USPS OIG: Returns Season Is Upon Us

The holidays might be over but the package returns season is in high gear. It kicked off in mid-December, shortly after the first wave of holiday deliveries, and is expected to run through most of this month.

Returns track with the online retail market — as shopping online grows, so, too, do package returns. About 15 percent of all goods purchased online are returned, FedEx told analysts in a December conference call. Other estimates put the return rate of online purchases at closer to 30 percent. With projections of over 2 billion packages delivered this holiday season, that’s roughly at least 300 million returns.

Total U.S. holiday-related retail returns are expected to jump 10 percent year over year, to total $90 billion worth of merchandise, according to data from Optoro Inc., a technology company that works with retailers to process returns. Based on past years, Optoro said 40 percent of consumers return holiday gifts between Dec. 26 and New Year’s Eve, 51 percent during January, and 9 percent after January.

And returns aren’t cheap, costing retailers billions of dollars a year to handle unwanted, used, or damaged goods each year. The Reverse Logistics Association puts the cost at about $450 billion in 2017.

Delivery companies obviously benefit from handling returns, but they also pay a price “They… have had to invest billions of dollars to upgrade and expand their networks to cope as ecommerce purchases surge to new heights,” a recent Reuter’s article noted. And, delivering individual packages to shoppers — and picking up returns — is the lower-margin part of the delivery business, the article said.

Many experts believe that retailers need to solve the returns conundrum or risk losing customers. Studies show most customers expect returns to be easy, convenient, and free. Indeed, 83 percent of consumers would shop more with a retailer that has made the returns process easy, the Reverse Logistics Association reported.

Did you return online purchases this holiday season? To a brick-and-mortar store or via a delivery company? Do you review a return policy before shopping with an online retailer? Will you choose an online retailer based on the returns policy?

Source: USPS Office of Inspector General

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