How to Turn Retail Returns From Sunk Costs Into Revenue | Entrepreneur

If you’re running a retail-based business right now, you’re probably feeling it from all sides. Tariffs and inflation are squeezing your costs. Consumers are tightening their spending. And what used to work, from bulk ordering to blanket discounts, isn’t cutting it anymore.

So, where do you turn when both your margins and your customers are under pressure?

One part of your business you’ve likely overlooked is returned product. Historically, most companies have treated returns as a sunk cost rather than a strategic opportunity. But in today’s climate, returns represent a valuable revenue channel.

Returns now account for $890 billion annually, or 16.9% of total U.S. retail sales in 2024. This is a growing number that has jumped nearly 20% from the previous year, underscoring the urgent need for brands to rethink a product’s journey well past the first sale.

Here’s why forward-thinking brands are doubling down on understanding returns recommerce in 2025 as a scalable way to move inventory, acquire new customers and build resilience in a volatile retail environment.

Related: The Holiday Return Surge Ruins Our Planet — Make These Small Changes to Create a More Sustainable (and Profitable) Business.

1. Offering a deal without becoming a discount brand

Right now, businesses are racing to convert cautious consumers, often defaulting to flash sales, sitewide promos and steep discounts just to get products moving. But that strategy has a short shelf life. With margins already under pressure, constant discounting becomes unsustainable.

Worse, it chips away at long-term brand value and teaches customers to wait for deals rather than buy at full price. And for smaller brands, slowing down inventory or waiting for demand to return isn’t always viable.

Returns recommerce offers an alternative and more sustainable approach. By selling quality-checked returns, brands can connect with a new customer and offer affordability without undermining their core pricing strategy.

The first step is auditing the returns process. Brands should evaluate how rigorous a quality check process might be needed to identify whether an item came back unused. For example, a T-shirt might require minimal inspection and can more easily be restocked, whereas electronics like an air fryer would need complex test and grade steps. This helps determine how feasible returns recommerce is and allows companies to calculate the true cost of their returns process both financially and environmentally. It also highlights opportunities to prevent unnecessary losses from items that could otherwise be resold.

The challenge with returns has always been in the hidden complexities of handling them. Most brands don’t have the infrastructure to process, quality check and sell returns cost-effectively. As a result, the majority of these products — 8.6 billion pounds annually — end up in landfills.

That’s where a returns recommerce partner like REBEL can help. With the technology and system in place to handle, process and sell returned goods at scale, brands can recover value, clear excess inventory and offer customers meaningful savings without compromising brand perception.

2. A smart way to acquire and retain customers

In an unpredictable economy, consumers are spending carefully, seeking out brands that align with their values, needs and budgets. Discovery plays a critical role in this environment, giving brands the opportunity to make a meaningful first impression with value-conscious shoppers and lowering the barrier to trial, while maintaining full-price integrity elsewhere.

Returns recommerce creates that entry point, introducing new customers in a way that feels accessible and low risk. These shoppers get to experience the brand firsthand through a returns recommerce marketplace, which builds trust and familiarity.

The next time they shop or recommend a product to friends, they’re much more likely to recall that brand, opening the door to customer acquisition and longer-term loyalty.

Related: 5 Easy Strategies to Prevent Costly Retail Returns

3. Meeting customers where they are

Families are stretched thin. Everyday essentials cost more, and for many consumers, price has become the deciding factor.

This shift is reshaping how people shop. By creating a dedicated, value-priced channel for returned items, brands can offer real value while protecting their full-price business.

There’s more than one way to build a value-priced channel for your returns. Brands with minimal processing needs and warehouse space might launch their own recommerce program without incurring a large cost. Others may choose auction-style platforms that purchase returned and overstocked merchandise. With returned items costing retailers an average of 30% of an item’s original price, brands may opt for a dedicated returns recommerce partner that can ensure a financial return while handling the entire journey from processing and quality-checking to brand experience and reselling returned items. The best approach depends on your level of inventory control, operational complexity and customer experience goals.

Whichever you may choose, providing affordable access to your products shows customers that you understand their reality and that you’re willing to adapt. It also helps reduce unnecessary waste — a benefit that resonates with price-conscious shoppers who care about how brands operate.

In today’s economy, the brands that win will be the ones rethinking the full product journey. And in a high-pressure retail environment, returns recommerce is a lever you can pull right now to help your business stay agile, move inventory, connect with new customers and align with their values.