Retail returns are a growing challenge and opportunity for today’s retailers. With return rates reaching over 16% in U.S. retail, and substantially higher for ecommerce, figuring out how to sell customer returns effectively is no longer optional. It’s a critical part of profit recovery, inventory management, and brand sustainability.
Forward-looking retailers are increasingly embracing recommerce, the resale of returned, refurbished, or surplus products, as a way to transform what was once a costly burden into a profitable opportunity. Whether managed internally, outsourced, or structured through revenue-sharing partnerships, recommerce is proving to be a powerful new growth channel.
This article explores three key retail return strategies:
- Outsourcing to recommerce partners
- Building an in-house returns resale process
- Working with buy-back partners on a profit-share model
Let’s break them down.
1. Outsourcing to Recommerce Partners
One of the most rapidly expanding techniques among contemporary retailers is outsourcing customer return resale to recommerce partners. Third-party companies process every step of the reverse supply chain, such as returns processing, refurbishment, pricing, listing, and end sale. With the scale and specialization of such companies, retailers can convert troublesome returns into a predictable, low-effort stream of revenue.
One of the greatest benefits of outsourcing is speed to market. Recommerce partners already have built-out infrastructure, including sorting centers, refurbishment facilities, and online marketplaces, to resell products in a timely manner. For instance, firms such as Total Surplus Solutions, Optoro and B-Stock focus on reselling return items through direct-to-consumer websites and auction-style listings. This provides products returned to a second life with little delay, enhancing inventory turnover and decreasing holding cost for the retailer.
Operational effectiveness is another essential advantage. Returns processed in-house are costly and logistically intensive. Inspection, grading, cleaning or repair, repackaging, and customer service all take people and resources away from core business functions that drive top-line growth. By outsourcing, retailers save on these overhead costs. Recommerce partners cover the associated expenses and liabilities of the return life cycle so that internal resources can remain concentrated on core activities.
In addition, recommerce providers know how to squeeze the most resale value out of products. They know how to price products competitively through various resale channels like eBay, Amazon, proprietary websites, or wholesale auctions. They also use data analysis to identify which categories sell best on what platforms. Consequently, recovery rates on returned merchandise are often much higher using bulk liquidation.
Sustainability is a largely overlooked advantage. Consumers and investors increasingly push retailers to eliminate waste and promote greater environmental performance. By engaging in responsible recommerce partners, products returned to the retailer are diverted from landfills and are instead resurrected in the circular economy. This enhances corporate ESG initiatives and enables favorable brand communication.
Of course, there are trade-offs to outsourcing. Retailers will generally have less control over product presentation, customer experience, and branding when returns are outsourced. Also, the convenience is not free, and typically costs in the form of a percentage of revenue, per-unit charge, or lowered resale price are involved.
This approach is best suited for retailers who:
- Lack the infrastructure to manage returns internally
- Have high return volumes across multiple product categories
- Want a plug-and-play solution with minimal investment
Ultimately, outsourcing returns to a recommerce partner is a flexible, scalable strategy that allows retailers to quickly and efficiently monetize returned goods. As the recommerce industry matures, these partnerships will continue to evolve with new technologies, marketplaces, and sustainability practices that further enhance their value.
Also read: 20 Ways for eCommerce Businesses to Lower Customer Returns in 2025
2. Creating an In-House Returns Resale Process
For retailers with internal capabilities to spare, constructing a in-house recommerce business provides full control over managing returned inventory, resale, and presentation to customers. More complicated than outsourcing, the model enables retailers to establish a branded, personalized resale experience that can drive margins and strengthen customer loyalty.
The initial step toward creating an internal returns resale process is establishing an effective reverse logistics system. This means establishing acceptance workflows for returned merchandise, transportation workflows, and workflows for sorting the returned merchandise. Returned merchandise needs to be routed efficiently from stores or customers to distribution centers or a centralized returns facility. There, each product needs to be screened on the basis of condition, resale value, and refurbishment needs.
Inspection and grading is also a key element. Items returned from customers should be organized by category, such as new (unopened), like-new (open box), refurbished (repaired and tested), or salvage (non-working or severely damaged). Having this process standardized promotes consistency and assists in aligning inventory to the correct resale outlets.
Refurbishment capacities can also be required, particularly for electronics, appliances, and home furnishings. This can range from cosmetic cleaning to software resets, part swaps, or complete testing. There is the option for retailers to do this in-house or outsource it to certified fix partners.
