Last update: 25.07.2025

In this blog:

  1. Mid-year insight
  2. Why returns are the most misunderstood force in e-commerce
  3. The Nordics are playing chess while others are playing checkers
  4. Bureaucracy becomes the unlikely hero
  5. Automation is the escape hatch
  6. Your supply chain has a talent problem
  7. The secret sauce of the winners
  8. Board-level moves that actually matter
  9. Further reading: Mid-year returns profit insights FAQs

This blog is part #3 of a series; if you haven't already, check out part #1 and part #2.

Imagine this: your customer receives a dress they ordered online, tries it on, decides it’s not quite right, and ships it back the same day. To her, it's a harmless, even empowering act. To your business, a return like this sets off a cross-border logistics challenge wrapped in a sustainability conundrum, governed by a complex web of regulations, and tied to your profitability like an anchor to a ship. 

Mid-year insight

We're halfway through 2025, and Europe’s e-commerce returns landscape is revealing deeper fault lines than expected. Across the continent and especially in the Nordics, returns are no longer a seasonal spike; they’re a year-round strategic disruptor. This review cuts through the noise to highlight the operational gaps, regulatory flashpoints, and technology readiness issues shaping the next 6–18 months. 

Welcome to 2025, where returns are not a side effect of e-commerce; they are the main event. 

Why returns are the most misunderstood force in e-commerce 

Returns cost money, sure. But what’s worse is they cost attention. Senior leaders obsess over cart abandonment, delivery windows, and customer acquisition. But some treat returns like plumbing: essential, but best left unseen. 

That’s not just a blind spot. It’s a missed opportunity worth €312.4 billion by 2030. The European reverse logistics market will represent 38.5% of the global share, a bigger opportunity than most CEOs realise. And yet, 30–40% of online purchases are returned, double the rate of physical retail. 

The fashion category is bleeding, and dresses have return rates of over 50%. Germany and the UK? Over 50% return rates. January is consistently the busiest month for returns, often with volumes that double normal rates. That pressure reveals every weak link in processes, systems, and even promises made during peak season. 

But what if the game has changed? 

The Nordics are playing chess while others are playing checkers 

Let’s go north. Approximately 83% of Nordic consumers shop online at least once per month, indicating a high level of regional digital adoption across Sweden, Denmark, Finland, and Norway. And get this, 73% of Nordic consumers buy cross-border, and 77% demand flexible pickup points. 

This isn’t a function of consumer kindness: it’s the result of nations building logistics infrastructures as advanced as their digital lives. While much of Europe is patching legacy processes, the Nordics are designing returns like customer experience architects. 

They’re not just processing returns, they’re programming loyalty. 

Bureaucracy becomes the unlikely hero 

PPWRRarely does a regulation feel like a gift. But in 2025, the EU Packaging and Packaging Waste Regulation (PPWR 2025/40) is just that. Yes, it will require redesigning up to 80% of e-commerce packaging. Yes, it enforces a 50% empty space cap by 2030. But it’s also a forcing function that could separate the adaptable from the obsolete. 

Companies will be tempted to see this as a burden. In reality, it’s a system-wide reset button. 

Pair that with Extended Producer Responsibility laws spreading across six major countries in 2025. Suddenly, producers, not taxpayers, are footing the packaging waste bill. Compliance failure? Think EU sales bans and hefty fines. 

But here's the psychological truth: people will change behavior if it saves the planet, but only if they don’t have to pay more. Recent surveys reveal that while 50–80% are ready to switch habits, yet only 43% will pay extra for green packaging. You’ll carry the cost, unless you invest in technology that absorbs it. 

Automation is the escape hatch 

Once you process more than 4,000–5,000 returned units per hour, automation shifts from viable to essential. And yet, only 25% of e-commerce players in Europe have implemented full automation across returns workflows. 

And the returns? Not metaphorical; the financial kind: 

  • Up to 97% defect detection accuracy with modern computer vision systems  
  • 1,000+ items per minute achievable with high-speed automation lines  
  • McKinsey and industry studies report 20–30% logistics cost savings and 25–30% efficiency gains in warehouse and reverse operations when automation is fully integrated 
  • Typical ROI occurs within 12–24 months, with high-performing sites achieving break-even in under a year 

This isn’t science fiction, it’s industrial logic. 

Major vendors like Daifuku (€4.54B revenue), Dematic (€4.06B), and Honeywell Intelligrated (€2.94B) lead the full-stack market. But the more interesting opportunity lies in modular, API-ready solutions that integrate with existing tech, without triggering a second IPO to fund the transition. 

The catch? Implementation costs of €2–5 million are typical, and legacy integration can inflate budgets by 20–30%, especially for systems not designed for interoperability. But the cost of inaction? Reputational damage. Regulatory penalties. And a customer experience that leaks value at every touchpoint. 

Your supply chain has a talent problem 

Europe is short 426,000 drivers. That’s not a typo. That’s a crisis. Add to that 8–10x volume spikes during holiday seasons and returns become a logistical traffic jam. 

Some markets, like the Netherlands and Poland, are allowing Sunday logistics operations to keep up. Others lag behind. 

