Every year, as South African retailers prepare for Black Friday, the focus is squarely on driving revenue: deep discounts, promotional campaigns and omnichannel sales strategies dominate the conversation.
Yet, lurking quietly behind the scenes is a challenge that can make or break a season’s profitability: reverse logistics. Managing returns - from inspection and restocking to refurbishment - has become a critical bottleneck in retail.
E-commerce has fundamentally changed how consumers behave. Shopping online isn’t just convenient - it’s the norm. If an item doesn’t fit, isn’t the right colour or simply isn’t as anticipated, the expectation is clear: return it quickly and easily. Retailers must plan for that reality.
Black Friday revenue spike and operational pressure
Black Friday exemplifies the double-edged sword of peak trading events. While sales volumes surge, so too does the volume of product returns that flow back through the supply chain.
IMM Graduate School data shows that returned goods during peak periods can occupy up to 20% of warehouse capacity in high-return categories like apparel, footwear and electronics accessories.
For textiles and fashion, return rates can exceed 30%, driven not by defects but by changing consumer preference. Electronics returns, in contrast, tend to stem from mis-shipments or product faults rather than buyer choice.
Every hour counts during Black Friday. Inefficient handling of returns causes warehouse congestion, transport strain and rapid margin erosion.
South African retailers feel this pressure acutely. Statistics South Africa reported a 7.7% year-on-year jump in retail sales in November 2024, the strongest November in years. That spike, however, fuels what industry insiders call the ‘returns wave’ that ripples into December and January. Unlike global e-commerce giants, few South African retailers have purpose-built reverse logistics systems, leaving storerooms cluttered with unsold, returned stock - sometimes jokingly referred to as ‘Christmas graveyards’.
Financial and operational implications
Returns are expensive. Every returned item incurs inspection, handling, repackaging and sometimes refurbishment costs. Shipping - particularly outbound collection - is often absorbed by the retailer. Globally, 16.9% of online sales were expected to be returned in 2024, representing roughly $890bn.
In fashion and footwear, high return rates can quickly erode profit margins. In South Africa, the phenomenon is mirrored, creating a significant drag on cash flow, working capital and warehouse operations.
Returns impact cash flow: cash is tied up during assessment, inventory congestion slows new stock and unsellable items erode margins.
Ports and transport networks compound the challenge. South African ports remain among the slowest globally in container efficiency, while high-crime last-mile delivery zones force additional security measures, sometimes turning a simple return into a costly logistics exercise. The irony is stark: a returned Black Friday item might cross paths in Durban harbour with its replacement shipment, highlighting the complexity and inefficiency of current systems.
Forward-thinking retailers are turning to technology and innovation to manage returns more effectively. Predictive analytics and artificial intelligence help forecast return volumes, enabling better allocation of warehouse space, labour and transport.
At checkout, enhanced sizing guides, fit reviews and AI-driven recommendations help reduce mis-purchases. Digital fitting rooms and augmented reality mirrors are being trialed to preempt returns before they occur.
Logistics partnerships are also crucial. Consolidated pickup and drop-off networks - including lockers and retail partner counters - allow returns to be collected more efficiently and in bulk, reducing failed collections and transport costs.
Refurbishment and resale channels, or ‘re-commerce’, are emerging as profitable avenues for monetising returned goods. Small-scale operators are already generating double-digit margins by reselling gently used items through informal channels like WhatsApp marketplaces.
Returns are no longer an afterthought. They are a core part of supply chain planning. Retailers must communicate closely with logistics providers to schedule pickups, optimise routing and ensure returns are processed quickly. Efficiency here is directly tied to customer satisfaction and margin protection.
Changing consumer expectations
The rise of e-commerce has created a cultural shift: hassle-free returns are now considered a standard part of the purchase experience. Younger consumers are especially online-focused, relying less on physical stores for both purchases and returns. Retailers failing to meet these expectations risk losing loyalty and repeat business.
A poor returns experience can erode customer trust faster than any sales promotion can build it. Retailers must adapt not only to the volume of returns but also to the expectations of speed and convenience.
The growing complexity of reverse logistics highlights broader trends in South African retail:
- Integrated planning: Returns are increasingly seen as an extension of the forward supply chain, requiring the same focus on efficiency, cost management and service quality.
- Technology adoption: Predictive analytics, AI and real-time tracking are critical for managing returns, particularly during peak trading periods.
- Sustainability considerations: Returned products that cannot be resold are often refurbished, recycled or responsibly disposed of, reflecting growing environmental and social governance concerns.
Retailers ignoring returns risk chaos, margin loss and unhappy customers; those who prioritise reverse logistics gain a competitive edge.
