It's January So It Must Be Return Season
The volume of online shopping is booming with the pandemic accelerating a trend already overtaking the popularity of physical retail locations. Like anything else in our environment, one change quickly leads to other, sometimes unpredictable changes, that affect the entire system.
Americans spent $222 billion in online sales this past holiday season. Of that number, over 30% of those goods will be returned and most of them in January, up 13% from last year and an increase of 40% from 2019. Why is
that happening?
Buying clothing online is a good case study. Consumers are ordering in volume and bedrooms have become the new dressing rooms. Several sizes, colors, and styles are often ordered just to try on at home, with unwanted items shipped back as returns. In stores, unwanted clothing is refolded and put right back on the shelf, all with minimal cost and impact. According to Shopify, only 9% of items bought at brick-and-mortar locations are returned. With eCommerce however, returns have become an expensive game-changer for retail sellers, taking about 6% off their total sales – a number that can really hurt a company’s profitability.
All these returns require extra labor, warehouse space, and an entire reverse logistics process. It’s a tough situation for online retailers and one that must be handled well to survive. Unless the return process is easy and painless, consumers can rapidly lose confidence in a brand. If done smoothly, returns become a competitive advantage, making future purchase decisions easier, and increasing customer lifetime value.
Statistics show shoppers like the choice of returning items to a nearby physical store, but for smaller eCommerce sellers that’s not an option. Most online retailers aren’t set up to successfully manage returns of any real volume so outsourcing that process is a good idea. A logistics fulfillment partner can receive the item at their warehouse, inspect it, issue a refund, restock it for a future order, and provide the seller with real-time inventory visibility. For companies operating in a 100% online marketplace, that makes a lot of sense.
