E-commerce sales and returns have been growing exponentially, even before the pandemic’s quarantines and lockdowns forced a massive shift to online shopping. According to an NPR report, consumers returned 95% more items online in 2019 than they did just five years earlier. That makes returns a multibillion-dollar (and growing) problem for retailers. To remain competitive and reduce staggering losses, retailers must look for ways of optimizing returns at every step in the cycle from the moment a person decides to take an item back. The question is, how can retailers increase returns profits, especially at the uncharted volumes they’re facing today?

From refurbishment and secondary markets to reconciliation and tapping into AI technology, here are our top 5 tips for retailers to increase returns profits. 

1. Outsource Refurbishment

When returned items show signs of wear and tear or minor malfunctions, they lose significant retail value, but that doesn’t mean they’re worthless. Refurbished products offer retailers an opportunity to enter the secondary market, maintain their brand reputation, and recover lost profits. Moreover, by finding new homes for gently used items, retailers contribute to a more sustainable planet rather than throwing them away. 

The main issue with refurbishment is that it’s a complicated process. Many retailers and manufacturers don’t have the expertise to restore their merchandise to better-than-new quality. If they make just one mistake, such as not thoroughly wiping the data from a smartphone, they can face serious legal liabilities and reputational damage. That’s why retailers should outsource the refurbishment process to partners with the proper resources and knowledge to restore goods to manufacturer-grade quality. 

Many new businesses have formed in recent years to refurbish second-hand goods, but that doesn’t mean all refurbishment partners are created equal. Because there is no single national standard for what refurbishment entails, retailers need to outsource their needs to a legitimate company with a transparent process that doesn’t leave customers guessing about quality. 

For example, goTRG has restored more than 40 million pre-owned electronics, toys, home goods, and furniture items over the past ten years. In fact, goTRG offers a fully managed refurbishment solution through its goMINT brand, which helps retailers recover up to 60% of lost profits on each item while adhering to the most environmentally responsible practices.

To choose the best refurbishment partner, retailers must select a provider that is transparent and can guarantee:

  • Human testing
  • Multipoint inspection process specific to each product type
  • Sanitization to CDC standards
  • Updated software and enhanced product performance
  • A 1-year warranty on each item
  • Repairs with verified or OEM parts
  • Intact surfaces without scratches
  • Verification reports for every item

Download goTRG’s report on How to Choose a Qualified Refurbishers to Boost Retail Profits.

2. Sell smarter on the secondary market 

Thanks to socially aware and price-conscious millennials and Gen Z shoppers, business is booming for secondary marketplaces, which offer overstock and refurbished goods at a discount. Plus, with the explosive growth of returns, there is more second-hand inventory than ever. To be successful in a secondary market, retailers must choose their channels wisely, diversify their strategy, utilize smart technology, and always keep their brand mission at the top of mind. To sell smarter on the secondary market, retailers must:

  • Utilize top secondary e-tailers, known as recommerce marketplaces. Top brands include HauteLook, eBay, Poshmark, and The RealReal. Research shows these online platforms are growing five times faster than secondary brick-and-mortar stores such as TJ Maxx or Marshalls and 20 times faster than the general retail market. 
  • Sell across multiple online platforms. Resellers that use a multiplatform approach see up to a 190% jump in revenue—and that’s just from selling on two websites. When retailers list across various platforms, they can ensure the largest number of consumers have access to their products.
  • Take advantage of dynamic pricing. Dynamic pricing utilizes technology to continually change product prices—sometimes from one minute to the next—in response to real-time market conditions. Retailers that invest in repricing software will make returns more profitable by selling used items at the highest possible cost. 
  • Share a compelling brand story and mission. Consumers spend more money with companies that demonstrate social and environmental responsibility while avoiding companies that don’t incorporate such practices. That’s why it’s so important for retailers to spread the word about their mission and sustainability on their websites and all recommerce channels they utilize to resell returns.  

Visit our blog for more tips on how to earn big on the secondary marketplace

3. Track returns through reconciliation

Reconciliation broadly refers to comparing two sets of records to see if everything matches. When it comes to returns management, reconciliation creates transparency to every product through its life cycle. This process allows retailers to track where inventory is, who touched it and why, where it moved, and how it sold. 

When companies incorporate regular software-based reconciliation reviews into their best practices, they can turn losses into profits by achieving greater accuracy in their records and preventing errors. They’ll also be able to make smarter future choices by accounting for gains and losses from:

  • Refurbishing items for resale
  • Obsolescence of returned items
  • Lost warehouse efficiency
  • Shipping costs

Retailers can use this data to get expert advice on building the best returns plan, which is vital if they want to increase returns profits. Manual human tactics reach their limits quickly in this area, so it’s best to invest in reconciliation computer software that can automatically account for every returned item and track every cost accurately, down to the penny. 

Visit our blog for more on why retailers need to track returns through reconciliation

4. Harness AI-driven predictions

Artificial intelligence, or AI, is infinitely smarter and faster than human brains, so utilizing the power of AI predictions and machine learning is key to optimizing returns. Manual methods that rely on human decision-making turn the returns process into a headache and ensures significant losses. By utilizing AI software, retailers can save as much as $340 billion a year by 2022, according to a 2018 survey—and 80% of those savings would come from AI technology optimizing supply chains and returns. 

An example of this AI technology is goTRG’s Returns Automated Disposition app or RAD, an application that scans a product’s UPC, then curates data and algorithms to make real-time disposition decisions. RAD automatically factors customer demand, dimensions and weight for shipping, repair and remarketing costs, and sales and pricing trends. 

By harnessing a machine learning application like RAD, which can be used on an in-store device or integrated into an e-commerce platform, retailers can process, reroute and track merchandise to boost efficiency and increases returns profits. 

Visit our blog for more on AI-based returns

5. Reduce supply chain costs

In 2020, due to COVID-19, many consumers shifted from returning in-store to mailing returns, which created significant challenges for retailers without robust reverse logistics strategies. To make returns more profitable, retailers first need to reduce the number of shipped returns by making it easy for customers to buy online and safely return in stores or curbside. Retailers without physical storefronts should partner with brick-and-mortar companies to accept their returns, like Amazon, who partnered with Kohl’s to allow customer returns in more than 1,000 locations. 

Next, retailers must negotiate with carriers to reduce shipping and reverse logistics costs. In particular, retailers must reduce expenses related to “last mile delivery” or transporting goods from the distribution center to their final destination. This “out for delivery” leg often involves inefficient multiple stops and accounts for a staggering 53% of total shipping costs. To minimize these costs and increase returns profits, retailers should:

  • Find shorter, optimized routes.
  • Work with a reverse logistics company.
  • Negotiate lower shipping costs.
  • Diversify their carrier portfolio so that customers have more shipping options.


Making returns more profitable involves many factors, such as outsourcing refurbishment, incorporating AI technology, and working with a reverse logistics company for retail supply chain solutions. Retailers who incorporate these strategies can make better choices for their business, waste less, and turn the tide from historic losses into unprecedented reverse profits. 

Download our 2021 Returns Report for more tips on how to make returns more profitable in 2021.