Ways to Cut Waste and Reverse Logistics Costs for the Circular Economy

17 Apr, 2026

Ways to Cut Waste and Reverse Logistics Costs for the Circular Economy

The National Retail Federation says U.S. shoppers returned more than $890 billion in goods in 2024, a 15% increase from the previous year. And according to Shopify, processing a single return can cost 20% to 65% of the product’s original price. That is probably why most businesses are not excited about reverse logistics and product returns. They see them as a cost they just have to cover. So, a product comes back into the system, and they are struggling to figure out what to do with it. In many cases, they still end up writing it off or throwing it away. 

That approach to reverse logistics will only ever be a drain on finances and will also unnecessarily fill landfills. Here is the thing, though — the process of getting products back from customers for reuse, recycling, or recovery doesn’t have to cost much. Companies can get real value from products that would otherwise be thrown away by redesigning their returns processes to follow the principles of the circular economy.

In this article, we will explore tips to reduce costs and waste in reverse logistics.

Why Returns Cost More Than They Should

The shipping label isn’t the only cost in reverse logistics. There is also a cost involved in the sorting, checking, storing, and slow decision-making about what to do with each item. Also, many businesses still use a mix of vendors to handle returns: one for picking up, one for sorting, and one for recycling. Every time you hand something off, it costs more and takes longer. And products that could have been repaired and resold lose their value while they sit on a shelf.

Take, for example, a returned holiday sweater that went through the usual process of being shipped to a central location, waiting in line for inspection, and then being sent to a discount partner weeks later, only to recover less than half its value. The same sweater, quickly sorted and sent to a nearby store to be sold while demand is still high, gets back closer to 75%. The difference between losing and recovering value is speed and smarter routing.

Tips to Improve Reverse Logistics and Reduce Waste

The fixes here aren’t complicated, but they do require a shift in how operations teams think about returns.

1. Route Returns Through Centralized Hubs

When returned products are routed to different places without a set process, things get lost, put in the wrong place, or sit around for weeks. Centralized return hubs solve this problem by bringing all returns to a single location where trained teams can quickly inspect, sort, and route items. Centralized hubs also improve data accuracy. When all returns go through one system, you can see patterns, such as which products are returned the most, why, and what percentage can still be resold. It’s hard to see such smooth operations when processes are broken up.

2. Refurbish and Resell Before You Recycle

Putting a return back into circulation is the quickest way to recover its value. Returned electronics, appliances, and even clothes can often be checked out, repaired, and resold as refurbished goods for 40% to 60% of the original price. However, for that to happen, you will need to sort every returned item into one of three groups: refurbish and resell, harvest for parts, and recycle. Companies that do this well treat every return as a potential asset rather than a loss on their books.

3. Combine Forward and Reverse Shipments

The cost of reverse logistics will inevitably rise if trucks are not used efficiently — sending out trucks to collect returns only to find they are half-filled, for example. One way to fix this is to combine deliveries going out with pickups going back on the same route. For instance, a delivery truck can pick up returned items on the way back if it is dropping off inventory at a store. This cuts down on empty miles, lowers the cost per unit to transport, and makes better use of the fleet capacity already on the road.

4. Track Every Item Through a Single System

One of the most costly gaps in reverse logistics is having data scattered across multiple locations. When return information is scattered across vendor spreadsheets and siloed systems, operations managers can’t determine how many products are being returned, how much they are worth, or why some products keep coming back. However, with a single tracking system that keeps track of each asset from the time it is returned by a customer until it is finally disposed of, whether that means selling it again, recycling it, or recovering parts, your teams can make faster and more intelligent decisions.

Close the Loop Is a Partner Built for Circular Reverse Logistics

It’s hard to manage tightening up reverse logistics across many sites and product categories with only internal resources. However, with Close the Loop, you have a one-stop shop for the entire reverse supply chain, from nationwide collection and secure data destruction to certified refurbishment, resale, and recycling with no waste. Contact us today to get started.