Soaring e-commerce holiday sales will lead to surge in returns

December 9, 2020 | By RetailME Bureau

Holiday e-commerce sales grew by a record 14% last year to $167.8 billion. 2020 will shatter that record with a projected 40% increase to $234.9 billion, putting e-commerce’s share of total retail sales at 32%, according to CBRE Research.

Supply chains will be tested as retailers handle a record number of returns. Brick-and-mortar retail return rates typically average between 8% and 10% of total sales throughout the year, according to eMarketer. Total holiday retail sales (November and December) are expected to reach $741.2 billion this year, up just 1.5% year-over-year.2

The surge in e-commerce demand this holiday season will lead to a corresponding spike in returns, according to Optoro, a reverse logistics software provider. E-commerce sales have a much higher average return rate of up to 30%, and this is even higher during the holiday season. With a projected $234.9 billion in online holiday sales this year, e-commerce returns will be at least $70.5 billion—a 73% increase from the previous five-year average.

Return Costs for Retailers Vary by Product Type

Amid the COVID-19 pandemic, consumers are doing more online shopping for products that support a stay-at-home environment. Optoro’s online proprietary marketplaces, BLINQ and BULQ, have seen an increase in purchases of toys, baby items, electronics, cleaning supplies, appliances and health & beauty goods.

Knowing which products are purchased online is important for a retailer’s bottom line, as different products have varying levels of depreciation. For example, Optoro estimates that the value of fashion apparel depreciates by 20% to 50% over an eight-to-16-week period, creating urgency to get returned items back up for sale.

Apparel retailers likely will see the biggest rise in reverse logistics costs as many customers buy several of the same items to try on and return the ones that don’t fit. Apparel has the highest return rate for online purchases, from 30% or as much as double that of in-store purchases.

Other typical gift-giving segments, such as electronics, small appliances, jewelry and accessories, may see higher reverse logistics costs due to the need to inspect, test, wipe customer data, reimage and sometimes repair for warranty purposes. Electronics are prone to quickly lose value since rapid innovation leads to new models of the same product.

There likely will be an increase in the giving of physical gifts this year, with less giving of experience-related gifts like tickets to concerts and sporting events due to pandemic-related restrictions.



Previous Article Next Article



Lulu Group partners with Amazon expanding grocery offerings to online customers in the UAE

Abu Dhabi based grocery retail chain Lulu Group has partnered with Amazon 

Continue Reading

November 24, 2022 | By RetailME Bureau
Food Tech Valley partners with Tradeling to boost UAE’s food ecosystem

UAE-government-led initiative Food Tech Valley – announced in 2021 by His Highness 

Continue Reading

November 17, 2022 | By RetailME Bureau
Lulu Hypermarket to open in The Dubai Mall in 2023

Abu Dhabi-based supermarket chain Lulu Hypermarket is all set to open in 

Continue Reading

November 10, 2022 | By Rupkatha B
Beyond Meat’s Q3 2022 results “disappointing”

Plant-based meat brand Beyond Meat’s financial results for the third quarter of 

Continue Reading

November 10, 2022 | By RetailME Bureau
Barakat unveils new biodegradable packaging

UAE’s fresh produce brand Barakat has launched bio-degradable packaging across its entire 

Continue Reading

October 27, 2022 | By RetailME Bureau
Pure Harvest CEO Sky Kurtz

UAE-based agritech start-up Pure Harvest Smart Farms has signed a Memorandum of 

Continue Reading

October 27, 2022 | By RetailME Bureau
Carrefour signed up as anchor tenant for Midtown Project

Carrefour, owned and operated by Majid Al Futtaim – Retail in the 

Continue Reading

October 27, 2022 | By RetailME Bureau
Grandiose Supermarket announces country-wide expansion plans

Grandiose Supermarket, part of Ghassan Aboud Group, has announced expansion plan in 

Continue Reading

October 26, 2022 | By Rupkatha B
100 years of Valrhona

The Valrhona journey began 100 years ago with a cocoa bean. Since 

Continue Reading

October 24, 2022 | By Justina Eitzinger
On-demand grocery delivery in 15 mins

Deliveroo UAE has announced the expansion of its rapid grocery delivery service 

Continue Reading

October 24, 2022 | By RetailME Bureau
Mariam bint Mohammed Almheiri, Minister of Climate Change and Environment

The Ministry of Climate Change and Environment (MOCCAE) revealed that the UAE 

Continue Reading

October 17, 2022 | By RetailME Bureau

Abu Dhabi-based leading supermarket chain Lulu Group has appointed investment bankers Moelis 

Continue Reading

October 13, 2022 | By RetailME Bureau

Download Images RetailME Magazine