Retail Returns Are Out of Control—Can AI Fix It?

I’m spending this week in Chicago with my mom (apologies to my Chicago friends for not reaching out!). Over breakfast, she asked where she could take her sliding screen door for repair. Years ago, a local hardware store would handle it quickly. Now? You typically need to hire a handyman for $150–$250 since they come to you.

So, I told her I’d fix it myself. A quick Amazon search led me to a nylon mesh screen in black or gray. When I asked which color she preferred, she hesitated:

“Black would give me more shade…”

”…but gray would probably be more transparent.”

Without thinking, I responded: “Let’s just buy both and return the one we don’t want.”

And that’s when it hit me—I’ve become a “bracketer.”

Like many consumers today, I often buy multiple sizes or colors online, knowing I’ll return what doesn’t work. It’s convenient for me but a logistical nightmare for retailers. Bracketing drives up supply chain costs, return processing expenses, and operational complexities.

Can Technology Solve the Retail Returns Crisis?

The retail industry is investing heavily in technology to manage the growing challenge of returns. Here are some of the most impactful innovations:

AI & Data Analytics for Returns Prevention

Predictive Analytics – Helps retailers anticipate return patterns and provide better recommendations.

AR & Virtual Try-Ons – Allows customers to visualize products before purchasing, reducing unnecessary returns.

Bracketing Detection – Identifies excessive returners and enables personalized return policies.

 

Smart Returns Processing & Automation

AI-Powered Chatbots – Automate return requests and improve efficiency.

Smart Warehousing & Reverse Logistics – Uses robotics and AI to streamline return handling.

Blockchain Tracking – Verifies product authenticity to prevent fraud.

 

Fraud Detection & Prevention

AI-Driven Fraud Detection – Identifies patterns of wardrobing (buy-use-return), fake receipts, and excessive returns.

Computer Vision – Analyzes product condition to validate return claims.

 

Sustainable Returns Management

AI-Driven Resale & Circular Economy Initiatives – Reroutes returns to resale, donation, or recycling instead of landfills.

Smart Packaging & QR Code-Based Returns – Reduces waste and minimizes carbon footprints.

 

Digital-First Returns & Drop-Off Networks

Label-Free & Box-Free Returns – Simplifies the process for consumers while reducing packaging waste.

Retail Tech Partnerships (Happy Returns, DHL, Amazon Hubs) – Enhances efficiency by providing convenient drop-off locations.

 

As retail evolves, balancing customer convenience, operational efficiency, and sustainability will be key.

What do you think? How do you approach returns as a consumer or retailer? Drop your thoughts in the comments! And as always if you need help with any of these aspects, feel free to contact me.

 

-Eugene Park, Chief Strategy Officer