Rethinking returns: a strategic imperative for marketplace success

Marketplaces have revolutionized the way consumers shop—offering endless variety, competitive pricing, and lightning-fast delivery. But with convenience comes complexity, especially for brands navigating the high-stakes challenge of return rates. On platforms like Amazon and Walmart, return rates often soar to 1.5–2x those seen on direct-to-consumer (DTC) sites. This isn’t just a logistical nuisance—it’s a direct hit to profitability. 

To thrive in this environment, brands must move beyond reactive measures and adopt a proactive, data-informed strategy to mitigate returns. 

Understanding the Return Landscape 

Returns are inevitable, but not all are created equal. Some are operational—damaged goods or defective products—and should be addressed through broader quality and logistics improvements. Others, however, are behavioral, shaped by how consumers shop, compare, and evaluate products in a digital-first world. 

Here are some of the most common behavioral drivers of returns: 

• Change of Mind: Products ordered and later deemed unnecessary—often tied to timing or impulse.  We see this return reason increase as seasons change and holidays approach.   (Think last minute ski trip at the end of the season or someone found a new gift options for the holiday.) 

• Try-and-Return Behavior: Shoppers using products within the return window, then sending them back—an ethical gray area, but a known reality.  It’s shocking to hear what some people try to return and unfortunately, if you have a product that has a relatively short usage window (such as a baby carrier), you might find yourself with a unique set of returns.  

• Comparison Shopping: Consumers ordering multiple brands or styles to evaluate side-by-side at home.  A brand can try to get this under control with high reviews and accurate content, but there is no guaranteed safety net.  

• Color & Variation Preferences: Ordering multiple colors or styles and keeping only one—often due to unclear imagery or subjective preference.  This is also very common when parents order multiple units for their kids and let the kids have the final say on which color stays.  

• Sizing Uncertainty: Especially in apparel and accessories, where fit is subjective and size charts are inconsistently applied. 

The Short and Long term Cost of Returns 
The financial implications of high return rates are significant: 

• Marketplace Fees: Platforms charge returns processing fees, contributing to additional losses beyond the fees a brand already paid when the item was sold.  

• Inventory Loss: Returned items may be unsellable, leading to write-offs or destruction. While much of the returned items can be resold, incorrect grading can also contribute to a review problem if the product was used.   

• Reputation Risk: Negative reviews often follow returns, especially when expectations aren’t met. It doesn’t matter if a customer returned the product, they will still be vocal about what made them unhappy.  

• Conversion Barriers: Amazon’s “Frequently Returned Item” badge can deter future buyers and damage brand equity.  Unfortunately, the flag is prominent in the shopping experience and can create many barriers to conversion.  

Recent data from select businesses shows a concerning trend: return rates are rising. In Q1 2025, categories like apparel, accessories, and outdoor gear saw YoY increases of 5–6%.  It’s a meaningful spike in categories already facing 20–25%+ return rates. Economic uncertainty and shifting consumer sentiment may be new contributing factors, as is Amazon’s removal of size charts in certain categories, which has made it harder for brands to communicate fit and sizing effectively.  If anyone has tried to get sizing images published lately, you’ve probably noticed that your imagery may or may not go live and if it does, it gets pulled down quickly.   Amazon does have a plan for standardizing and fixing sizing imagery, but timing and execution are unclear.  Keep trying to get those images to stick.  Don’t give up.  

Strategic Levers to Reduce Returns 
To protect margins and customer trust, brands must take a holistic approach: 

1. Content Strategy: Set Clear Expectations

• Visual Context: Use lifestyle imagery and comparison visuals to help consumers understand fit, size, and use cases.  If you’re selling a tote bag, show the consumer what you can fit in it.   Context makes your content more relatable than communicating dimensions alone.  

• Detailed Descriptions: Go beyond specs—explain what the product can hold, how it fits, and who it’s best for. 

• Fit Guidance: Especially in apparel and accessories, provide intuitive sizing tools and visual cues.  A cross-body bag on a 5’10” model is going to look different than it would on a 5’3” model.  

2. Content Utilization: Maximize Every Touchpoint

• PDP Optimization: Ensure product detail pages are rich with accurate, compelling content that delivers on the strategy above.   Make sure that you are using every piece of your PDP content to communicate solutions that overcome purchase barriers.  

• Enhanced Content (A+): Use this space to compare similar products and guide consumers to the right choice. 

• Media Assets: Communicate through videos and ad units that help deliver the right product to context.  This means you need a closely knit strategy between media and content.  

• Brand Stores: Help shoppers navigate your portfolio with clarity and confidence. Brand stores have the ability to promote a broader product assortment and without a clear strategy, there is risk that shoppers will select a product that isn’t exactly what they need or want.  

3. Assortment Strategy: Know When to Say No

If a product consistently underperforms—even after optimization—it may not belong on a marketplace or at a minimum, you might want to consider a different one.  It will be important to determine whether it’s better suited for a DTC channel where you can control the experience more tightly or a different marketplace with a different buying persona. 

 The Bottom Line 
Return rates aren’t just a cost center. They’re a strategic signal that a brand is at risk of losing profits. They reveal gaps in communication, friction in the customer journey, and opportunities for innovation. Brands that treat returns as a core business metric—not just a post-purchase problem—will be better positioned to win in the evolving marketplace landscape. Contact us to learn more.