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Here's what most founders don't see coming until it hits their P&L: for every million dollars in sales, roughly $250,000 of that product flows back through your warehouse. You issue refunds quickly, but what happens to the returned inventory? Most brands treat it like an afterthought, and that's where margin goes to die. (yikes)
While you're locked in and focused on CAC, ROAS, and conversion rates, there's an entire reverse logistics operation determining whether the returned product gets restocked, liquidated, flagged as fraud, or sent back out damaged.
The brands winning now aren't just optimizing forward fulfillment, they're building systems for returns processing, AI search visibility, and relationships that unlock better deals, talent, and growth.
This week's edition is packed with frameworks you can implement right now to protect margins, show up in AI search, and build the infrastructure that scales.
Here's what's inside this week's edition:
🎧 This Week's Podcast – Kyle Bertin from Two Boxes breaks down the $250K returns problem hiding in your warehouse corner, why returns processing is stuck in spreadsheet hell, and how AI-powered decision support helps you restock more inventory, catch fraud, and stop bleeding margin.
💡 Knowledge Drops – The answer-first content strategy that gets Shopify brands cited by ChatGPT and Google's AI results, plus the relationship infrastructure playbook that turns trust into an operating advantage for scaling brands.
🔥 Tool of the Week – Turn one-time visitors into repeat customers with Trustoo Loyalty—customizable points, VIP tiers, referral programs, and review management in one platform.
📡 Industry Pulse – Shopify unveils Universal Commerce Protocol for AI shopping, Walmart partners with Google to bring native commerce to Gemini and AI Mode, and MaxFusion raises funding for AI-powered supply chain solutions.
Let's dive in. 👇
🎧 New Podcast Episode! 🎧
The $250K Problem Hiding in Your Warehouse Corner: Why Returns Processing Is Your Next Margin Unlock
Rising returns volume making you sweat? Inventory sitting in limbo for weeks?
You're not alone, but brands that protect margins aren't treating returns as an afterthought. They're building systems that turn reverse logistics into a strategic advantage.
This week, I chatted with Kyle Bertin, Co-Founder and CEO of Two Boxes, a return processing platform tackling the chaos after returns hit your warehouse. Kyle's origin story is fascinating…while working at Outrider, integrating autonomous vehicles into logistics facilities, he toured fulfillment centers across North America and kept seeing the same pattern: pristine operations with cutting-edge robotics would have one glaring weak spot—the returns corner. Manual processes, Google Sheets, unhappy workers, zero technology. After the fifth facility, Kyle realized even the most well-funded enterprise 3PLs couldn't solve this problem.
Here's what we unpacked:
The hidden margin killers — Beyond shipping and processing fees, you're bleeding profitability through inventory tied up in transit, items incorrectly condition-graded, delayed restocking during peak periods, and undetected fraud because warehouse workers make snap judgments with zero data
Why your team dreads the returns corner — While forward fulfillment gets gamified systems and automation, returns processing feels like stepping back 30 years: opening mystery boxes, determining if items are Grade A or damaged, logging everything manually, all while customers expect instant refunds
AI-powered decision support — Two Boxes integrates with Shopify stores in five minutes, pulls order history and return patterns, then gives warehouse workers clear guidance on whether items should be restocked, liquidated, flagged as fraud, or routed for exchanges
The post-BFCM returns tsunami — January and February see 50-500% spikes in return volume as holiday purchases flood back. Without systems in place, brands face expensive lessons: return processing isn't customer service—it's a P&L issue
Returns as inventory intelligence — Processed correctly, returns reveal product quality issues, fraud patterns, and exchange opportunities that save sales. Most brands miss this strategic revenue recovery channel entirely
The 25% rule and its true cost — With 17-25% return rates ($800-900 billion annually), the full cost structure includes RMA software, round-trip shipping, warehouse labor, delayed restocking, fraud losses, and customer experience damage
The merchants winning at returns aren't spending more, they're building systems that help teams make faster, smarter decisions under pressure.
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💡 Knowledge Drops of the Week 💡
How Shopify Brands Win in AI Search in 2026: The Answer-First Strategy That Gets You Cited
AI search is changing how shoppers find products. Instead of scrolling through blue links, people ask full questions in ChatGPT or Google's AI results, get a summary, and move on. For Shopify brands, the new goal isn't just ranking higher—it's getting cited inside the answer so the assistant names your brand, lifts your wording, and points to your page as the source.
The brands showing up in AI answers aren't publishing more posts. They're structuring the right pages so AI can extract answers fast and shoppers can verify trust details instantly. That's why "answer blocks" matter—a tight 40-60 word direct answer near the top, followed by proof bullets and clear policies.