With inventory ready for resale, the next step is identifying the right sales channels. Retailers may choose to:
- List items in a dedicated “Outlet” or “Open Box” section of their e-commerce site
- Operate branded clearance or outlet stores
- Sell through third-party marketplaces like eBay or Amazon Renewed
- Bundle or repurpose items for promotional use
Having control over where and how items are sold provides two big advantages: higher profit margins and greater brand consistency. Retailers can maintain their customer experience standards, pricing strategy, and messaging, even in the resale space. For example, Lululemon’s “Like New” program offers gently used athletic apparel directly through the brand’s site, creating a seamless shopping experience.
In-house recommerce also enables deeper customer engagement. You can offer loyalty points or credits for returning used items, promote sustainable practices, and reinforce your brand’s commitment to affordability and reuse. It’s an opportunity to attract budget-conscious and eco-minded shoppers without sacrificing brand value.
However, this model does require significant investment in people, processes, and technology. Labor costs, warehousing, quality control, and customer service can be high. Inventory turnover may also be slower without the scale and reach of third-party resale networks.
This strategy is best for retailers who:
- Have the infrastructure and volume to support reverse logistics
- Want full control over branding and customer experience
- Are looking to build long-term value through customer loyalty and sustainability
In-house recommerce is a strategic, brand-building approach to returns that can yield strong results when executed well.
3. Working With Buy-Back Partners on a Profit-Share Model
A third resell model for returned merchandise is collaboration with buy-back or resale-as-a-service providers on a profit-sharing basis. These partnerships marry the economies of outsourcing with the profitability of direct resale, producing a middle-ground solution that is becoming increasingly popular throughout retail segments.
Here, the partner buys returned or overstocked merchandise from the retailer on commission, doing everything from inspection and refurbishment to resale and customer fulfillment. The partner does not purchase the inventory outright but resells it and distributes the proceeds on a predetermined revenue share, typically 60/40 to 80/20, depending on the deal.
This profit-sharing paradigm provides several unique benefits. For one thing, it aligns the incentives between the partner and retailer. Since the partner only benefits when goods are sold, they have an incentive to maximize pricing, speed to market, and customer experience. This typically leads to better recovery rates than bulk liquidation or fixed-price buybacks.
Second, it lowers the risk and capital outlay. The retailers do not have to make investments in warehouses, labor, or resale channels, nor do they bear the costs of unsold stock. Most of the operational overhead is taken by the partner, which makes it appealing for brands that wish to test recommerce without committing long-term infrastructure investments.
Third, it facilitates a branded resale experience without internal complexity. Certain partners, such as Recurate or Archive, assist retailers in creating their own resale channels within their own websites. Customers are able to purchase certified pre-owned products via a trusted interface while the partner manages the backend logistics and customer support. This enhances brand trust and enables sustainability messaging.
The model is also very flexible. The retailers may opt to engage partners that have specialization in their particular category, for example, fashion, electronics, or home products to guarantee improved resale performance. They may also make variations in volumes, categories, and resale tactics according to seasonal fluctuations or business priorities.
However, there are important factors to clarify in any profit-sharing agreement:
- Inventory ownership: Does the retailer retain ownership until sale, or does the partner take title?
- Pricing strategy: Who sets the resale price, and how are markdowns handled?
- Payout terms: How frequently are profits distributed, and what fees are deducted?
- Data transparency: Will the retailer have access to sales metrics, return rates, and channel performance?
This model is ideal for retailers who:
- Want higher recovery rates without managing operations
- Are exploring recommerce without long-term investment
- Seek aligned incentives and performance-based outcomes
Overall, profit-sharing partnerships offer a flexible, low-risk way to capitalize on the value of returned inventory. As the recommerce ecosystem grows in complexity, more and more specialized providers and platform integrations will spring up to foster this model further, making it more lucrative for mid-level and large retailers alike.
Conclusion: Don’t Let Returns Become a Write-Off
Returns were formerly viewed exclusively as losses. Now, recommerce is converting them into revenue, loyalty, and sustainability gains. By reselling, refurbishing, or repurposing returned merchandise, retailers reduce waste, increase margins, and respond to growing demand for affordable, green products.
Either through outsourcing, in-house operations, or profit-sharing, the trick is to view returns as assets, not liabilities. Executed correctly, recommerce deepens profits, customer trust, and brand viability—all from inventory previously deemed worthless.
Ready to explore the right resale strategy for your business? Visit Customer Returns Buyers to connect with partners and discover solutions tailored to your retail needs.