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Returns, otherwise known as reverse logistics, have always been part of warehouse fulfillment. What has changed is their scale, their unpredictability, and their influence on everything else that happens inside the warehouse.
According to data from the National Retail Federation and Happy Returns, U.S. retailers expect consumers to return roughly 15.8 percent of all merchandise in 2025, consistent with 2024 levels that reached nearly $890 billion in returned goods.
That volume alone makes one thing clear that reverse logistics is no longer a marginal workflow. It is a structural force that shapes labor planning, space utilization, inventory accuracy, and customer experience. At scale, reverse logistics has become a direct test of Operational Confidence — the ability to trust how your warehouse will perform when conditions shift unexpectedly.
Across conversations on the “Warehouse Automation Matters” podcast, warehouse leaders rarely describe reverse logistics as a discrete function anymore. They talk about it as a constant operational presence that must coexist with outbound fulfillment in real time.
In an environment defined by ever-peak demand, reverse logistics is no longer something warehouses “handle.” It’s something they must design for. This is precisely where flexibility-first automation becomes critical — infrastructure designed to absorb variability rather than react to it.
Returns Are No Longer Predictable and That’s the Core Challenge
In traditional retail models, returns followed recognizable patterns. Seasonal peaks, post-holiday surges, and steady baseline volumes made it possible to staff and process returns with a degree of confidence.
That predictability has eroded.
As Kevin Sullivan, Chief Operating Officer at Conectiv Supply Chain Solutions, explained on a recent podcast episode, returns behave very differently depending on the business model. In legacy media and retail environments, inbound return volumes were consistent enough to support heavily automated workflows. But, in eCommerce, returns arrive one by one, often without warning, and vary widely in condition and disposition requirements.
That variability breaks traditional reverse-logistics models. Manual processes depend on batching and stability, and modern returns offer neither.
When returns arrive continuously and unpredictably, warehouses must choose whether those flows will destabilize the operation or be absorbed intentionally.
Reverse Logistics Is a Labor Problem Before It’s a Process Problem
Many warehouse leaders describe returns as “messy,” but the real issue is strain.
Returns introduce unplanned inbound volume, exception-heavy workflows, increased inspection time, and high training demands — often during the same periods when outbound volumes peak. At scale, those pressures collide directly with ongoing labor challenges.
As Adam Lawicki, VP of Strategy at scale3PL, put it on an episode of “Warehouse Automation Matters”: “This isn’t a seasonal spike anymore. This is a new baseline operation.”
Manual reverse logistics amplifies fatigue and inconsistency. Each return requires judgment, movement, and decision-making, frequently performed by less experienced associates during high-pressure periods. The result is slower processing, higher error rates, and downstream impacts on inventory confidence.
Fixed automation systems struggle with the exception-heavy, variable nature of returns. Adaptive, AMR-based automation can flex with shifting volume and SKU complexity. Automation doesn’t remove human judgment from returns, but it does remove unnecessary movement and repetition. That shift allows people to focus on inspection, disposition, and exception handling rather than transport and searching.
Visibility Matters More on the Way Back In
One of the most consistent themes across transcripts is the importance of visibility.
Returns are not just inbound inventory. They are data events and without real-time AI-driven tracking and orchestration, returned items disappear into gray areas to sit in cages, wait for inspection, or be restocked incorrectly.
At scale3PL, automation and orchestration were introduced specifically to ensure exceptions were visible, not buried. By automating standard workflows, teams could focus on what fell outside the norm — including returns — without slowing the rest of the operation.
That same principle applies to reverse logistics more broadly. When inbound returns are tracked, routed, and prioritized through a unified orchestration platform such as LocusONE™, they stop disrupting the operation and start behaving like a managed flow.
Visibility restores confidence — not just in returns, but in the system as a whole.
Reverse Logistics Competes for Space, Whether You Plan for It or Not
Returns consume space in subtle but costly ways.
Manual warehouses often create temporary areas for returns processing that quietly become permanent. Cages overflow, aisles narrow, and forward pick locations get compromised as returned inventory waits for disposition.
At Conectiv, years of experience handling retail and media returns led to purpose-built automation for predictable flows and careful evaluation for less predictable e-commerce returns. The takeaway wasn’t that every return can be automated — it was that unplanned returns space is one of the fastest ways to lose capacity.
Warehouse automation enables tighter routing, faster disposition, and quicker reintegration of sellable inventory to preserve space for revenue-generating activity.
Automation Brings Consistency to an Inherently Inconsistent Process
Returns will always involve variability, but what automation brings is consistency in how the operation responds.
In a podcast conversation with Peak Technologies, Dave Green and Mike Wills emphasized that consistency, and not speed, is what unlocks accuracy and predictability. Robots move at the same pace every time. Tasks are routed the same way. Training time collapses from months to days or even hours, reducing risk introduced by turnover and seasonal labor.
That consistency matters most in reverse logistics, where associates must quickly learn inspection criteria, routing logic, and system updates. When movement and task sequencing are standardized, human effort can be applied where it adds the most value.
Reverse Logistics Can’t Be an Afterthought
One of the clearest lessons from these conversations is that reverse logistics cannot be bolted on later.
Warehouses that treat returns as an exception manage them reactively. Warehouses that treat returns as infrastructure design workflows that flex as volumes change.
This is where reverse logistics intersects directly with Operational Confidence, which is the ability to trust how your warehouse operations will behave when conditions shift. Confidence doesn’t come from eliminating variability. It comes from knowing how the system responds when variability shows up.
Designing Reverse Logistics for an Always-On World
Returns aren’t going away. In many sectors, they’re increasing — driven by e-commerce growth, customer expectations, and more generous return policies.
The warehouses that outperform won’t be the ones that process returns the fastest on paper. They’ll be the ones that design reverse logistics as part of the core operation and are visible, orchestrated, and resilient.
In 2026, reverse logistics is a defining test of whether a warehouse is built to handle reality as it is, not as it used to be.
Reverse logistics has become one of the clearest indicators of whether a warehouse is designed for today’s realities or yesterday’s assumptions.
If returns are disrupting labor planning, consuming space, or eroding confidence in inventory data, it may be time to rethink how reverse logistics fits into your broader fulfillment strategy.
Reach out to Locus Robotics to learn how flexible, automation-driven workflows can help you integrate returns into your core operations to create visibility, consistency, and confidence even as volumes fluctuate.
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