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US Consumers Expect To Return $115 Billion In Unwanted Gifts

January 03, 2021 at 11:54PM

A surge in eCommerce returns driven by COVID-19-related policy changes is hurting retailers but helping logistics companies, the Financial Times reports.

On each side of the equation, the math is simple.

Retailers that sell a product to a customer who ultimately returns it not only absorb the cost of executing a sale that ultimately will be for naught, but also need to process a returned item. If retailers can’t restock the item, they lose whatever they paid for it. If they can restock it, they pay restocking costs and suffer the loss of the item for a potentially permanent sale throughout the process, the Financial Times noted.

The paper cited data indicating that about half of returned items can’t be resold.

As undesirable as accepting returns is, retailers are trapped, the Financial Times noted.

Sucharita Kodali, a former Saks executive who now is an analyst at Forrester, told the Financial Times, “Consumers won’t buy from retailers in the first place if they don’t like the return policy.”

Tobin Moore, chief executive of retail technology firm Optoro, told the Financial Times consumers increasingly are buying items online — knowing they can easily return them — more comfortably than they used to.

“People are taking more risks with the goods they’re buying online,” he said, according to the Financial Times.

Many online retailers are making it especially easy to return items.

As for the logistics companies: What could be better than delivering record volume during a holiday season? The answer: delivering goods, then getting paid to ship many of them back to the retailers that sold them in the first place, the Financial Times noted, citing public statements from shipping industry executives.

Commercial real estate firm CBRE concluded in a December 2020 report that online retail in the U.S. was likely to hit $235 billion for the just-ended holiday shopping season, and that $71 billion of orders would be returned.

 

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