Here’s what most founders don’t realize until they’re deep into scaling: for every million dollars in sales you do, roughly $250,000 of that product is coming back to your warehouse.
And while you’re laser-focused on conversion rates, CAC, and ROAS, there’s an entire chaos corner in your fulfillment center where margins go to die.
Kyle Bertin discovered this problem the hard way—not as a merchant, but while touring fulfillment centers across North America for Outrider, an autonomous vehicle company. The pattern was impossible to miss: 90% of these massive facilities were pristine operations with robotics, automation, and gamified productivity systems. Then he’d turn the corner—always the corner—and find the returns section. Messy, manual, and staffed by visibly unhappy workers armed with nothing but Google Sheets trying to make split-second decisions about whether items were resellable, damaged, or fraudulent returns.
After the fifth or sixth warehouse tour showing the exact same dysfunction, Kyle realized even the most well-funded enterprise logistics companies couldn’t solve this problem. That realization led him to co-found Two Boxes, a return processing platform that uses AI and machine learning to automate the decisions that most brands are still making manually—if they’re making them at all. With Q4 volume hitting warehouses and January-February being what Kyle calls “the Super Bowl for returns” (brands see 50-500% spikes in return volume), this conversation couldn’t be more timely.
Let’s dive in.
What You’ll Learn
✅ The hidden margin killers in your return flow — beyond shipping and processing fees, you’re bleeding profitability through inventory tied up in transit, items incorrectly condition-graded, delayed restocking that costs you sales, and fraud you’re not detecting because warehouse workers are making snap judgments with zero data.
✅ Why your fulfillment team dreads the “returns corner” — while forward fulfillment is gamified and optimized with technology, returns processing feels like stepping back 30 years—opening mystery boxes, trying to determine if items are Grade A or damaged, logging everything in Excel, all while customers want instant refunds and your inventory sits in limbo.
✅ How Two Boxes uses AI to make the resellability decision in real-time — their platform integrates with your Shopify store in five minutes (seriously—five minutes), pulls order history and return patterns, and gives warehouse workers clear AI-powered guidance on whether items should be restocked, sent to liquidation, flagged as fraud, or routed for exchanges.
✅ The post-BFCM returns tsunami nobody prepares for — January and February see 50-500% increases in return volume as holiday purchases flood back to warehouses, and brands that don’t have systems in place are about to learn expensive lessons about why return processing isn’t just a customer service issue—it’s a P&L issue.
✅ Why returns are actually inventory opportunities, not just costs — processed correctly, returns reveal product quality issues, fraud patterns, and exchange opportunities that can save the sale, but most brands treat them as an afterthought instead of a strategic revenue recovery channel that deserves the same technology investment as forward fulfillment.
✅ The 25% rule and what it means for your P&L — with online sales seeing 17-25% return rates ($800-900 billion annually), every founder needs to understand the true cost structure: RMA software, shipping both ways, warehouse labor, delayed restocking, fraud losses, and the customer experience impacts of sending damaged goods because returns weren’t properly condition-graded the first time.
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Episode Summary
Steve welcomes Kyle Bertin, Co-Founder and CEO of Two Boxes, for a conversation about the reverse logistics problem that most Shopify brands are completely overlooking—what actually happens after a return hits your warehouse. With returns representing 17-25% of online sales (an $800-900 billion market annually), the math is brutal: for every million dollars in sales, roughly $250,000 worth of product is flowing back through your fulfillment center, and how you process those returns directly impacts your margins, customer experience, and bottom line.
Kyle’s origin story is fascinating. While working at Outrider, a company building autonomous yard trucks for logistics facilities, he spent months touring fulfillment centers across North America. The pattern was impossible to ignore: these massive, sophisticated operations with state-of-the-art robotics and automation would have one consistent weak spot—the returns section, always tucked in a corner, where technology disappeared and chaos reigned. Workers armed with nothing but Google Sheets were making split-second decisions about whether items were resellable or damaged, all while dealing with messy, sometimes worn or stained products that customers had returned. By the fifth or sixth facility—including some of the largest and best-funded logistics operations on the planet—Kyle realized this was a massive unsolved problem worth tackling.
The conversation digs into the hidden costs most brands miss. Yes, you’re paying for RMA software, return shipping, and warehouse processing fees—those are your first-order costs. But the real margin killers are the second-order effects: inventory tied up in transit that can’t be sold, items condition-graded incorrectly (either marked damaged when they’re sellable, or worse—restocked when they’re damaged, leading to customers receiving defective goods), fraud that goes undetected because workers have no data to verify returns, and the opportunity cost of delayed restocking during peak selling periods. Kyle shares how one apparel company he visited in California had an entire 40-foot container arriving every few days filled with returns, with dedicated staff using steamers and manual inspection processes just to triage what could be resold.
