US Consumers Returned 78% More Purchases in 2021
According to the National Retail Federation’s survey for 2020 and 2021, retail returns skyrocketed to over $760 billion in value. This places a significant strain on “reverse logistics” companies.
US consumers have been sending back unprecedented volumes of unwanted goods. In 2021, 16.6% of all retail sales were sent back, a significant rise from the 10.6% from the previous year. It takes nearly two-thirds of the average item’s price to process its return to the shelves. Since customers can often return items for free, this eats into already slim profit margins.
As we know, eCommerce skyrocketed since the pandemic started; just for holiday sales, online shopping revenue grew by 43.5% between 2019 and 2021. However, there is a significant difference between shopping in person and through an online storefront. At a brick-and-mortar store, customers can get help from the shop assistants, see the product for themselves, and try it out.
On the other hand, customers who bought goods online will likely find discrepancies between what was advertised and what has arrived. Consequently, they will return the goods in larger volumes. Furthermore, free returns enable “bracketing,” i.e., ordering multiple sizes or styles of a single model to try at home, and sending back things that don’t fit.
As convenience is crucial in retaining customers, eCommerce stores offer generous return policies. Some of them are extending return windows to up to three months to accommodate early shoppers returning Christmas gifts after the holidays, for example. A Morning Consult poll found that by January 5, 9% of Americans made at least one post-holiday return. Additional 9% intended to do so soon as well. The longer return window might create an even more significant strain on reverse logistics.
What’s worse, not all products that get returned reappear on the shelves, as the process of putting them back is lengthy and expensive. When handling returns, companies typically take one of the three available routes: The first is the worst for the environment and cheapest for the companies - sending the returned items to a landfill. Optoro, an online returns processor, estimated that returned inventory created over 2.5 million tons of landfill waste in 2020.
The other option for these retailers is to allow their customers to keep the product and just get their money back. This might seem strange, but sometimes the price of processing a returned package just isn’t worth it.
The products accepted back for resale must go through several stages: The retailer must check that products are fit to be resold and have them cleaned and repackaged. Those who can afford it can still profit by selling those products with a significant markdown. On the other hand, it serves a brand’s image when it allows customers to keep items, and still get their money back. This treatment makes for excellent customer experience, especially when supported with the right CRM solution.
This increase in returns also opened many new doors for logistics companies. GXO, a supply-chain management company, declared a 21% rise in their reverse-logistics revenues within a year. UPS also predicts that it will handle more than 60 million returns before January 22 - five million more than the previous year.
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