In January 2025, an estimated £1.55 billion worth of items bought during November and December headed back to retailers. While returns have always been part of retail, today they represent something far bigger than an operational challenge. With macroeconomic headwinds putting pressure on margins and more shoppers looking for sustainable options, the way companies handle returned stock has become a strategic decision that affects profitability and brand reputation.
Particularly for technology retailers, the challenge goes beyond what to do with devices that come back through the door. Now, it’s how to extract the most value from them while meeting customer expectations around sustainability and transparency.
The hidden cost of returns
Returns are an expensive operation. According to a report by IHL Group, overstock and returned items that can’t be resold as new cost retailers hundreds of billions annually. For many businesses, the default strategy has been to tighten return policies or absorb the losses. But there’s a third option that’s gaining traction thanks to its standout commercial potential: building reverse logistics systems that treat returns as recovered value.
The difficulty is that most supply chains were never designed to work in reverse. They’re built to push products out efficiently, not to bring them back in and redirect them to their next life. Returned devices often sit in warehouses or end up as e-waste without a robust system for handling them.
This is an opportunity hiding in plain sight. With the right infrastructure and mindset, returned stock can become a renewable source of inventory and revenue through refurbishment and resale.
The time is now
While the concept of reverse logistics isn’t new, current economic conditions are boosting its adoption. Import tariffs, inflation, and careful consumer spending are forcing retailers to look harder at every revenue stream. Refurbishing and remarketing devices offers a way to avoid certain import costs while capturing value from products that already exist and are in circulation.
Recent changes in consumer attitudes can help explain this shift. Many shoppers are increasingly aware of the value sitting in their old devices and want a straightforward way to reclaim it and put it towards their next purchase. They also expect the return experience to be as seamless as the first purchase, as well as visibility into what happens next.
This meeting of cost pressure and consumer demand has created ideal conditions for reverse logistics to move from optional to business-critical.
Building the infrastructure
Getting reverse logistics right starts with visibility. Retailers need real-time data showing what’s being returned and what condition it’s in. This allows for quick decision-making: should this device be resold as-is, refurbished first, or recycled for parts?
The end goal is to sort products at speed. Products sitting in a returns queue are tying up capital and warehouse space. Trained technicians following rigorous, manufacturer-aligned processes can accelerate the evaluation, testing, grading, and redirecting of devices. This brings both the consistency and flexibility needed to handle a wide range of device types at speed.
But infrastructure alone doesn’t mean much if companies don’t rethink how they position secondary stock to their customers. Refurbished devices shouldn’t be marketed as inferior alternatives or discounted so much that they impact new product sales. Instead, they should be presented as value-driven choices that appeal to a range of consumers: both budget-conscious shoppers and those motivated by sustainability.
Clear grading standards and transparency about what “refurbished” really means builds customer confidence. When done right, it creates a complementary product tier that appeals to a new customer base, rather than simply shifting existing customers to alternative products.
The trade-in advantage
One of the most effective ways to fuel a reverse logistics strategy is through structured trade-in programs. These give customers an easy path to upgrade their devices while providing retailers with a steady flow of inventory for refurbishment.
The potential here is enormous. Recent research by Alchemy found that consumers in the US are holding around $83.74 billion in unrealized trade-in value from unused devices. Despite 90% of US consumers being open to trading in, 58% of devices were neither traded-in nor recycled, leaving significant value on the table.
The beauty of trade-ins is that they work on multiple levels. They reduce the upfront cost barrier for new purchases, with 71% of US consumers surveyed saying a compelling trade-in offer would prompt them to replace their smartphone six months earlier on average. They also keep customers engaged with the brand ecosystem; 84% are more likely to remain loyal to a brand given a competitive trade-in value. And they ensure a constant supply of devices that can be refurbished and resold, creating an additional revenue stream.
The key is making the process genuinely frictionless. Customers want an easy way to understand what their old device is worth and a straightforward exchange process. When companies get this right, trade-ins stop feeling like a discount mechanism and start functioning as a loyalty tool that keeps customers coming back.
Rethinking returns
Returns will always be part of retail, but they don’t have to be a pure cost center. Especially during critical during high-volume periods when returns spike after major spending periods, they become essential for maintaining a good brand reputation and customer loyalty. Companies that aren’t prepared might find that opportunities to recapture value slip away.
Reverse logistics will continue to evolve from a back-office function to a strategic capability. As more industries embrace circularity, close collaboration between retailers and expert refurbishers will become essential to keeping products in motion.
At Alchemy, we’ve worked with retailers and carriers to refurbish and remarket over 13 million devices to date, and we’ve seen a clear pattern: companies that invest in reverse logistics infrastructure have more chances to get ahead of their competitors. The economic pressures facing retail aren’t going away anytime soon, and neither are consumer expectations around sustainability and convenience. Reverse logistics sits in the middle of both, offering a solution that protects profits and keeps customers coming back.
The devices are already there, and the market demand exists. What’s needed now is the operations to connect the two, turning what flows back into what sells next.
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