More stress for retailers and the already strained supply chain may be ahead as e-commerce returns are expected to start earlier and sustain high volumes this holiday season, according to a new report from CBRE in partnership with Optoro, a provider of returns technology and services for processing retail returns.
According to the report, e-commerce returns this holiday season could total as much as $66.7B, a 45.6 percent increase over the five-year average. The forecast is based on National Retail Federation data, which estimates online holiday purchases (November and December sales) will reach $222.3B.
Adding to volume challenges, this year retailers may face an elongated return season, as earlier buying may mean earlier returns if shoppers decide to return gifts before giving them. According to Optoro, 41 percent of consumers plan on shopping earlier this year in an attempt to avoid product scarcity and supply chain delays.
And the cost to process all the returns is going up: A $50 item could amount to 66 percent of its sale price on average—up from 59 percent last year—when factoring in the costs of customer care, transportation, processing, discount loss and liquidation. High-value electronics, such as laptops, tablets and cell phones, will see the highest reverse logistics costs in terms of total dollar cost per unit, according to Optoro.
“E-commerce holiday gift returns have always been a significant challenge for retailers, but this year will be particularly difficult,” said John Morris, executive managing director and Industrial & Logistics Leader, CBRE. “With the growth of e-commerce during the pandemic and the increasing costs across a bruised supply chain, reverse logistics will be tougher and more costly than ever before for retailers this holiday season.”
Additionally, returns (reverse logistics) require up to 20 percent more space and labor capacity than the original order fulfillment process (forward logistics). This creates additional challenges given that industrial space is already historically tight, with third-quarter U.S. vacancy rates at a record low of 3.6 percent, according to CBRE.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2020 revenue). The company has more than 100,000 employees serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
