July 31, 2025

How to Fix Your Returns and Earn 5% more revenue

Smart brands aren’t just focused on top-line growth, they’re unlocking hidden margin. In this post, we break down how returns quietly erode revenue and how optimizing your return strategy can drive nearly half a million dollars in lift—without touching paid spend. From increasing restock rates to launching branded resale, we show how brands like Pact are turning return logistics into profit engines.

Returns

In ecommerce, most conversations about growth follow the same script:

"We need more traffic. We need to increase AOV. We need to improve conversion. We need better retention."

Those are all valid. However, what if you could add half a million dollars in revenue without spending another dollar on paid ads, hiring another retention consultant, or redesigning your PDPs?

What if the answer wasn’t at the top of your funnel but buried in the back?

That’s the opportunity hidden inside your returns.

Returns have long been treated as a necessary evil: the annoying cost of doing business online. But in reality, they’re one of the most underleveraged drivers of margin and growth. When handled strategically, returns can quietly become one of the most efficient levers you have.

Let’s break it down.

**You Think You're Running a $10M Brand—But You're Actually Closer to $9M**

If you're running a healthy DTC brand doing $10 million a year in sales, it feels like things are working. The growth is solid, your product resonates, and you're moving 100,000 orders a year at an average price of $100.

Take a closer look, because that $10M headline number isn’t telling the whole story.

Returns are quietly eroding your revenue.

The Hidden Cost of Returns

Let’s break it down and look at how most brands handle those returns.

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The Real Revenue Picture

When you subtract the return-related waste, you’re no longer a $10M brand. You’re more like a $9.05M brand:

That’s nearly a million dollars quietly disappearing every year, not because of bad products or poor planning, but because the return system was built to minimize mess, not maximize margin.

A Better Option: Fix Your Returns, Unlock Growth

Now let’s look at what happens when you optimize your returns strategy.

You’re not doing anything radical. You’re just tightening the bolts:

You improve product pages and fit tools to reduce returns slightly—down to 20% (from 25%).
You optimize operations to push your restock rate up to 85% (from 80%).
Instead of liquidating B-grade items, you build a branded resale experience where slightly used or imperfect items are resold at 70% of MSRP.
You streamline reverse logistics and reduce return costs by 20%.

Here’s what the numbers look like now:

That’s a $460,000 lift, without touching your growth marketing strategy. No new traffic. No price hikes. No product redesign. Just smarter operations and better inventory recovery.

Why Returns Are So Overlooked—and So Powerful

Returns live in the shadows.

They’re owned by ops, not growth, and they’re the bane of every CFO’s existence. They’re messy, complicated, and hard to make sexy on a slide deck. Because of that, they rarely get the investment or attention they deserve, despite being a treasure trove of margin.

Think about it:

Lowering your return rate with improved fit data and clearer product info protects more of your topline revenue.
Increasing your restock rate with streamlined operations turns dead stock into margin.
Creating branded resale channels lets you monetize what used to be landfill or liquidation.
Streamlining logistics drops dollars directly to the bottom line.

Each of these tweaks has a compounding effect. Together, they can unlock hundreds of thousands of dollars annually for brands doing $5M+ in DTC revenue.

The Pact Story: Turning Returns Into Revenue

Treet’s recent webinar with Pact and Fillogic offers a real-world example of this principle—on a massive scale. When Pact found itself with 100,000 stranded returns across borders and warehouses, they didn’t patch around it, they reimagined their returns process. And it paid off quickly.

Within two weeks of going live, nearly 2,000 units were sold via Pact’s branded resale, turning a bloated backlog into revenue.

This smart system blends:

Fillogic’s reverse‑logistics network to triage, route, and grade returns closer to the consumer
Treet’s branded resale storefront and peer-to-peer tools

Together, they close the loop. Keeping inventory in the ecosystem and turning returns into margin.

“It makes sense logistically, it makes sense operationally, and it makes sense financially.”

— Drew Cook, CFO & President @ Pact

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The Next Growth Frontier Isn’t Acquisition. It’s Optimization.

We’ve hit a turning point in e-commerce.

Paid media is more expensive than ever. Email and SMS are saturated. Margins are tight. Everyone is looking for the next edge—but often looking in the wrong places.

The truth? The real unlock isn’t about doing more.

It’s about doing what you already do, better

Fixing returns doesn’t get the same hype as launching a TikTok campaign or rolling out a new loyalty program. But for brands that want to build real, sustainable profitability, it's one of the most underrated moves you can make.