The most terrifying horror films are the ones where you never actually see the monster – they remain an unseen source of chaos. In retail, it is the same. The explosion of social commerce and ever-more generous returns policies have created a costly problem for retailers: ghost stock. This describes products that inaccurately appear available in inventory systems but are not physically there.

The phantom inventory can be found in an influencer’s haul, stolen, in transit with a customer, or buried in a mountain of returns. It is invisible, unsellable, and creates significant forecasting challenges that haunt retailers.

This is not just a minor backend issue. The rise in returns has become a daunting operational challenge compounded by rising fraudulent returns, with nearly two-thirds (64%) of UK brands saying it’s the trend with the most significant impact on their business.

Many retailers are trapped in a logistical nightmare, having to funnel returns through centralised distribution centres for manual inspection – a slow, labour-intensive process that delays getting valuable stock back on the shelves.

During this year’s Amazon Prime Day shopping event, Manhattan Associates research revealed the scale of the problem during seasonal spikes. The report found that 23% of retailers see 10-20% of their total peak sales returned, and 18% said that only 10-20% of those returned items can be resold at full value. The same research highlighted that the average return costs over half (51%) of businesses between £20 and £49.99, with the sudden influx of returns eroding margins.

“Ghost stock is causing tangible nightmares for retailers, impacting not just their bottom-line profitability, but also customer satisfaction and loyalty too,” comments Keith Dipple, Sales Director, at Manhattan Associates. “Retailers are caught between meeting customer expectations for easy returns and the operational reality of processing them. And since a negative experience will stop 45% of shoppers from buying again, the choice isn’t easy. Without a clear view of this phantom inventory, retailers don’t have all the cards to make planning decisions.”

The ghost-buster

The solution doesn’t necessarily lie in stricter returns policies, which can alienate many customers. It’s about building a digital backbone that provides complete, end-to-end visibility. Leveraging a unified commerce model that uses real-time data means that retailers can finally make ghost stock visible again. And, by correcting inventory inaccuracies, businesses could even see an 11% increase in sales, according to a study by ECR Retail Loss Group.

“The horror of ghost stock can be highly mitigated through a unified, real-time view of inventory, orders, and customer data,” Dipple continues. “This enables retailers to make intelligent quick decisions, cutting the time for stock to become sellable again, dramatically improving forecasting accuracy and increasing cash flow.”

Turning horror into fantasy

Loyalty in retail is largely about creating convenient and reliable customer experiences, enabled by sustainable, circular processes. To achieve that, brands must eliminate bottlenecks in their returns cycle with a technology-driven process that optimises the journey back to the shelf and turns a logistical challenge into a competitive advantage. This allows businesses to be more agile, responsive, and resilient, even in the face of fluctuating demand and high return volumes.

“Returns are about far more than just processing items; it’s about strengthening customer relationships,” concludes Dipple. “By shifting to unified commerce, brands can exorcise the ghost stock clogging up their processes, maximise product availability, accelerate resell rates, and ultimately ensure they deliver a more satisfying experience.”