The Return on Returns: Turning Reverse Logistics Into a Competitive Advantage

Karla Kirby (0:08)

Hello, and welcome to Mailin It!, the official podcast of the United States Postal Service. I'm Karla Kirby.

Jeff Marino (0:15)

And I'm Jeff Marino. Karla, you know, if you shopped online in the last few years, you're aware that free returns are kind of an expectation now.

Karla Kirby (0:25)

They absolutely are. But what a lot of people probably don't realize is that returns and reverse logistics are actually a huge challenge for businesses and retailers in particular.

Jeff Marino (0:39)

That's right. And they get especially challenging this time of year as we head into the holiday season. But here's the thing, though. Returns don't have to be a cost that retailers just absorb in order to compete.

With the right planning, they can be turned into a competitive advantage.

Karla Kirby (0:56)

And so, Jeff, that's why we're talking to Nagee Jackson today. Nagee is the Director of New Business Acquisition at the Postal Service, and he works with some of the nation's largest retailers to help them design return strategies that work.

Nagee, welcome to Mailin It!

Nagee Jackson (1:13)

Karla, I'm excited to be here. Returns are one of those areas that every retailer has to deal with. So when they're planning the right way, they can become much more than an operational necessity.

Jeff Marino (1:24)

Well, we're glad to have you here, Nagee. So let's start with the big picture. For someone who's listening to this podcast, who runs a business, why should they be thinking strategically about returns right now with the peak season coming up?

Nagee Jackson (1:39)

Yes, the first thing I'd say is that returns aren't just a shipping conversation. They're a customer experience conversation. So the way a business handles a return can have a direct impact on whether that customer comes back and buys again.

Every customer doesn't have the same expectation though. Someone in exchange, someone to refund, and increasingly, consumers are looking for a convenient way or free return experience. So businesses have to understand what their customers expect and then build a strategy that makes sense economically.

So that's especially important going into peak because higher sales volumes can ultimately mean higher return volume. Planning ahead gives the business an opportunity to manage those costs too.

It gives them the opportunity to protect their margin and still deliver a strong experience. The strategy is going to look different depending on what you sell, whether it's apparel, perishables, and electronics, but they create very different return considerations.

Karla Kirby (2:36)

So it's my understanding, Nagee, that some retailers take a hit on returns, meaning they lose money on that transaction. Why would any business do that?

Nagee Jackson (2:48)

Sometimes taking a hit is actually the better business decision. So you have to look at the cost of bringing the product back, the value of that product, and then whether you can realistically resell it.

For example, if there's a relatively inexpensive shirt, a retailer may determine that it's cheaper to send the customer a replacement and let them keep the original than to bring it back. So if perishables like fresh food or, for example, a cheesecake, physically returning the product may not even be an option, but if we're talking about something like a $10 commemorative coin, the return transportation cost could outweigh the value that you're recovering. So the goal isn't to force every product back. The goal is to have a deliberate policy, understand the economics behind it, and make the policy clear to the customer before they buy.

Jeff Marino (3:38)

So speaking of economics, what kind of numbers are we actually talking about? For example, how big is the returns market in reality?

Nagee Jackson (3:47)

Significant. The figures outlined show about $849.9 billion in US retail returns in 2025, and online returns are especially important. About 19.3 percent of online sales are returned, compared with roughly 5-9 percent in brick and mortar retail. So we also know that free returns matter to consumers, with 82 percent saying they're important when shopping online.

So this isn't a temporary issue that's going away. Returns are essentially a part of today's retail environment, and businesses need to treat them as a strategic part of the customer journey rather than an afterthought.

Karla Kirby (4:24)

So Nagee, when a retailer sits down with you to talk about returns, what options does the Postal Service put on the table?

Nagee Jackson (4:34)

You could look at several services, and it depends on what the customer is trying to accomplish. Priority Mail Return is the faster option, so that's generally one to three days, and including tracking. Ground Advantage is generally two to five days, also includes tracking, and is typically the more economical option.