Summary

Returns are not an exception, but a structural component of modern commerce models. High return rates, rising process costs, and growing pressure on margins make one thing clear: what matters is not the individual return, but the underlying end-to-end process. This article shows how returns can be systematically managed, where value is lost along the process, and why recommerce is shifting from an operational workaround to a strategic lever for margin, control, and secondary markets.

In Germany, hundreds of millions of items are returned every year. Companies that understand and actively manage the returns process reduce costs, gain speed, and unlock new revenue through recommerce. This article shows how returns work today.

packages on wheels

What Is Currently Happening With Returns

The majority of returned items flows directly back into sale as A-grade goods, while additional volumes are redistributed through B-stock, refurbished offers, or recommerce and secondary marketplaces. Disposal, at under 4%, remains the exception and applies almost exclusively to products with defects or hygiene and safety risks.

At the same time, customers are further along than many retailers assume. Around half of customers are actively interested in what happens to returned products, while another roughly 25% can be reached through transparent information. In total, around 75% are open to recommerce and secondary utilization.

The Return Process

Returns do not become profitable through isolated measures, but through a clearly managed end-to-end process.

From the moment the return decision is made to resale, every hour counts, because each return is an asset with a limited time window. This is why returns almost always follow the same logic: regardless of category, brand, or channel, they move through clearly defined stages with fixed decision points. The process begins with a structured return initiation and an efficient return shipment and ends with targeted refurbishment, a deliberate recovery decision, and actively managed resale. It is the system behind the process that determines whether returns remain a pure cost factor or become a controllable value stream.

Market Overview: Returns in German E-Commerce

Germany as a High-Return Market

Depending on the product category, every fifth to eighth parcel is returned, adding up to around 280 million returned parcels or approximately 487 million individual items per year. The economic dimension is significant: total costs exceed €5.4 billion annually, with average costs of around €20 per return. About half of this amount is attributable to transport, while the remaining share comes from handling, inspection, inventory holding, and value loss over time.

For customers, returns are usually “free.” In reality, these costs are indirectly covered through prices, fees, and margins. Returns are therefore not a service extra, but a structural cost factor that is financed within the business model.

Germany vs. Europe

Germany is among the countries with the highest return volumes in a European comparison and structurally exceeds the EU average. Key drivers include the widespread use of purchase on account, a very liberal return policy, and the strong customer expectation of free returns. This pattern is particularly visible in fashion, but returns also remain economically relevant in technical and household-related categories—not primarily due to high return rates, but because of other cost drivers such as inspection effort, logistics, and value depreciation.

a car driving returns

Why Return Rates Vary Across Categories

  • Fashion: high return rates due to fit issues, bracketing, and style uncertainty. Multiple orders are part of the purchasing behavior, making fast classification and resale critical.
  • Electronics: lower return rates, but higher inspection and handling costs. Functional testing and technical checks determine how quickly an item can be resold.
  • Furniture & bulky goods: low return rates, but high handling impact. Size, weight, and logistics effort make each individual return economically significant.
  • Baby & kids: sensitive hygiene and safety requirements. Trust, transparency, and clean inspection processes are prerequisites for any secondary use.

Implication: A uniform returns process is always too expensive. Successful retailers segment their returns processes by category and item value.

What Costs Are Really Embedded in a Return

Shipping is visible; the actual costs of a return are not. They arise from manual handling in the warehouse, inspection and refurbishment time, inventory holding and space costs, as well as value loss over time and seasonality. In addition, there are markdowns in external liquidation channels when goods are not resold in a controlled manner. A return does not cost €3–4, but often €10–20 before it is even sold again.

Where Value Is Lost in the Process

Value is not lost at the moment of return itself, but when decisions are made too late or without reliable data. If clear classification is missing, long dwell times arise, flat markdowns replace differentiated pricing logic, and liquidation is outsourced to external channels without brand control. It is precisely at these breakpoints that the lever for brand-owned recommerce emerges: control over condition, price, channel, and brand determines whether value is preserved or permanently given away.

Why recommerce Becomes a Strategy

Current market analyses, including insights from the Returns Compendium of the German E-Commerce and Mail Order Association, clearly show that recommerce is no longer viewed as an experiment, but as a necessary component of modern retail models. Key drivers include rising return costs, increasing margin pressure in the core business, ESG and CSRD requirements, and regulatory developments around the circular economy.

Many companies start recommerce initiatives with buy-back or trade-in models. In practice, however, recommerce almost always begins earlier—with returns. The goods are already there, their condition is known, logistics are in place, and demand exists. Returns are therefore the lowest and most pragmatic entry point into a proprietary second-life channel.

Do you want to launch your own recommerce program? With koorvi, we implement branded resale for you—so you retain full control over margin, brand, and secondary markets.

FAQs

What are return rates in Germany?

Return rates vary significantly by category. While they are often around 5% for furniture, they can exceed 40% in fashion. Across all categories, the average in German e-commerce is about 20–25%, making returns a structural factor in the business model.

Are returns economically resellable?

Yes. Studies show costs of approximately €10–20 per return. Direct recommerce often outperforms external liquidation channels significantly in terms of margin.

Why is time the most important factor in the returns process?

It is not the condition of a return that determines the outcome, but speed. Every additional day in the returns process reduces the achievable resale price, increases internal costs, and lowers the resale rate. Return-to-resale time is therefore one of the most important, and least measured, KPIs in returns management.

How high is customer acceptance of recommerce?

It has increased significantly. Recommerce is no longer perceived as “used,” but as inspected and transparent. Younger, price- and environmentally conscious customers are particularly open to it, provided that condition grading, processes, and brand presentation are clear.

Why is recommerce becoming a strategic necessity?

Recommerce is driven by clear economic and regulatory forces: rising return costs, growing margin pressure in first sales, higher customer expectations for transparency, and increasing regulatory requirements. Companies that continue to treat returns merely as a cost center will lose long-term control over value, brand, and the secondary market.