A busy holiday shopping season in 2021 can mean only one thing as the New Year kicks off: more returns. Mastercard SpendingPulse found retail sales grew 8.5% from November 1 through December 24. Online sales made up 20.9% of total retail sales, up from 20.6% in 2020 and 14.6% in 2019 – and online sales grew 11% this year compared to the same period last year.
B-Stock predicts that between $112 billion and $114 billion worth of merchandise will be returned in the post-holiday period.
B-Stock is in a position to know a thing or two about returns, since it handles excess merchandise for nine of the top 10 U.S. retailers including Walmart, Target, and Amazon, with much of the holiday returns ending up for sale on its platform.
B-Stock Chief Operating Officer Marcus Shen is forecasting that this year, a whopping 13.3% of all holiday purchases will be returned – and he said fewer than 10% of returns actually make it back to primary shelves
While B-Stock predicts $43 – $45 billion of holiday returns will come from ecommerce orders, Narvar puts the number at $27-30 billion. A post-purchase platform used by over a thousand major retailers, Narvar predicted that retailers will issue more “keep the item” returns this year.
Narvar found that Amazon, Walmart, Target, Wayfair, Chewy, Wish, Kohl’s, and Shein were the most commonly cited retailers offering keep-the-item returns – another practice that puts pressure on smaller retailers and online sellers who may not be able to absorb the costs of such a policy.
Some of those returns are due to a mistake on the part of the retailer, according to a survey conducted by Voxware in October 2020. 41% of respondents said they returned an item due to retailer error (incorrect size, color, or wrong item altogether), up from 30% in 2018.
But even if they receive the correct item, 26% of survey respondents said they returned the item due to late delivery. That was up from 10% in 2018, and it will be interesting to see if it updates the data for 2021.
More shoppers prefer to mail back their returns using pre-paid postage rather than return them in-store (56% compared to 34%). That’s a change from 2018 when 47% preferred mail versus 41% who preferred in-store returns.
While holiday shopping strained transportation and warehouses (the supply chain), all those post-holiday returns mean the pressure will persist into 2022. Mark Stanton, GM of supply chain solutions at PowerFleet, said returns often don’t go back to China but instead gets redistributed into the supply chain, triggering transportation and warehouse storage challenges. That could explain in part why large retailers are implementing “just keep it” return practices.
However, the National Retail Federation (NRF) said last month that innovations like online return portals have streamlined the returns experience. It pointed to the rise of third-party drop-off locations that allow customers to bring unpackaged items to a local store or drop-off point. “Some of these take the form of third-party providers like Happy Returns or the UPS Store 360 Returns Program while others are through partnerships with retailers, such as Amazon and Kohl’s.”