Retailers now are hoping they can provide many happy returns
Retailers and shippers have just completed a record-shattering number of deliveries at the hands of online holiday shoppers.
Up next: a tsunami of gift returns.
Consumers are expected to return a historic $70.5 billion in online purchases in the weeks following Christmas, a surge of 73 percent over the five-year average that will provide no rest for weary delivery drivers, warehouse workers and package handlers, the commercial real estate firm CBRE predicts.
While delivering the goods in time for Christmas was particularly challenging this year, doing it in reverse will be even more complex, retail observers say.
The expected onslaught has been a boon for companies such as Happy Returns, Optoro and Narvar — third-party software and logistics firms that endeavor to streamline the returns process for retailers and consumers.
Some 60 percent of holiday shoppers plan to return at least one item, said Venky Shankar, research director for Texas A&MUniversity’s Center for Retailing Studies.
Online purchases get returned at higher rates, because items might look different in person or not fit right.
In addition, the unprecedented volume of orders and the strain on retailers and couriers led to more mistakes, Shankar said — either in shipping the wrong items or packaging them in ways that left them
vulnerable to damage. The result: an increase in returns and exchanges.
Major retailers are expanding the standard 30-day returns window. Walmart, Target and Amazon, for example, are giving shoppers until the end of January to return holiday purchases made between October and Christmas.
“We recognize that many customers started their holiday shopping earlier than ever and wanted to ensure their return window wouldn’t expire before the Christmas holiday,” a Walmart spokeswoman said.
On Monday, Walmart announced a new returns option that allows customers to initiate an online return through its app and arrange for carrier pickup at their home through FedEx.
Amazon also announced a new returns option that lets customers avoid boxes and labels by dropping returns at Whole Foods, Amazon stores, Kohl’s and UPS Store locations.
Shoppers also can arrange for free pickup through UPS, Amazon said.
“Retailers don’t have an option, here,” Shankar said. “Consumers are in charge. Nowadays, you’re expected to provide seamless returns. That’s added pressure on them because they have to be able to handle all types of returns and a lot of retailers are not ready for that, unfortunately.”
As a result, retailers are turning to third-party logistics providers to help them navigate an increasingly complex returns process and hold onto customers.
Retailers that provide easy, hassle-free returns have opportunities to win enduring loyalty of shoppers, according to a consumer survey conducted in September by Narvar, one of the third-party logistics companies.
Returns, meanwhile, are becoming an ever-bigger part of online shopping.
Narvar’s survey found more than half of respondents planned to “bracket” purchases this year, meaning they would order different colors or sizes of a product and return the less-desirable versions — a method of online shopping especially common among luxury shoppers and those under 30.
Planned bracketing spiked to 62 percent from 48 percent last year, Narvar said.
Narvar works with more than 800 retailers including Sephora, Patagonia, Yeti, Lululemon, Gap and its subsidiaries.
Once a shopper initiates a return through a retailer’s site using Narvar’s platform, the automated system directs the item to a particular warehouse based on where the retailer can most efficiently get the item back up for sale, said Amit Sharma, Narvar’s founder and chief executive.
“If you can plan ahead and get that inventory online ahead of January, you don’t have to have it marked down,” he said.
The volume of returns passing through Narvar’s platform has doubled during the pandemic, Sharma said.
One of Narvar’s competitors, Optoro, reported a five-fold increase in returns over last year. Happy Returns also reported gains, but declined to be more specific.
“It’s a good time to be in the returns business,” said David Sobie, CEO of Happy Returns.
The third-party logistics companies partner with retailers and malls to place in-person returns hubs inside their locations.
Optoro has hubs inside Staples, for instance, and Happy Returns has hubs inside Paper Source — an arrangement that brings foot traffic to the stories as shoppers return purchases bought through other retailers.
When a customer drops off a return at a Happy Returns counter or participating retail hub, the customer brings the QR code generated by initiating the return online.
The code gets scanned and the item placed in a reusable shipping container alongside returns from other retailers using the service.
The returns are shipped together to a Happy Returns warehouse, where they’re sorted and shipped to its retail clients.
Reverse logistics companies said the streamlined returns process benefits the consumer, keeping them apprised of their return and refund through online tracking and alerts.
Investing in returns systems to make them simpler and easier to navigate became increasingly important this year as the pandemic forced customers who preferred brick-and-mortar shopping onto the internet.
“Now you have a whole bunch of new customers that aren’t used to being online,” said Adam Vitarello, president of Optoro. “If you get returns right, they’ll stick around.”