Many (Un)Happy Returns: Navigating ‘Returnmageddon’

The big show is over for another year. For the tens of millions of Americans who celebrated Christmas this year the party is over — the roast beast has been carved, the stockings unstuffed, the gifts have been unwrapped (such as they arrived on time for Dec. 25 opening) and the judgements of the gifts has been passed.

And now the real adventure begins.

Because not every gift is a winner. Some are the wrong size, the wrong color or just the wrong idea entirely. Not every swing, afterall, can be a home run. And for every perfect present that was unwrapped yesterday, there were a few duds that perhaps came close, but ultimately missed their target.

Which leaves the recipients of those gifts that didn’t quite hit the mark with a difficult choice — keep the shoes that don’t fit or the sweater that was apparently woven out of steel wool, or brave the return process in the hopes of exchanging it for something more pleasing.

A decision that according to reports might be a little bit tougher in 2020, when the experts are expecting a return tsunami and retailers are setting up for what will be a bit of a scramble.

A Banner Year For Returns

There is no official data as of yet on just how busy this holiday return season will be, but the data is estimating a big one. According to data released by Ware2Go holiday survey, 80 percent of consumers are already planning  to make at least one holiday gift return this year. Thos returns, according to the report, will be accompanied by new purchases, as 31 percent intend to shop within a few days after the holidays, while 34 percent plan to do more shopping in the month of January.

But whatever boost from additional shopping retailers manage to wrangle this year, they are certainly due for an incredibly busy return season starting today, according to most reports. Online purchases are more likely to be returned than their counterparts in physical stores, which means that with an increase in eCommerce there is generally a corresponding increase in returns. That was visible in 2019 when UPS handled nearly 2 million returns after the holiday season, marking a seventh consecutive record-breaking year in that regard — a reality the company at the time attributed to the rise in eCommerce.

This year, the COVID-19 pandemic precipitated a 30 percent plus jump in eCommerce sales, meaning returns could be poised to hit new heights in 2020, a potential costly reality for retailers of all stripes. In a worst-case scenario, according to commercial real estate  firm CBRE, as much as $70.5 billion worth of goods could be returned this year, marking a  73 percent increase over the firm’s estimated average for the previous five years. Some of those goods will make it back to storerooms and shelves — but, reports Quartz, a large share will not, as it will be cheaper to liquidate and discard the items than attempt to restock them. Return costs, according to reverse logistics shipping firm Optoro, vary somewhat between categories of goods — but are invariably high. A $50 item, for example, on average has about $30 of return costs associated with it.

And that average might well be set to go up in 2020 as consumer preferences around returns are shifting alongside shopping habits. A year ago, about 25 percent of consumers reported a preference for returning their goods to a physical location, and that figure has ticked up to 30 percent as of this year, according to reports in the Chicago Tribune. Retailers prefer shoppers return items in stores rather than ship them back because they can get items back on shelves more quickly.

And time, notably, will be a bit more of a factor in 2020, as consumers’ returns will likely be delayed as a result of their gifts being somewhat delayed as well. The first round of Shipmageddon meant that despite the USPS’s best efforts — as well as FedEx’s and UPS’s —  a fair number of gifts didn’t make it over the Dec. 25 finish line and will be rolling in over the next week. A consumer can’t decide to return a gift before they get it — adding even more mystery to a return season that is gearing up to be a bit more intense than previous years.

But retailers, aware of how much more online shopping they’ve already seen this year and having already navigated through the first holiday shipping apocalypse, are not about to take the second one lying down.

How Retail Is Readying For Returns

Different retailers are taking different approaches to the problem. Walmart has partnered with FedEx and will pick up returns at customers’ homes for free for items shipped and sold by Walmart.

Amazon, meanwhile, has announced customers can return items at 500 Whole Foods Market stores without a box or shipping label and is keeping its return partnership with Kohl’s, as well as with UPS for use of its stores for free customer returns.

Dick’s Sporting Goods will let customers return items through curbside pickup, as long as the purchase was made with a credit or debit card — and it is widely anticipated that curbside return offers will become common in January as retailers look for a low-touch alternative for returning unwanted goods.

Additionally, specialty returns services like Happy Returns are now partnered with FedEx to let shoppers return items from brands like Everlane, Rothy’s and Steve Madden at 2,000 FedEx locations with no box or shipping label, up from just 600 six months ago.

The returns, it seems, are coming perhaps more in 2020 than ever — particularly if past patterns hold. But though it might be a bit messier, more chaotic and a bit slower than it has been before, consumers will be able to ship out the gifts that didn’t make the cut — even if retailers have to work a little bit harder to catch them.