Returns and reverse logistics, why UK ecommerce returns cost more than you think

Every online retailer plans for the sale. Fewer plan properly for what happens when the customer sends the item back. Online returns are not a rare exception for UK ecommerce businesses. They are a predictable, recurring part of the business, and the cost of handling them badly adds up quickly.

This guide covers what reverse logistics involves for UK ecommerce businesses, how much returns genuinely cost to process, why the returns experience affects repeat purchases, and how to manage the process better.

What is Reverse Logistics?

Reverse logistics is the process of moving goods from the customer back to the business, the opposite direction to a standard delivery. Reverse logistics fulfilment covers everything that happens after a customer decides to send an item back: issuing a returns label, receiving the parcel, inspecting the item, restocking it if it is resaleable, and processing the refund or exchange.

For most ecommerce businesses, reverse logistics gets far less attention than the outbound delivery process, even though it involves nearly as many steps and, per item, often costs more to manage well.

How Much Do Returns Cost?

How much do returns cost is not a simple question, because the cost is spread across several different parts of the business rather than showing up as a single line item. According to Retail Economics and ZigZag's UK Returns Benchmark 2025, non-food online returns in the UK were forecast at £25.1bn in 2025, down slightly from £26.7bn in 2024, with the overall online return rate easing from 21% to 19.5%. Clothing has a notably higher return rate, averaging around 23.6%.

That figure covers the whole market. For an individual business, the returns cost UK retailers actually absorb includes reverse shipping, staff time to inspect and process each return, restocking or write-off costs for items that cannot be resold, and the lost sale opportunity while stock is in transit or being processed rather than available to sell again.

Free returns can be particularly costly for businesses, since offering free returns as a competitive feature means absorbing all of this cost without passing any of it to the customer.

Serial returners, customers who order multiple items with the clear intention of returning most of them, add a further layer of cost concentration. A relatively small proportion of customers can be responsible for a disproportionate share of total returns volume and cost.

Why Does the Returns Policy Matter So Much to Customers?

It would be easy to treat returns purely as an operational cost to minimise. The evidence suggests that is a mistake. Research from IMRG and nShift found that 85.6% of UK shoppers say a retailer's returns policy is important when deciding whether to buy online, and 42.3% said they would be much less inclined to shop with a retailer again after a poor returns experience.

In other words, when ecommerce businesses handle returns and refunds well, they are not just a cost centre, they are part of the customer relationship. A confusing or restrictive returns policy ecommerce UK shoppers encounter can put them off before they even complete a purchase, while a smooth, well-communicated one can be a genuine reason a customer chooses you over a competitor.

Why Do Returns Spike After Christmas?

Why do returns spike after Christmas is one of the most predictable patterns in UK ecommerce, and it happens for a combination of reasons that all land at once. Gifts that do not fit or were not wanted get returned as soon as the holiday period ends. Returns after Black Friday follow a similar but earlier pattern, as impulse purchases made during heavy discounting get reconsidered once the deal excitement has passed.

Peak season returns therefore arrive in two distinct waves: one immediately following Black Friday and Cyber Monday, and a second, often larger wave in the first weeks of January. Businesses that plan fulfilment capacity for peak outbound volume but do not plan equivalent capacity for the returns wave that follows often find January just as operationally stressful as December, for entirely different reasons. Our peak season 2026 readiness guide covers how to plan for both ends of this cycle together.

What Does a Good Ecommerce Returns Process Actually Involve?

A well-run ecommerce returns process typically covers the same core steps regardless of business size.

Clear Returns Policy Communication

The customer returns process should be easy to find and easy to understand before the customer even needs it, not something they have to search for once they already have a problem.

Simple Label Issuing

Whether returns labels are included in the original parcel or issued on request, the process for the customer to start a return should require minimal effort.

Fast, Accurate Receiving and Inspection

Once a returned item arrives, restocking returns quickly, checking condition and deciding whether the item is resaleable, keeps stock available for resale rather than sitting unprocessed.

