US' e-commerce returns expected to reach 30% of sales

In a notable trend, e-commerce is set to account for over 23 per cent of all non-auto retail sales for the first time ever in the fourth quarter (Q4). This increase is paralleled by a surge in product returns, with the return cost escalating by 50 per cent since 2018, now standing at $149 billion. On average, the cost to return a purchase is 27 per cent of the purchase price, potentially halving the sales margin.

The 2023 holiday shopping season commenced with a record-breaking 7.5 per cent increase in online sales on Black Friday, totalling $9.8 billion. Throughout the Thanksgiving to Cyber Monday period, a record 200.4 million consumers shopped both online and in-store, a rise from 196.7 million the previous year. Notably, 134.2 million of these purchases were made online, marking a 3 per cent increase from 2022, as per the National Retail Federation (NRF).

E-commerce continues to drive industrial demand, particularly among third-party logistics (3PL) providers. In 2023's first three quarters, these providers accounted for nearly 31 per cent of leases for spaces over 100,000 square feet. Remarkably, 3PLs have leased over 100 million square feet of bulk space annually for four consecutive years.

Consumer preferences are shifting towards retailers with favourable return policies. A survey by Optoro revealed that 64 per cent of consumers prefer retailers with the best return policies, and 44 per cent value free return shipping. Additionally, 24 per cent find the process of printing and affixing a return label or sourcing packaging materials challenging.

Retailers are responding by revising their return policies, with 87 per cent making changes in 2023. These changes include establishing drop-off locations, charging for returns, allowing customers to keep some returns, implementing fraud checks, and providing online return portals. Notably, 44 per cent of retailers increased their return and restocking fees, and 40 per cent expanded their return drop-off locations.

To simplify the returns process, companies like Happy Returns are offering third-party locations for returns using QR codes, eliminating the need for printing labels and packaging goods.

However, reverse logistics is not without challenges, especially concerning environmental impacts. Returned inventory contributes to 9.5 billion pounds of landfill waste annually, equivalent to the load of 10,500 fully loaded Boeing 747s. Retailers are actively seeking to balance consumer demands with sustainability, partnering with technology companies and employing artificial intelligence to improve product descriptions, enhance customer experiences, and increase recovery rates on returns.

Fibre2Fashion News Desk (DP)