Returns are no longer just a post-sale headache – they’re one of the most complex and costly challenges in Australian retail. For many brands, the “reverse supply chain” is now as important as the outbound journey – and the numbers are staggering.

Australians spent a record $69 billion on online shopping last year. At an industry-average 30 per cent return rate, the Australian retail industry has a $20 billion challenge to address. Yet despite the scale, returns remain one of the most underinvested areas in retail operations.

For years, industry fixes have been surface-level, implementing blanket “no-questions asked” returns policies or providing an automated return label. While this helps at the front end, it doesn’t address the real value leaks hidden in the processing stage. In today’s high-volume e-commerce environment, managing returns with the same precision and intelligence as outbound logistics is no longer optional. It’s a strategic necessity.

Blue Yonder’s forthcoming 2025 Consumer Retail Returns research reveals a rapidly shifting returns landscape across Australia and New Zealand. Almost 40 per cent of Australian shoppers are willing to pay up to $5 to return a product, but close to one-third wouldn’t return it at all if a fee were involved. More than half (57 per cent) express concern about the environmental impact of returns, and nearly half have been asked by retailers to keep items rather than send them back.

The findings also point to a direct sales impact: Two-thirds of consumers have been discouraged from making a purchase due to stricter return policies, and one-third have stopped shopping with online-only retailers with restrictive return rules. For Gen Z and millennials – key growth segments – more than 70 per cent have walked away from purchases because of return restrictions.

Why processing power matters

Returns are often a retailer’s largest single inbound supply source, sometimes bigger than any supplier. In this context, speed and accuracy in processing aren’t just operational metrics, they’re revenue drivers.

An advanced returns management platform needs to take a full-journey approach, optimising not only the customer-facing front end but also the store and warehouse processing stages. This accelerates resale, shortens the time products spend out of circulation, and enables smarter disposition decisions – whether restocking, refurbishing, or routing to clearance.

Efficient returns handling has become central to supporting Australia’s fast-growing e-commerce sector. Over 500 ANZ retailers have deployed Blue Yonder’s returns management solution through Australia Post. These capabilities have helped participating retailers improve their customer experience, cut turnaround and refund times, recirculate inventory faster, and ultimately offer customers more flexible return options such as Australia Post 24/7 parcel locker network and label-free over-the-counter drop-offs – reducing manual processes, operational costs and wastage.

This approach is strengthened by an omni-inventory mindset–in other words, treating all inventory across every channel and right back to suppliers as a single pool to serve customers better, improve operational efficiency, and plan smarter. Retailers can incentivise preferred return behaviours like in-store drop-offs for speed and efficiency, while also streamlining the consumer journey through branded returns pages and a self-service drop-off kiosk network. By capturing and using real-time returns data, retailers can forecast inbound volumes more accurately, align sourcing decisions, and turn returns into a predictable and profitable inventory source.

Meeting customers where they are

Survey results show that convenience and cost are the biggest influencers in consumer return behaviour. In Australia and New Zealand, the top factors encouraging shoppers to use third-party return services are lower or no shipping fees and convenient drop-off locations.

Retailers that remove friction here not only boost customer satisfaction but also gain earlier visibility into inbound stock, enabling proactive resale and markdown strategies. 

Environmental and brand impact

Today’s consumers, especially younger demographics, are attuned to the sustainability implications of returns. Many are open to alternatives, with 60 per cent saying they’d keep a product if offered a discount on a future purchase. Others opt to resell, donate, or seek eco-friendly disposal if they know an item might end up in a landfill.

Forward-thinking retailers are aligning returns strategies with sustainability goals, using AI and analytics to identify the most resource-efficient next step for every returned item. This not only reduces waste but also strengthens brand equity with eco-conscious shoppers.

Turning pain into profit

In an era where retail margins are under pressure and customer expectations are high, managing returns is no longer an operational afterthought. It’s a profit lever, a brand loyalty driver and, if done right, a sustainability win.

For Australian retailers, the opportunity is clear: Invest in the processing power behind returns, and you can turn what was once a $60 billion problem into a measurable competitive advantage.

About the author: Brett Egglestone is a senior director of retail industry strategy at Blue Yonder.

• Learn how Blue Yonder’s Returns Management solution helps leading retailers turn the pain of returns into profit here.