According to a new report from CBRE, while e-commerce companies are likely to see a record level of online purchases this holiday season, they're also experiencing a costly problem - returns - which could total as much as $82.1 billion in the U.S.
E-commerce sales are predicted to increase by 7% this holiday season to $273.7 billion, according to the National Retail Federation. CBRE calculates a maximum value for this season's returns of online purchases at $82.1 billion by applying the standard percentage range for online returns - 15% to 30% - to this year's projected holiday retail sales.
For its latest report on returns, or "reverse logistics," CBRE partnered with Optoro, a returns technology provider that optimizes reverse logistics operations for retailers and third-party logistics (3PLs) companies. Optoro estimates that the cost of returns in the U.S. has increased by 50% or $149 billion since 2018. The cost to return a purchase averages 27% of the purchase price, potentially erasing as much as 50% of the sales margin.
"Reverse logistics have a huge impact on retailers' bottom lines, and the most effective retailers have built their supply chains to effectively handle the reverse flow of merchandise," said Joe Dunlap, Managing Director, Supply Chain Advisory at CBRE. "Smart return policies, enlisting help in third party merchandise handlers and making the returns process easy for customers all help retailers increase their rate of recovery on returns."
Retailers realize that the ease of returns influences where consumers shop
Many retailers are enlisting help
Environmental considerations also loom large over reverse logistics operations
"A tide is turning in returns. Five years ago, returns were taboo in retail. Now, smart retailers have realized that returns are a revenue opportunity," said Amena Ali, chief executive officer of Optoro. "The right technology and strategy can not only cut costs and limit waste but deliver an experience that can win customers in the long run. It's not just about prevention anymore, it's about capitalizing on the prime return opportunity."