A Peek at the Future: Holiday Returns Expected to Soar
Holiday shoppers might return approximately $66.7 billion worth of purchased merchandise in the year 20XX.
Get ready for a spike in holiday returns! According to a recent report from CBRE and Optoro, consumers could return a staggering $66.7 billion in holiday purchases this year, a whopping 45.6% increase over the past five years.
As for an average $50 item, the return costs for merchants have climbed from 59% of the price last year to a steep 66% in 2021. The expenses for electronic items, such as laptops, cell phones, and tablets, will be the highest due to their size, testing, refurbishing, and online sales fees, says the report.
With rising sales and returns, the demand for storage space is escalating. However, the supply isn't all that plentiful. The report indicates that 23 industrial markets in the U.S. have vacancy rates below the national average of 3.6% as of Q3 2021. Moreover, third-party logistics providers now control 30% of large industrial leases of 100,000 square feet or more in 2021, a significant increase from 27% in 2020, according to the report.
Last year's returns during the first year of the COVID-19 pandemic might provide some insight into what retailers can anticipate this year. With consumers flocking to online shopping during the pandemic, e-commerce returns skyrocketed along with sales. UPS, for instance, forecasted 8.75 million returns during the week of Jan. 6 this year, a notable 23% increase compared to the highest week of returns during the previous holiday shopping period.
Returns pose steep costs for both retailers' profits and the environment. Yet, this year's supply chain disruptions could make returns even more expensive. According to a survey from the Reverse Logistics Association, over half of respondents expect product return costs to escalate, and 65% expect the volume of returns to surge, though nearly a third claimed their returns would remain the same. Delivery costs are already on the rise. In August, FedEx announced additional surcharges for packages, which will carry on into early 2022.
"E-commerce holiday gift returns have always posed a significant challenge for retailers, but this year will be particularly complex," John Morris, executive managing director, and industrial and logistics leader, stated in a declaration. "With the growth of e-commerce during the pandemic and the increasing costs across a battered supply chain, reverse logistics will be tougher and more costly than ever before for retailers during the holiday season."
- The escalating demand for storage space due to increased returns in the holiday season might spark research into more efficient logistics and packaging solutions within the industry.
- As AI and technology continue to advance, policy makers may consider implementing regulations to address the environmental impact of excess packaging and waste from holiday returns.
- With the rise in holiday returns and the growth of e-commerce, the space industry might explore opportunities for satellite-based monitoring and analytics to optimize supply chain management and reduce return costs.
- As the finance sector grapples with soaring return costs, some analysts predict a potential shift in investment policies towards supporting environmentally friendly and sustainable alternatives within the retail market.
- The markets are closely watching the space sector, hoping that advancements in reusable rocket technology could lead to cost reductions in shipping returns, enhancing profit margins for retailers.
- Amid the pandemic and supply chain disruptions, the war for sustainability and cost-efficiency in reverse logistics could intensify between e-commerce giants in the upcoming holiday season.
