Returns. What a waste, right? Not quite, as marketplaces, shipping carriers and technology providers are ready to seize the post-holiday returns opportunity. This year technology company Optoro is predicting $100 billion in returns over the holiday season (from Thanksgiving through the end of January). This is up $6 billion from last year.
Last year, United Parcel Service reported more than 1.4 million packages were expected to be returned during the post-holiday season. For the informal “National Returns Day,” which falls on Jan. 2 this year, UPS estimates 1.9 million returned packages — 26 percent higher than last year’s peak.
According to a report from marketplace platform B-Stock, 77 percent of consumers expect to return a portion of their gifts this season, meaning that the indulgence in holiday spending (Adobe Analytics reported $115.5 billion spent this holiday shopping season, in the period from Nov. 1 to Dec. 15) anywhere from 11 to 13 percent of those holiday purchases are returned.
Similar in its estimates to Optoro, the platform predicts more than $90 billion worth of merchandise coming back to retailers post-holiday, with less than 10 percent of that merchandise relegated to “primary shelves.”
Primary shelf space is reserved for the merchandise that is “brand new” or able to be restocked on shelves.
“For apparel, the great majority of returns end up on secondary channels,” said Marcus Shen, chief operating officer of B-Stock, a marketplace for returned, excess and other liquidation merchandise. Some of the company’s customers include Amazon Inc., Macy’s Inc., Target Corp., Costco Wholesale Corp., Walmart Inc., Home Depot Inc. and Best Buy Co.
For secondhand marketplaces, the post-holiday season is their holiday season. “For 2020, in general, the first quarter for the year is really crucial for us, especially January as well as February and March,” said resale marketplace Mercari’s chief executive officer John Lagerling, as reported in WWD.
For B-Stock, the number of truckloads of returned merchandise doubles from January through March. “Our buyers are buying in bulk and selling on Poshmark, The RealReal, eBay,” Shen said.
When all else fails, returns make their ways to the landfill, where Optoro estimates that returns create 5 billion pounds of landfill waste each year (the equivalent of 5,600 Boeing 747s fully loaded).
Despite the rise of “responsible retail” and open minds to secondhand gifting, only a fraction (37 percent) of the 2,000 consumers recently surveyed by Optoro considered the environmental impact of a return. According to the company, the shipping of returned inventory in the U.S. emits more than 15 million metric tons of carbon dioxide.
In a 2019 returns report, Optoro found “free-return shipping,” “immediate refunds” and “in-store returns” ranked as top concerns for consumers. Motivated by a penchant for quickness and cost-free returns, the ubiquitous preference for physical returns continues to benefit both consumers and retailers (who stand to gain from a “second bite of the apple” in the words of Shen).
Overall, Shen agreed the returns data was “more of what we saw last year, but we believe we might see upticks in returns from social and mobile shopping purchases,” and with that retailers and brands are advised to prep for returns — perhaps even embracing the post-holiday season.
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