Returns Management: Reduce Returns, Increase Margins

Approximately one in four online orders in Germany is returned (EHI Retail Institute). In the fashion sector, the rate can reach up to 50%. For online retailers, this means rising costs, shrinking margins, and considerable logistical effort. The good news: With a well-thought-out returns management strategy, returns can be systematically reduced - while maintaining high customer satisfaction.

Return Rates in German E-Commerce

Return rates vary significantly by industry. While fashion retailers see return rates of up to 50% (EHI Retail Institute), electronics hover around 10%, and furniture stays below 10% (EHI Retail Institute). Overall, approximately 550 million parcels are returned annually in Germany (University of Bamberg) - a record figure that underscores the importance of professional returns management.

The True Cost of a Return

The true cost of a return goes far beyond return shipping. According to the EHI study (2024), 30% of online retailers estimate per-return costs at 5 to 10 euros, while 26% report costs between 10 and 20 euros (EHI Retail Institute). For some retailers, a single return can cost up to 50 euros.

The Most Common Return Reasons

To effectively reduce returns, retailers must understand the root causes. 81% of online retailers systematically track return reasons (EHI Retail Institute), and 67% actively use this data for optimization. The most common reasons for returns are:

1. Fit and size do not match - by far the most common reason, especially in fashion. Customers order multiple sizes to choose from.
2. Product does not match the description - inaccurate or exaggerated product descriptions lead to disappointed expectations.
3. Quality defects and damage - poor workmanship or shipping damage.
4. Color or material deviates - screen representations do not match reality.
5. Selection orders - customers deliberately order multiple variants intending to return some.
6. Late delivery - especially for gifts or seasonal occasions, delayed delivery leads to returns.

Strategies to Reduce Returns

1. Optimize Product Data

75.2% of online retailers cite detailed product information as their most important measure for reducing returns, according to the EHI study (EHI Retail Institute). The principle is simple: the better informed the customer is before purchasing, the lower the likelihood of a return.

• Detailed product descriptions with exact measurements, material composition, and care instructions
• High-quality product images from multiple angles - 62.8% of retailers already do this (EHI Retail Institute)
• Product videos for complex items showing function and size proportions
• Customer reviews with size and fit feedback directly on the product page
• Comparison tables for similar products to aid orientation

Modern PIM systems and data integration ensure that product data is consistently and completely delivered across all channels.

2. Intelligent Size and Fit Guidance

In fashion retail, fit issues are the number one return reason. AI-powered size guidance can reduce return rates by 4 to 6 percentage points (University of Bamberg). These systems analyze body proportions, past orders, and return histories to deliver precise size recommendations.

• Virtual try-ons with augmented reality enable realistic product previews
• Size charts with comparison features - customers enter their measurements once and receive consistent recommendations across channels
• Fit feedback from reviews - automatic analysis of whether an item runs large or small
• Individual AI-based recommendations based on purchase history and user profile

3. Pre-Shipping Quality Assurance

47.9% of retailers use pre-shipping quality assurance as a return prevention measure (EHI Retail Institute). Thorough incoming goods inspection and outgoing quality checks significantly reduce returns due to quality defects and damage.

• Systematic incoming goods inspection with sample testing and documentation
• Optimized packaging protects products from shipping damage and reduces damage rates
• Automated quality checks through image recognition and warehouse sensors
• Packaging standards for sensitive product categories defined and enforced

4. Reduce Selection Orders

Deliberate selection orders - such as customers ordering three sizes and returning two - significantly impact margins. Rather than penalizing customers, retailers should create incentives for targeted purchases.

• Better product guidance reduces the need for selection orders
• Tiered discounts for return-free orders reward targeted purchasing behavior
• Transparent return policy with clear communication of return costs
• Loyalty programs that reward return-free orders with bonus points

Technical Solutions for Returns Management

Modern e-commerce systems offer numerous technical capabilities for reducing and optimizing returns. Custom development of return processes enables tailored solutions for every shop.

