2021 has seen the rise of even more hurdles in ecommerce and logistics during the holiday season due to supply chain disruptions, labor shortages and higher transportation costs.
The COVID-19 pandemic has created a major shift for consumers to shop increasingly more online and has had a noticeable effect on ecommerce returns. In fact, the National Retail Federation predicts as much as a 13% year-over-year increase in 2021 holiday sales to $223.3 billion.
With an increase in sales comes an increase in ecommerce returns. Unlike Adam Sandler’s Hanukkah comedy Eight Crazy Nights, in this article we’ll go over eight not-so-crazy post-holiday reverse logistic facts you need to know as an ecommerce retailer.
1. Average Return Cost
Customers expect free returns and do not yet set a value on shipping. Despite this return costs are increasing for retailers. Many factors are contributing to the increase including transportation costs, processing, discounting and liquidation losses. According to CBRE, on average it costs $33 or 66 percent of a $50 item for online retailers to process a return – up from 59 percent since 2020.
2. Carbon Emissions & Waste Impact of Returns
In the US alone, returns create five billion pounds of landfill waste and 15 million tons of carbon emissions annually. According to Optoro, this is equivalent to the amount of trash produced by five million people in a year. Reducing packaging waste can reduce shipping costs for an online retailer and reduce the company’s carbon footprint.
3. What Products Will See Highest Reverse Logistic Costs?
Electronics such as laptops, cellphones, gaming consoles and tablets will see the highest cost in reverse logistics per item. Typically, reverse costs for electronic items are 15 times higher than other merchandise due to size, product testing, refurbishing, salvaging and online-sales-platform fees.
4. Increased Labor Costs
Wages for logistic and warehouse workers have increased by five percent since the start of the COVID-19 pandemic and online retailers need 20 percent more warehouse space to process returns. [CBRE, 2020]
5. Bracketing Increases
Bracketing is the practice of customers buying multiples of the same item in various colors and sizes to try on at home with the intent to return those they do not want. In a recent survey, about 72 percent of online shoppers that practiced bracketing in 2020 plan on doing it more this holiday shopping season. Creative solutions such as AI assisted – augmented reality fitting rooms have been implemented by some retailers to combat bracketing.
6. Boxless Returns
When given the option, 10 percent of customers choose to return items to UPS stores, bypassing the process of finding packaging for items and saving time for themselves and making the returns process simpler for ecommerce retailers.
7. Retailers Increase Return Window
According to Macy’s spokesperson, Sheikina Liverpool, says that Macy’s has increased the return window of holiday purchases. Most items purchased online or in store starting as of October 5th will be eligible for return until January 31st. Many other major retailers are following suit with new industry standard 30-day return policies.
8. Estimated Return Figures
An estimated 30 percent or 66.7 billion in holiday purchases are expected to be returned. [CBRE, 2021]
Need Even More Tips?
We’ve got you covered with the only guide you’ll ever need to help manage, prevent and reduce returns. Learn what the pros do by reading our Ultimate Guide to Ecommerce Returns.
