It’s the season of giving, which means the next season is holiday returns. If you’re a retailer or brand, chances are you’ve been preparing for a virtual holiday spending season since the summer. That’s because as well all know, e-commerce has been pushed into overdrive by the masses of people practicing social distancing and stay-at-home orders. So, what can you expect?
E-commerce has surged this holiday season, but by how much exactly? Well, 71% of adults are planning to do more than half of their holiday shopping from behind a screen at home rather than behind a mask in stores this year:
In addition, online retail sales are expected to increase by a whopping 40% this year, reaching a total of $234.9 billion. Yes, that’s BILLION, with a B.
Ease of Shopping, Ease of Returns
In a year of countless inconveniences, retailers have implemented return policies to help facilitate the buying cycle for consumers. Below are some of the top ways retailers have prepared for a never-before-seen holiday season:
- Extending return policies to provide consumers longer windows of time to exchange and return items. Some of the extended policies allow consumers until the end of January to return items purchased in October.
- Updating retailer websites with features such as updated photos and 360-degree views to make it easier for consumers to visualize the items in lieu of seeing them in person.
- Adding more drop-off locations, thousands of them, that are located closer to consumers’ homes, allowing them a more convenient option for dropping off returns.
So, let’s now discuss the unavoidable, consequential process of the purchase equation: returns.
Holiday Returns Projections
If there is an expected nearly $235 BILLION in online holiday retail sales, how much of that can we expect to get returned to retailers? Because, not everyone is going to like that awful sweater, and some grandmas and grandpas may be receiving a hoverboard that they surely didn’t even ask for. When all is said and done, gift and holiday returns will total about $70.5 billion; yes, once again—billion with a B.
Source: Matt Leonard / Supply Chain Dive, data from CBRE
Will letters to Santa be misplaced? Will the Grinch steal Christmas? We may never know. What we DO know is that Santa calls it quits after the holidays. So, when all the warm and fuzzy feelings of gratitude wear off and consumers are left with billions of dollars’ worth of merchandise they don’t want, it’ll be up to retailers and brands to manage the flow of holiday returns. How will they do it?
The Costs of Holiday Returns
With more purchase and return power, comes more responsibility to manage holiday returns. And cutting corners in the reverse logistics space can result in waste. “The return process for an online order involves several steps that include the cost of pickup handling and many touches as items move back into inventory,” said Matt Walaszek, the director of research for CBRE‘s industrial and logistics division. For this reason, it’s expected many retailers will turn to a 3PL partner to move returns back into inventory; “3PLs accounted for more than 27% of industrial real estate transactions for deals of 100,000 square feet or more as of Oct. 2020, according to CBRE.”
Some of the top options for retailers when it comes to holiday returns include selling them to other retailers, donating them, or destroying them. And while in-store returns help aid in the need for transporting items, the current state of the pandemic is limiting retailers’ ability of using that as an outlet. Not to mention that on the other side of the reverse logistics challenge is the fact that the process is relatively immature to begin with:
“While there are plenty of 3PL partners to turn to, the in-house technology side of reverse logistics is less mature. The technology for managing reverse logistics is a pretty new market,” said John Morris, executive managing director of CBRE’s Americas industrial and logistics operation. “It’s been something that’s been not paid as much attention to in retail in the last 10 years,” he said. “I think most of the capital that has gone into tech generally has been in the third-party space, but if it is an item that came from your supply chain, at least you’d be able to manage it and track it going backwards.”
Aside from donating, selling to other retailers, or destruction, are there any other options? Surely, there are.
The Key to a Merry Returns Season: Liquidation
We all know the adage “time is money.” Well in the world of returns, re-processing returns back onto store shelves not only wastes both—one as a consequence of the other. As our very own Vice President of Sales Eric Moriarty noted: “It can cost twice as much to process an online return back on shelf as it does to sell it the first time. Given online return rates are triple that of brick-and-mortar, it’s often more efficient for the retailer to liquidate.”
How does liquidation work? With B-Stock, it’s quite simple: We set up an online, private, B2B marketplace for retailers and brands to sell their excess inventory. Rather than dealing with the challenges of reverse logistics and returning items to the shelf, retailers can offload their inventory directly to hundreds of thousands of vetted business resellers, circulating the product directly into the secondary market:
It’s why we currently work with nine of the top 10 U.S. retailers to sell their returned and excess inventory, allowing them to achieve 30-80% high prices than traditional methods of liquidation.
Learn more about how an online, B2B marketplace can turn your post-holiday surplus and returns into cash by downloading our Holiday Playbook.
Download Holiday Playbook
And if you’re ready to make a plan for those returns, request a demo.