Two Boxes solves this with AI-powered decision support that integrates directly with Shopify stores in what Kyle claims is a five-minute setup process. The platform pulls order history, return patterns, and product data to give warehouse workers real-time guidance on how to process each return—whether it should go back to stock, get routed for exchange, be sent to liquidation, or be flagged as potential fraud. January and February are “the Super Bowl for returns,” with most merchants seeing 50-500% increases in return volume as holiday purchases flood back. Kyle’s team onboarded 25 brands last December alone, proving it’s not too late to get systems in place before the post-BFCM wave hits.
The bigger opportunity? Returns are inventory intelligence most brands ignore. Properly processed returns reveal product quality issues, help detect fraud patterns, and create chances for exchanges that save the sale instead of losing the customer entirely. But most brands treat returns as an afterthought, dedicating massive technology investments to forward fulfillment while leaving reverse logistics stuck in spreadsheet hell.
Strategic Takeaways
👉 Treat returns as a P&L line item, not just a customer service problem. If 20-25% of your sales are coming back, that’s a material impact on profitability. The brands that win measure first-order costs (shipping, processing fees) alongside second-order impacts (inventory delays, fraud losses, incorrect condition grading). Run the math: what does $250K in returned product actually cost you in direct expenses and opportunity cost from delayed restocking?
👉 The post-BFCM returns tsunami is predictable—prepare now. January and February consistently see 50-500% spikes in return volume as holiday purchases flood back. If your returns process is already manual and chaotic during normal months, it’s about to become unmanageable. Brands that win install proper systems in December (Two Boxes does it in five minutes for Shopify stores) rather than firefighting through Q1 with overwhelmed warehouse staff and mounting customer complaints.
👉 Manual processing with Google Sheets is bleeding margin. When warehouse workers make snap decisions without access to order history, return patterns, or fraud indicators, errors cascade through your operation. Items get marked damaged when they’re fine (lost revenue). Items get restocked when they’re defective (angry customers). Fraud goes undetected because there’s no systematic flagging. Technology exists to solve this—use it.
👉 Your fulfillment team’s happiness directly impacts returns quality. The “returns corner” is universally dreaded—messy manual work with used products while forward fulfillment gets gamification and automation. Unhappy workers making rushed decisions with poor tools make more errors. Investing in better returns processing technology creates systems that help your team make better decisions under pressure.
👉 Returns reveal patterns that forward-looking metrics miss. A properly instrumented returns system shows you which products have quality issues (high return rates for specific SKUs), which customer segments are return-prone, and which returns look fraudulent (wrong items returned, excessive frequency). This intelligence feeds product development, marketing targeting, and fraud prevention—but only if you’re capturing the data instead of just processing boxes.
👉 The exchange opportunity is massive and most brands miss it. When a customer initiates a return, that’s not automatically a lost sale—it’s a chance to save the transaction through exchange. But you need systems that make exchanges easy for warehouse staff to process and for customers to request. Brands that treat returns strategically turn potential losses into retained revenue through proactive exchange programs and better customer experience.
Guest Spotlight
Kyle Bertin
Co-Founder & CEO, Two Boxes
Kyle Bertin co-founded Two Boxes after an unexpected discovery while working at Outrider, where he helped integrate autonomous vehicle solutions into logistics operations. His job required touring fulfillment centers across North America—a role that exposed him to one of e-commerce’s most persistent problems.
The pattern was impossible to miss: sophisticated operations with cutting-edge robotics and automation consistently had one dysfunctional weak spot—the returns section. Tucked in corners, staffed by unhappy workers armed with Google Sheets, and completely devoid of the technology powering the rest of the facility, these “returns corners” represented a massive opportunity. If even the largest enterprise 3PLs and retailers couldn’t solve this, Kyle saw real demand for a solution.
He dove deep into understanding why returns processing remained so broken. The answer was a perfect storm: returns are unpredictable (you don’t know what condition items arrive in), they require human judgment (is this resellable or damaged?), and brands treat them as an afterthought despite returns representing 17-25% of online sales—an $800-900 billion annual market. Two Boxes emerged as Kyle’s answer: an AI-powered platform that integrates with Shopify stores and gives warehouse workers real-time decision support on how to process each return.
What makes Kyle’s perspective valuable isn’t just the technology—it’s his genuine commitment to merchant success. He emphasizes that even if Two Boxes isn’t the right fit, founders should still be thinking strategically about returns as a P&L issue, not just a customer service inconvenience. His offer to provide advice via LinkedIn regardless of whether brands become customers reflects the “raise all boats” mentality the best operators bring to the ecosystem.
Links & Resources
Connect with Kyle & Two Boxes:
Two Boxes — AI-powered return processing platform for Shopify brands
Kyle on LinkedIn
Two Boxes on LinkedIn
Tools & Platforms:
Shopify
Slotted — 3PL matchmaking platform (Two Boxes partner)
Companies Referenced:
Narvar — Returns merchandise authorization (RMA) provider
Loop Returns — Returns management platform
Happy Returns — Returns solution provider
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