Reverse logistics — returns economics

Return costs, returnable packaging, defects, the return-or-not decision

Key aspects

Return cost structure

Full return cost: reverse freight (can be ×1.5–2 of forward) + inspection/sorting + refurbishment/disposal + value loss. In e-com returns reach 5–15% of order value.

Return flow types

Commercial returns (defect, error), consumer (didn't fit), seasonal, repair, packaging/pallets. Each type has its own economics.

Pallets & packaging

Returnable packaging — often the easiest saving: pallet accounting, deposits, exchange agreements. Lost pallets cost 200–400 UAH each.

Defects & recalls

Recall process: lot tracing, collection point, documentation for the maker. Speed and tracing matter more than freight cost.

Return decision

Rule: return if recovery value > logistics + disposal cost. Sometimes cheaper to dispose on-site or donate — decided before shipping.

Reverse logistics is almost always a loss operation — the goal is minimizing loss, not optimizing the process. The best strategy is preventing returns upstream (order accuracy, packaging quality).