The Future of Returns: How AI and Automation Are Changing the Game

The Rising Cost of Returns

Returns have always been a thorn in the side of retail. In e-commerce, the challenge is even bigger: customers can’t touch, try, or test products before buying. As a result, return rates can reach 20–30% of all online purchases in fashion and footwear. For retailers, this means lost revenue, rising logistics costs, and dissatisfied customers.

To make matters worse, the global return volume is growing every year, fueled by the shift to online shopping. Reverse logistics – the process of getting a product back from the customer to the warehouse – is often more expensive than the initial shipment. Many brands now spend billions annually handling returns.

This pressure is forcing the industry to rethink. Instead of simply managing returns, the new goal is preventing them, automating them, and learning from them. And that’s where AI and automation come in.

Over the next 5–10 years, technology will completely reshape how returns work. Here’s a closer look at the trends that will define the future.

AI-Powered Prediction and Prevention

Imagine a world where a return never happens because the customer made the right choice from the start. This isn’t a fantasy – AI is making it possible.

Retailers are increasingly using machine learning models to analyze purchase history, browsing behavior, and even return records. With this data, AI can:

• Suggest the correct size based on body profile and past purchases.
• Flag products with high return risk before checkout.
• Personalize recommendations so shoppers buy what they’re more likely to keep.

For example, an AI tool might notice that a customer often returns shoes due to sizing issues. The system can then prompt: “Based on your past purchases, size 9.5 may fit better than 10.” This tiny intervention reduces returns, saves money, and improves customer satisfaction.

At scale, these AI-driven nudges could save the industry billions in unnecessary returns.

Augmented Reality (AR) for “Try Before You Buy”

One of the most exciting developments is the use of augmented reality (AR). AR enables customers to virtually “try on” clothes, furniture, or even makeup before hitting the buy button.

• A shopper can see how a sofa looks in their living room.
• A customer can test how a lipstick shade looks on their face.
• Someone buying sneakers can check how they match with their jeans.

This technology reduces the “buy, try, return” cycle that has become so common in e-commerce.

The potential is massive: the AR in retail market is projected to reach $1.19 trillion by 2032. For retailers, investing in AR is not just a gimmick – it’s a necessity. Those who fail to adopt it may see higher return rates and lower customer loyalty.

At Backsy, we see AR as a future partner technology to returns management. The better the fit and feel upfront, the fewer headaches for both merchants and customers later.

Smart Warehouses and Robotics for Returns

Even with prevention, returns will never fully disappear. That’s why automation inside warehouses is becoming critical.

Robotic systems can now:

• Sort returned products by category and condition.
• Scan for damage using computer vision.
• Direct items to resale, refurbish, or recycle channels.

Amazon and other giants already rely heavily on robotic arms and automated conveyor systems. In the next decade, smaller retailers will gain access to these technologies through logistics partners.

The result? What used to take days – manual inspection, re-packaging, restocking – could take minutes. Faster return processing means quicker refunds for customers, healthier cash flow for merchants, and less inventory loss.

AI Chatbots for Seamless Customer Support

Returns aren’t just about logistics; they’re also about communication. Customers want clear answers:

• “Am I eligible for a return?”
• “When will I get my refund?”
• “How do I print a return label?”

AI-powered chatbots are stepping up. Available 24/7, they can guide customers through the return process, handle policy questions, and even issue return authorizations automatically.

Unlike old-fashioned chatbots, today’s generative AI systems sound natural, learn from past interactions, and can handle complex cases. By reducing wait times and human workload, they create a smoother, less stressful return experience.

Backsy is already exploring ways to integrate AI-powered customer interactions into its platform, helping merchants provide instant support without scaling their staff costs.

Blockchain for Transparency and Fraud Prevention

One hidden cost of returns is fraud. From customers returning worn items (“wardrobing”) to counterfeit products being swapped into the supply chain, fraud eats into margins and trust.

Blockchain offers a solution. By giving every product a secure, immutable record, retailers can track an item from manufacturing to sale to return. When a product comes back, the blockchain verifies its authenticity and journey.

This level of transparency not only prevents fraud but also reassures customers that they are part of an ethical, secure ecosystem.

In the coming years, as blockchain adoption grows, returns will become more trustworthy – for both merchants and buyers.

The Bigger Picture: Returns Become “Invisible”

Put all these technologies together – AI predictions, AR try-ons, robotic warehouses, AI chatbots, blockchain – and you get a future where returns are:

• Faster (processed in hours, not days)
• Smarter (prevented before they happen)
• Invisible (so smooth the customer hardly notices the process)

This is the holy grail of reverse logistics: a system that works in the background, creating confidence for customers and efficiency for businesses.

Backsy’s Vision

At Backsy, we believe the future of returns is not just about handling products – it’s about building trust, loyalty, and sustainability. That’s why we are actively integrating AI and automation into our platform.

• AI insights help merchants spot patterns and optimize policies.
• Automation tools reduce manual work for both merchants and customers.
• Future-facing integrations (like AR and blockchain) are on our roadmap, ensuring Backsy merchants stay ahead of the curve.

The goal is simple: to make returns less painful, more intelligent, and more profitable.

Final Thoughts

Returns are no longer just an operational headache – they’re becoming a key competitive battleground. In the next decade, the retailers who win will be those who treat returns not as a cost center but as a customer experience opportunity.

With AI and automation, the future of returns will be fast, smart, and nearly invisible. And at Backsy, we’re excited to help merchants lead this transformation.

Because in the end, the future of returns isn’t just about sending products back – it’s about moving the whole industry forward.