Record Holiday Sales Trigger Record $100B Returns

Gift returns have become a holiday tradition in the U.S., with consumers anticipated to send back a record $100 billion worth of unwanted goods bought this year between Thanksgiving and Christmas, The Financial Times reported.

Last year returns from purchases made during the same period hit $6 billion. Online purchases are almost three times more likely to be returned than those in stores, leaving retailers with millions of items to sort.

Deloitte anticipates about $1.1 trillion in merchandise will be purchased in the November through January period, roughly 4.5 or 5 percent more than the same period in 2018. Returns logistics provider Optoro said some 5 billion pounds of those returned goods will end up in landfills. Just 10 percent of returned goods are resold through merchants’ websites and stores. 

Merchandise can sit in warehouses for weeks, said Larisa Summers, an eCommerce specialist with Optoro. Retailers generally don’t have a system in place to handle the “highly complex” challenge of reverse logistics. “Very few companies are equipped to handle this at scale.”

Happy Returns has a network of 700 “Return Bars” where customers can drop off unwanted items.

“For a long time people [in retail] just hoped returns would go away,” said David Sobie, co-founder of California-based start-up Happy Returns. “There’s been acknowledgment, especially in the past year, that this is something that needs to be addressed.”

One cost-savings measure is having customers return goods in physical stores, which saves shipping fees and could lead to additional sales while they are there. 

Regardless of the steep price of returns, merchants are eager to make customers happy and make the return process as easy as possible. 

“The problem is that in this kind of competitive environment they have to make life easy,” said Neil Saunders, retail managing director at consultancy GlobalData. “The consumer is almost being trained to be wasteful.”

A recent survey found that most people — around 77 percent — plan on returning some of their gifts this holiday season. About 20 percent of those surveyed said they would probably return upwards of 50 percent of their presents. Of those returning gifts, 32 percent said they would use the mail, while 65 percent said they would return in-store.