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- Ecommerce customers return more stuff than in-store shoppers do, and holiday returns are even higher.
- The expense of processing ecommerce returns can often exceed the value of the product itself.
- Analysts estimate that no-return refunds for 2021 could cost retailers as much as $4.4 billion.
In an effort to remove some of the hassle from processing ecommerce returns, major retailers including Amazon, Target, and Walmart have increasingly turned to an expedient — and expensive — solution.
Just keep it.
The practice is not new, but the massive growth of online shopping during the pandemic and strained delivery networks and supply chains cast a fresh light on it.
Holiday ecommerce returns are expected to swell more than 10% over last year, reaching as high as $114 billion, according to the inventory auction service B-Stock, and UPS estimates it will bring a record-high 60 million parcels back to sellers this returns season.
Meanwhile, as accountants close the books on 2021, AlixPartners estimates the value of all the refunds for stuff that didn’t get sent back will total as much as $4.4 billion across the retail industry.
Rising shipping costs aren’t the only thing changing the returns math for companies, The Wall Street Journal reported: longer return periods of up to 90 days could push many seasonal items out of their viable selling window.
Reverse logistics, as it is called in the industry, is currently a far messier proposition than “forward” logistics.
Where an order from Amazon typically involves one shipping label to get it from a fulfillment center to a customer’s doorstep, it can easily take three separate shipments to get it back again, according to Kim Friddle, who runs a business processing both new and returned items for Amazon sellers.
As part of the return journey, many items need to make a stop at a store or warehouse where people like Friddle inspect the items to determine whether they are in any condition to be sold. That labor and storage also costs money.
Once retailers add all the costs — shipping, storing, inspecting — and weigh them against what they could reasonably sell the item for, the numbers can easily make a no-return refund make sense.
Before shoppers get to excited about gaming the system however, Cathy Roberson of the Reverse Logistics Association told Insider that retailers are keeping careful tabs on these transactions, and that the industry is actively looking for a less-expensive solution.
Read the original article on Business Insider