Monday, December 18, 2017

This Week by the Numbers #CRE

by Steve Lubetkin,
As e-commerce claims an increasingly larger portion of holiday retail sales, retailers’ efficiency in limiting and handling returns of merchandise bought online – which could amount to as much as $32 billion this year – will make or break the holiday season for many.

E-commerce consistently generates more returns than brick-and-mortar retail, partly because shoppers often can’t sample online merchandise before buying it and partly due to the widespread practice of online shoppers ordering several versions of a product and returning those that don’t appeal.

Historically, returns of store-bought merchandise have amounted to eight percent of total retail sales. However, for e-commerce, that share ranges from 15 percent to 30 percent, depending on the product category.

Assuming those percentages hold true, the value of returns this season will increase by the same 13.8 percent that Adobe Analytics predicts for the increase in online sales this season. Adobe foresees online sales this season reaching $107.4 billion, up from approximately $93 billion last year. By extension, it is calculated that the projected ceiling for returns is $32 billion, up from roughly $28 billion last year.

“The increased amount of e-commerce returns will benefit Pennsylvania’s I-78/I-81 industrial corridor. We have a huge presence of 3PLs, public warehouses and reverse logistics firms in the area which are able to receive and process returned goods. In the past few years, we have witnessed shipping companies invest heavily to bolster their networks to accommodate the increased online traffic. Since the I-78/I-81 corridor is located within a day’s truck trip of 40 percent of the nation’s population, we believe the region will be an ideal location for returned online goods.”

Those well positioned to thrive in the online-returns market – also called reverse logistics – include third-party logistics firms and owners of 3PL facilities. Many retailers opt to contain costs and preserve their retail focus by outsourcing reverse-logistics functions to 3PL firms that specialize in that field.

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