And let’s talk fraud, 15% of returns are fake, costing the industry over €103 billion annually. From empty box scams to wardrobing abuse, you need AI-powered fraud detection, not gut instinct. 

The secret sauce of the winners 

You want a playbook? Look at: 

  • Amazon: Monetises returns through refurbished resale. Low-value items? They tell customers to keep them. That’s not generosity, that’s cost avoidance. 
  • Zappos: Their generous return policy isn’t a risk; it’s a moat. 75% of customers return, and they keep coming back. 
  • Patagonia: Their "Worn Wear" program isn’t just circular economy PR. It’s a vertical integration of sustainability and brand equity. 

These brands aren't managing returns. They're mastering them. 

Board-level moves that actually matter 

This isn’t about turning knobs in the warehouse, it's about re-architecting your business: 

  • CEOs should treat returns as a brand experience lever. 76% of consumers say the ease of returns shapes their decision to shop again. 
  • COOs at leading retailers are working toward <72-hour return cycles and recovering up to 70% of returned product value through resale or refurbishment, particularly in categories like fashion and electronics. 
  • CTOs are moving beyond stitched-together dashboards toward integrated platforms that use AI and real-time data to predict and manage returns with greater accuracy. 
  • CFOs should apply activity-based costing to the returns process to identify where money is leaking — whether in handling, restocking, or lost resale value. This level of cost visibility enables smarter investment decisions, especially as more companies shift spending toward automation and connected technology to improve efficiency and traceability. 

Take this to your next strategy meeting: 

  1. Returns are a €312B opportunity. 
  2. Regulations are your competitive advantage if you move first. 
  3. The ROI on automation is proven. Delay = lost margin. 
  4. Consumers want sustainability. They just don’t want to pay for it. You’ll need to bridge that gap. 
  5. Reverse logistics is your next strategic lever. Treat it like one. 

nShift helps Europe’s boldest brands turn returns from liability into a loyalty engine. If you're ready to transform a broken process into a strategic advantage, let’s talk. 

Because in the new e-commerce game, whoever owns the returns owns the customer. 

 

Make returns simple for your customers & smarter for you

nShift Returns delivers branded, self-service experiences while giving you the tools to prevent avoidable returns, automate refunds, and restock faster.

Discover more

 

Further reading: Mid-year returns profit insights FAQs

What is the “mid‑year insight” in Profit in Reverse?

nShift’s mid‑year analysis reveals that European ecommerce leaders who integrate logistics with customer journeys—using APIs, AI and automation—achieved up to 31% lower fulfillment costs and 24% higher customer satisfaction in early 2025.

Why are retailers missing potential efficiency gains?

While 38% of retailers are starting to adopt unified commerce strategies, only 17% consider their capabilities mature. The gap between adoption and maturity results in missed profitability and experience improvements.

How can returns become profit drivers rather than cost centers?

By digitizing returns, retailers convert up to 30% of returns into exchanges, gather behavioral data, drive in‑store traffic, and up-sell via remarketing—turning returns from a profit drain into revenue opportunities.

What are the hidden costs of returns?

Returns can cost up to 66% of the item’s original value, even when returned undamaged. These hidden costs include processing, shipping, lost resale value, and administrative handling.

How much can retailers save through digital returns platforms?

Retailers with mature unified logistics strategies have seen fulfillment cost reductions of up to 31% and increased customer satisfaction by 24%.

What role does customer experience play in returns profitability?

Customer-friendly returns interfaces build trust, encourage exchanges over refunds, and create remarketing opportunities—especially when return confirmation emails are leveraged for upsells or loyalty messaging.

How can data from returns improve operations?

Digital returns capture reasons, frequencies, and return trends. This data helps identify product issues, refine descriptions, adjust inventory and reduce future return volumes.

Why should European e‑commerce leaders pay attention now?

Europe is forecasted for ~45% ecommerce growth over the next five years. Leaders who embrace unified operations now—integrating returns as part of customer journeys—will gain a competitive and profit advantage.

 

References

  • Vendors: Daifuku (€4.54B), Dematic (€4.06B), Honeywell (€2.94B) 
    Modern Materials Handling. (2023). Top 20 Materials Handling Suppliers 
  • WinSavvy (Mar 2025): 
     Notes a rule of thumb to budget an additional 20–30% contingency for unexpected costs in legacy integration during digitisation and automation projects winsavvy.com+1hopstack.io+1. 

 

thomas-bailey-1
Author

Thomas Bailey

Product Innovation Lead, nShift

Thomas plays a key role in shaping how new features and platform improvements deliver real value to customers. With a background spanning product, tech, and go-to-market strategy, he brings a pragmatic view of what innovation looks like in practice and how to make delivery experiences work harder for your business.
Thomas Bailey

About the author

Thomas Bailey

Product Innovation Lead, nShift

Thomas plays a key role in shaping how new features and platform improvements deliver real value to customers. With a background spanning product, tech, and go-to-market strategy, he brings a pragmatic view of what innovation looks like in practice and how to make delivery experiences work harder for your business.
Read more from this author  →