Major U.S. retailers who adopted longer return policies during the ongoing COVID-19 pandemic to entice customers could be paying for those changes — in more ways than one — if holiday shoppers return a record $112 billion in unwanted gifts, Reuters reported Wednesday (Dec. 29).
Supply chain tie-ups have inventories lower than they’ve been since 1992, which led many retailers to start their holiday promotions in September in an effort to spread out the shipping and labor effects across a longer period than the usual holiday shopping peak between Thanksgiving and Christmas.
Apple, Saks Fifth Avenue and Nike have extended their return windows to between 60 and 90 days, well above the 30-day industry standard. That benevolence, though, comes with a cost for the retailer, including shipping, cleaning fees and repackaging, all of which trim profit margins.
And the problem isn’t going away, if forecasts of supply chain snafus until at least 2023 are accurate.
If U.S. shoppers return $112 billion to $114 billion in unwanted holiday gifts, that would represent a 24% to 27% increase over the 2019 total, according to online liquidation management platform B-Stock Solutions, which works with Walmart, Costco and Best Buy, among many others.
Out of the projected record return total, between $43 billion and $45 billion is expected to be comprised of products bought online, according to B-Stock.
Related: Gift Returns: The Holiday Hangover That Busts Retail Budgets, Overflows Dumpsters
Overall, retail returns are expected to represent a $200 billion hit this year across the U.S. As hectic as it’s expected to be, it’s imperative the retailers who are receiving those returns handle them the right way, Tobin Moore, co-founder and CEO of returns management firm Optoro, told PYMNTS.
“Online returns affect the customer experience significantly,” he said, noting that 89% of customers who have had a bad returns experience say they won’t shop again from an online retailer.
Optoro is applying returns technology to help retailers including Target, American Eagle, Best Buy, Ikea and Staples use data science and live decision-making to make it easier for consumers and retailers.
Earlier this month, Optoro announced a $25 million strategic investment led by Zebra Technologies, UPS and eBay.
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