Dive Brief:
- UPS expects returns to peak on Dec. 19, a change from previous years when returns spiked in early January. "Returns are still expected to hit 1.3 million packages on Jan. 3, but this will now represent the second wave and be outpaced by Dec. 19th returns of 1.5 million," UPS said in a press release.
- The company attributes the "jumpstart" to consumers returning packages purchased on or before Black Friday, along with retail promotions and simplified return processes for consumers.
- UPS said it anticipates at least 1 million return packages each day leading up to Christmas.
Dive Insight:
Big-box retailers doubled down this year on fulfillment and logistics, catering to consumers' desire for fast and free shipping. So it comes as no surprise that returns are peaking earlier, since retailers began touting e-commerce benefits in early November.
Walmart expanded two-day shipping to items sold by third-party sellers on Walmart.com in November, and Target announced free two-day shipping with no minimum purchase starting Nov. 1. Amazon rolled out free shipping with no minimum purchase to non-Prime members on Nov. 5.
An early start to the flurry of returns means supply chains must have their reverse logistics processes in order well ahead of peak season. A seamless returns process is critical for companies both from a consumer-facing standpoint and on the back end.
In UPS' Pulse of the Online Shopper study, 44% of respondents said the top issue when returning an item online is paying for return shipping. And a study by tech company Optoro, cited in UPS' press release, found 89% of consumers won't shop again at a retailer if they had a negative returns experience.
"The returns moment is an increasingly important time to drive future customer loyalty and engagement," said Tobin Moore, co-founder and CEO of Optoro.
Behind the scenes, processing returns is a costly endeavor. Brands and retailers must pay for transporting inventory back and forth between stores and warehouses. Putting inventory back on a shelf can cost twice as much as selling goods in the first place, leading companies to throw items away rather than restocking them.
The end of the year is certainly not the only time when retailers must efficiently handle reverse logistics. In reality, e-commerce returns are happening around the clock.
Amazon Prime Day created a mini-peak season in the summer, with some retailers piggybacking on the promotional event with their own "Black Friday in July" sales. The side effect of the uptick in sales was a spike in returns in the weeks following the events.