Here's what's working for Shopify brands right now:
Write quote-ready answer blocks — Start with a 40-60 word direct answer, follow with 2-3 proof bullets covering specs, shipping, returns, and warranty terms, then keep paragraphs to 2-4 lines for clean AI extraction
Make product pages agent-ready — With Shopify's Instant Checkout enabling purchases inside ChatGPT, incomplete product data creates bad matches. Fill in variant clarity, dimensions, materials, care instructions, shipping time, and return windows
Prioritize structured data that stays accurate — Focus on Product, Offer, reviews where eligible, and FAQPage for 3-5 real questions. Validate with Google's Rich Results Test to ensure markup works correctly
Run a weekly prompt log — Test 10-15 buyer-style questions weekly, track brand mentions, citations, and which page types show up, then improve what gets pulled into AI answers over 30 days
Discovery and checkout now occur within ChatGPT via real-time pricing and inventory syncing. That means your product data quality is part of the shopping experience, not just your website.
[ READ THE FULL BREAKDOWN ] Get the 90-day roadmap Shopify brands are using to become the answer AI cites
The Relationship Infrastructure That Scales DTC Brands Past $10M
Most brands think the ceiling after $10M is ops, ads, or finance. Those matter, but relationships are usually the real limiter. When CAC pressure is real (many brands report 25-40% higher acquisition costs) and loyalty has softened, your next stage depends on trust—with customers, partners, talent, and capital.
The brands that break past $10M build relationship infrastructure, just as they build inventory planning or creative testing.
They don't "network" randomly.
They run a repeatable system that turns relationships into an operating advantage across four pillars:
👉 Customer Trust Loops
👉 Investor Readiness
👉 Partner Pipeline
👉 Talent Network
Here's the relationship operating system that works:
Track your top 20 relationships in a CRM — Use Airtable, Notion, HubSpot, or a spreadsheet with these fields: last touch, next step, due date, and value you can give. This turns relationship management into a calendar rhythm instead of random memory
Send quarterly updates to investors and partners — Even when you're not raising or asking for deals, keep relationships warm with top metrics, wins, misses, and one clear ask. This is how you earn speed when you need it
Adopt a "low heart rate" communication style — Calm, clear emails with one ask and one deadline. On-time meetings that start with context and end with owners, dates, and next steps. Say "no" without posturing to protect optionality and earn better terms
Block one 2-hour "relationship day" monthly — Use this time to send updates, book calls, and move next steps forward across your capital, partnership, and talent pipelines
Mid-market growth has stalled around 3%, and many brands fight for 7-8% EBITDA. When margins are tight, you can't afford slow follow-up, messy handoffs, or "we'll get back to them" decisions.
[ READ THE FULL PLAYBOOK ] See how brands turn trust into faster yeses, better terms, and stronger talent
🔥 Tool of the Week 🔥
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⚡ Industry Pulse ⚡
Every week, I come across strategies and insights that are just too good not to share. Here's what caught my attention this week.
Shopify Launches Universal Commerce Protocol to Power Native Shopping Across All Major AI Platforms. Shopify's Universal Commerce Protocol lets brands sell directly inside ChatGPT, Google AI Mode, Gemini, and Microsoft Copilot with real-time inventory and native checkout—managed centrally from Shopify Admin. Discovery and checkout now happen inside AI conversations before shoppers visit your site, making accurate product data and inventory non-negotiable.
Walmart Partners with Google to Bring Native Commerce to Gemini and AI Mode, Reaching 120M+ Monthly Users. Walmart launched conversational commerce on Google's platform, letting customers discover products and complete purchases without leaving the chat. If Walmart delivers personalized, fast fulfillment inside AI, shoppers will expect the same frictionless experience everywhere.
Maxfusion Raises Funding for AI-Powered Bulk Video Ad Creation Platform Targeting DTC Brands MaxFusion secured funding to expand its AI supply chain platform that forecasts demand and optimizes inventory across multi-warehouse networks. With post-holiday returns spiking by 50-500%, predictive inventory management is moving from a nice-to-have to a competitive necessity.
Until Next Thursday
Thanks for being here. Every week, you show up, read these breakdowns, and apply what fits your brand. That matters more than you know.
The brands thriving now aren't spending the most on ads. They're building systems. Returns processing that protects margin, content that earns AI citations, and relationships that unlock better deals before they need them.
Whether you're dealing with post-BFCM returns chaos, trying to show up in ChatGPT recommendations, or building the partner pipeline that continues to grow and scale your business, the pattern is consistent: systems beat scrambling.
We're deep into January, which means returns volume is peaking, and Q1 and Q2 planning is alive.
I'm always here to support you in any way possible. I read every reply, so if you have anything on your mind, feel free to hit reply.
Thanks again for being a subscriber. I'm excited for where this newsletter continues to evolve.
Cheers!
— Steve
P.S. Missed a previous edition? Check out the archive for more growth strategies and insights.
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