packaging traceability. Teams conduct stakeholder interviews, analyze financial reports, and examine operational data to pinpoint bottlenecks.
This cross-functional assessment reveals friction points: untracked returns, restocking delays, lack of real-cost monitoring, and missing CSR indicators. It also uncovers duplicate operations across platforms and warehouses previously thought independent.
An example in French-speaking Switzerland involved a food retailer discovering that 30% of returns were handled manually across three separate warehouses without a single portal. This finding validated the urgency of a central orchestrator and shared KPIs for all sites.
Redesigning the Return Journey
With the assessment complete, map each existing return flow—from customer request to final disposition (restock, refurbishment, donation, destruction). The goal is to simplify, automate repetitive tasks, and introduce contextual rules by product type.
This phase engages UX leads, supply chain, quality, and CSR to co-create seamless user scenarios, minimizing unnecessary handling and maximizing reuse rates. Workflows are modeled and simulated before deployment to ensure no disruptions and controlled costs.
Building an Integrated System
The final phase implements the ecosystem platform: micro-services, data bus, open-source rules engine, and unified dashboard. IT teams work in agile, test each component under real conditions, and refine routing logic based on pilot feedback.
Modularity guarantees the future addition of use cases (cross-border returns, packaging consignment, refurbishment partnerships). Each feature relies on a secure, scalable architecture free from vendor lock-in and adherent to DevSecOps best practices.
An FMCG example showed this model’s robustness: a home-appliance manufacturer integrated return data continuously into its platform. In six months, it optimized reverse processes, cut external sorting center throughput by 40%, and tripled the reuse rate of spare parts.
Achieving Sustainable, Profitable E-commerce Returns
Redefining the return cycle as a high-value process significantly reduces logistics costs, enhances customer experience, and meets CSR objectives. With a global assessment, journey redesign, and a modular ecosystem in place, companies turn an expense into a competitive advantage.
Whether you’re planning a return-process overhaul or ready to adopt an ecosystem-driven approach, our experts can support you at every stage. From strategy to technical deployments, we help you combine performance, ROI, and sustainability—without vendor lock-in.
