“During the past five years, but really during COVID when all of the brick-and-mortar stores were shut down, consumers were forced to shop online, which really accelerated the growth of e-commerce sales and thereby returns,” says Vanessa Llovet, vendor relations manager at goTRG, an end-to-end returns solutions provider for big-box retailers like Walmart and Sam’s Club.

According to a report from the National Retail Federation and Appriss Retail, returns remained roughly flat in 2022 at 16.5%, compared with 16.6% in 2021. The NRF and Appriss Retail return figures encompass online returns. Breaking out online return rates shows e-commerce shoppers returned 20.8% of purchases in 2021 and 16.5% in 2022. For every $1 billion in sales, there’s around $165 million in returns to deal with.

While the return rate was stagnant in 2022, returns have been trending up in recent years. “Online returns more than doubled in 2020 from 2019 and are a major driver of the overall growth of returns,” reports NRF. Back in 2018, the return rate sat around 10%, per Appriss.

The beauty industry, which is estimated by market research firm Euromonitor International to produce over 120 billion packaging units annually, is a contributor to the returns, but tracking its slice of the pie is complicated. Items like appliances are returned at lower rates, so they drag down the aggregate number, while apparel returns bring the rate of return way up, with consumers often “bracket buying” sizes to try on extra merchandise at home to find what’s right for them.

“Apparel has the highest [rate of return], but cosmetics hover around sub-20%, which is still high,” says goTRG director of brand management Fara Alexander. Some direct-to-consumer brands selling beauty products peg their return rate at closer to 5%. No matter the return rate, brands and retailers are attempting to get it down to save money and improve environmental impacts.

“[Post-COVID] we have more health and beauty retailers looking at the post-purchase experience, and specifically the digital returns experience, more than ever,” says David Morein, VP of customer strategy at Narvar, a post-purchase customer experience platform that’s worked with brands like Sephora, Davines, Urban Decay and Molton Brown.

When it comes to e-commerce purchases, various factors impact the rate of returns, Morein notes, and companies like Narvar—plus goTRG and dozens of others in a new cottage industry coping with returns—help brands implement strategies to keep customers from sending things back. Shade-matching tools and virtual try-ons are tactics enabling consumers to mimic in-store experiences thanks to technology from companies such as Perfect Corp. and Beauty Labs. Artificial intelligence and machine learning, often implemented through online quizzes and virtual consultations, can get customers to the product suitable for them, too.

The beauty industry can take notes from apparel’s quest to lower its sky-high return rate. Fashion retailers like Dress The Population offer discounts for customers who agree not to return an item, whereas fast fashion brands like H&M and Zara have abandoned free return shipping. Gap, Old Navy, and Banana Republic have tightened their return window from 45 to 30 days.

No matter the category, the cost of shipping and processing returns can be burdensome, especially for lower priced items. Alexander estimates free return shipping can cost retailers between $10 and $14, plus $3 to $5 for software processing costs, and getting the item ready to be resold can cost up to 20% of its retail value. “If you have a $25 item, and you add that up, you could be over [its value],” she explains.

Liquidators are popular to offset return costs and mitigate disposal and recycling fees. Where Ya Bin, a liquidation retailer with locations in North Carolina, Florida and Ohio, has been highlighted on social media. It’s among several retailers that allow frugal shoppers to dig through returns—sometimes still in their boxes—for buried treasures. Where Ya Bin sells items for as little as a quarter, but beauty products are absent from its shelves.

To protect brand equity, some companies don’t allow their products to be resold or limit reselling to international liquidation. Smaller brands that handle their own returns may toss unopened beauty products into a free bin for employees or resell them. But bigger operations have a more complicated track ahead of them simply dealing with the volume of returns.

“We don’t resell any of the beauty [returns] we get because of the liability associated with the expiration dates,” says Llovet. She explains that connecting a beauty return to its original purchase order to gauge timelines is almost impossible due to poor record keeping, so even untouched products often can’t be safely resold. Serial numbers, common on electronics, are handy, but beauty products lack them.

Donating items is typically deemed risky by brands, so retailers and return-focused vendors began implementing a “keep it” strategy during the pandemic, where they refund the customer and instruct them to keep, gift or dispose of the unwanted item.

“Most of our clients have a threshold. So, if it’s under a certain amount, they don’t even bother shipping it back to us,” says Llovet. “We usually help them calculate that or make recommendations to them with their data.”

Where do returned beauty products generally go if they’re not regifted or kept? They’re destined for a landfill unless a retailer spends money to recycle them. Consumers are increasingly aware of that destination—and concern is growing about it.

In 2020, an Ulta Beauty employee named Bianca Ann Levinson went viral on TikTok by sharing a video of herself “damaging out” returned products. The process entailed emptying and breaking products before throwing them in the trash. She explained it was to prevent dumpster diving in the parking lot trash bins, another popular activity to document on social media. The video garnered 4.6 million views.

Representatives from Ulta Beauty didn’t offer comment on its return protocol, but pointed out positive steps toward sustainability it has taken. In the chain’s 2022 environmental, social and governance report, it states that Ulta donates products when possible, which included 500 pallets of personal care items and beauty products in 2022.

“I predict that the next six to 36 months will really start to see a lot more retailers, especially in the health and beauty space, continue to think about how to better manage goods that aren’t actually going to be resold,” says Morein.

In March of this year, Ulta rolled out a pilot recycling program with Pact Collective, a top recycler in the beauty space. Consumers can now find Pact recycling bins in 90 of Ulta’s 1,355 U.S. stores. The beauty retailer is part of the recycler’s growing reach. Currently, there are more than 950 collection bins across the United States and Canada, more than three times the amount of collection bins in 2022. In addition, Pact has 55 mail-back collection programs available to U.S. and Canada consumers, and like Victoria Beckham Beauty, Ilia and Westman Atelier participate in them.

Meanwhile, brands like Noble Panacea, Acure, Dermalogica and Josie Maran work with TerraCycle to collect empty products to be turn them into new things like industrial materials or park benches. Brands can ask consumers to ship their empties to the recycler using free return labels. Nordstrom, through its Beautycycle program, collects empties for TerraCycle at in-store boxes.

The bins, however, aren’t really designed to collect returns. Sephora collects empties through Beauty (Re)Purposed boxes found in each of the retailer’s stores in North America. The program represents Pact’s largest at a retailer to date, but Sephora relies on a different company for returns. For more than a decade, it’s teamed up with g2 revolution to divert unseen waste from testers, returns, samples and electronics from landfills. “Since Sephora and g2 revolution have been partnered, 23.7 million pounds of returned, damaged or expired cosmetic product waste has been diverted from landfills,” says a Sephora spokesperson.

The downside? It’s an operational quagmire. The Sephora spokesperson says, “g2 supports Sephora’s relationship with Pact by shipping Beauty (Re)Purposed collection bins to Sephora stores, capturing the data by location and sorting the packaging that goes into bins. Clean, empty materials that meet the collection guidelines are sorted for Pact to find the highest and best use for the collected material, including mechanical recycling, molecular recycling or waste-to-energy.”

Pact membership dues run between $850 and $12,500 per year based on the size of the company, and the programs are quoted on a case-by-case basis. “Pact strives to keep costs as low as possible,” says representative from the organization. “As a nonprofit, we don’t want cost to be a barrier to entry, and we want companies of all sizes to be able to participate.”

Between returned, expired, broken and unwanted goods, the stream of waste the beauty industry creates can be overwhelming, but there are new solutions seeking to disrupt the deluge without totally crushing profits. Still, the best way forward for brands and retailers is simple: “It’s best to mitigate returns as there are not a lot of great options,” instructs Llovet.