Prompt Refund or Exchange Processing

Delays between receiving a return and issuing a refund are a common source of customer frustration and negative reviews, even when the return itself was accepted without dispute.

Fraud Checks Where Appropriate

Returns fraud, including claiming items were never received or returning different or damaged goods, is a real cost businesses need reasonable processes to catch, without making the legitimate returns process needlessly difficult for genuine customers.

Returns Management for Small Businesses

There is a common assumption that returns management for small business owners has to mean either absorbing the cost personally or restricting returns so heavily that it damages conversion. In practice, a clear, fair returns policy small business UK operations can realistically offer does not need to match a large retailer's free-returns-on-everything approach to still build customer trust. Clarity and consistency matter more than generosity alone.

Where ecommerce returns management often becomes difficult is capacity. A small team already handling outbound dispatch has limited time left to inspect, restock and process returns promptly, which is exactly where the cost and customer experience problems tend to start. For practical guidance on building a more efficient ecommerce fulfilment operation, see our guide to 5 tips to get your ecommerce fulfilment right.

Should You Outsource Returns Processing?

For growing ecommerce businesses, outsourcing returns processing is worth considering for the same reasons outsourcing outbound fulfilment makes sense. A dedicated fulfilment operation handles returns as a standard part of the service, receiving items, inspecting them, restocking or flagging them, and keeping your inventory accurate, without it competing for time against your own team's other priorities.

This is one of the areas covered as standard within a proper 3PL fulfilment UK service, rather than something bolted on separately. For a broader overview of how CSM supports ecommerce businesses across fulfilment and dispatch, see our guide to how CSM can support your ecommerce business.

How CSM Supports Returns and Reverse Logistics

CSM's fulfilment service includes returns management as part of the standard offering, not as an add-on. Returned items are received at our London-based fulfilment centre, checked against your returns policy, restocked where appropriate, and your inventory is updated automatically, keeping stock levels accurate without manual reconciliation on your end.

This sits alongside CSM's outbound dispatch, so returns handling and new order fulfilment are managed from the same operation rather than as two separate processes. There are no call centres. If a returns query needs resolving quickly, particularly during a peak returns period, you speak to the named team who manages your account.

To find out more about how CSM's fulfilment service handles returns as part of a complete operation, see our ecommerce shipping solutions page, or contact your local CSM branch to discuss your returns volumes and requirements.

Frequently Asked Questions

How Much Do Returns Cost UK Ecommerce Businesses?

Non-food online returns in the UK were forecast at £25.1bn in 2025, according to Retail Economics and ZigZag's UK Returns Benchmark. For an individual business, the real cost includes reverse shipping, staff time, restocking or write-off costs, and the lost sale opportunity while stock is unavailable, not just the price of the returns label itself.

Why Do Returns Spike After Christmas?

Returns spike after Christmas because unwanted or ill-fitting gifts get sent back once the holiday period ends, arriving as a concentrated wave in the first weeks of January. A similar but earlier spike follows Black Friday and Cyber Monday as impulse purchases get reconsidered.

What is Reverse Logistics?

Reverse logistics is the process of managing goods moving from the customer back to the business, covering returns labels, receiving, inspection, restocking and refund or exchange processing, essentially the opposite journey to a standard delivery.

Should a Small Ecommerce Business Outsource Returns Processing?

It depends on capacity. Many small businesses can manage returns in-house at low volumes, but as order and returns volumes grow, outsourcing to a 3PL that includes returns handling as standard often resolves the capacity strain before it starts affecting refund speed and customer experience.

Does a Returns Policy Actually Affect Sales?

Yes. Research from IMRG and nShift found that 85.6% of UK shoppers say a retailer's returns policy influences their decision to buy, and a significant proportion say a poor returns experience makes them less likely to shop with that retailer again.