Data-Driven Returns Management

The key to fewer returns lies in systematic data analysis. Companies that systematically analyze return data can typically reduce their return rate by 12 to 18% (EHI Retail Institute). Which measures actually work can be validated through data-driven A/B testing in your online shop. The following data points are particularly insightful:

• Return reasons per product - identifies problem products and recurring defects
• Return rates by customer segment - enables targeted measures for high-return segments
• Seasonal patterns - helps plan capacity and preventive measures
• Correlation with product data quality - shows which information prevents returns

Returns Management in B2B E-Commerce

In B2B e-commerce, special rules apply to returns management. Business customers have no statutory right of withdrawal - return conditions are governed by contract. Nevertheless, returns are also relevant in the B2B space and require specific solutions.

• Individual return agreements based on customer group and contract volume
• Technical product data with CAD drawings, data sheets, and compatibility information reduce ordering errors
• Configuration validation checks before ordering whether the selected configuration is technically sound
• RMA processes (Return Merchandise Authorization) for structured returns with case numbers

Legal Aspects: Right of Withdrawal and New Regulations

The 14-day right of withdrawal for consumers in distance selling is a central pillar of e-commerce law in Germany. Online retailers must respect this right and account for it in their return processes. At the same time, important legislative changes are currently underway.

• Withdrawal right B2C: 14 days from receipt of goods, no reason required
• Withdrawal right B2B: No statutory right of withdrawal - contractual arrangement
• Return costs: Retailers may charge customers for return shipping, but must clearly communicate this
• Exceptions: Custom-made goods, sealed hygiene products, and perishable goods are exempt from the right of withdrawal
• Compensation for loss of value: If goods lose value due to non-essential use, the retailer may claim compensation

Legally compliant returns management protects retailers from warnings and builds customer trust. Professional consulting helps with legally sound implementation.

Sustainability: The Ecological Dimension

Returns impact not only margins but also the environment. In the German clothing trade, returns generate approximately 795,000 tons of CO2 equivalents annually (German Federal Environment Agency). Around 800,000 parcels are returned daily, corresponding to approximately 400 tons of CO2.

• Carbon footprint: A return with subsequent reorder generates over 4 kg of CO2 equivalents (BEVH)
• Resource waste: Returned goods are sometimes destroyed rather than resold
• Packaging waste: Every return means additional packaging material
• Growing consumer awareness: Customers increasingly value sustainable return policies

Reducing returns is therefore not only economically but also ecologically beneficial - and can be communicated as a competitive advantage.

Return Policy as a Competitive Advantage

According to the DHL eCommerce Trends Report 2025, 79% of customers abandon purchases when return options are inadequate (DHL). At the same time, nearly one in three consumers no longer shops with retailers that have opaque return conditions. Especially in mobile commerce, a seamless returns process is critical, as mobile users are quicker to abandon when usability is poor. A well-designed return policy is therefore not merely a cost factor but a strategic differentiator - and a key element of conversion optimization for online shops.

Action Checklist: Reducing Your Return Rate

• Complete product descriptions with exact measurements and material details
• Create high-quality product images from multiple angles
• Integrate size guidance and fit hints on product pages
• Include customer reviews with size feedback
• Implement pre-shipping quality assurance
• Systematically capture and analyze return reasons
• Integrate returns analytics dashboard into your e-commerce system
• Set up automated workflows for return processing
• Ensure ERP integration for seamless inventory tracking
• Design return policy to be transparent and customer-friendly
• Implement withdrawal button requirement from June 2026
• Make return data accessible to purchasing and product management

Frequently Asked Questions About Returns Management

Returns Management as a Strategic Success Factor

Professional returns management is no longer optional in modern e-commerce - it is a strategic success factor. With the right combination of high-quality product data, intelligent guidance technology, efficient processes, and a customer-friendly return policy, the return rate can be sustainably reduced while simultaneously increasing customer satisfaction. Our guide to checkout optimization explains how a streamlined purchase process can further reduce cart abandonment and returns.

The key lies in a data-driven approach: those who systematically capture return reasons, analyze them, and translate them into concrete measures typically achieve the best results. Combined with upcoming legal changes such as the withdrawal button from June 2026, now is the right time to put your returns management to the test. For more on what is shaping online retail, see our overview of the e-commerce trends 2026.