Holiday Returns Cost Expected to Double

After the explosion in holiday ecommerce, comes the flood of holiday returns, expected to cost retailers $1.1 billion, twice what it did in 2020, according to data from Narvar.

Two companies that provide returns services for ecommerce, goTRG and Returnly, both said Dec. 26 was the peak day for consumers to initiate returns after Christmas. UPS traditionally lists Jan. 2 as peak returns day for transit of items that consumers have sent back.

“We expect that it will take longer for shoppers to drop their items in the mail or to a carrier, nearly a week from the time they start a return online,” said Eduardo Vilar, founder and CEO of Returnly. “Last year, Returnly saw a 24% increase in the time it took to return during January compared to yearly averages. The company handles returns processing for leading DTC brands including UNTUCKit, ThirdLove, Fanatics, Outdoor Voices and Everlane.

A confluence of factors could extend the typical holiday returns season, Vilar said.

“This year, the Monday after New Year’s Day is a full 10 days after Christmas,” he said. “Plus, we’re seeing extra-long return windows due to COVID, fewer back-to-the-office routines and more people looking to avoid crowds. Between all of this, merchants should brace for a longer than usual return season this year.”

Vilar said Returnly saw a shift away from use of the U.S. Postal Service by merchants ahead of the holidays, due both to price increases and concerns over delivery issues, which was borne out by the deluge and delays at the end of the holiday shopping period. Figures for on-time performance of UPS, FedEx and the USPS up until Christmas should come out at the end of this week from ShipMatrix.

All carriers, of course, were adversely impacted by the massive wave of ecommerce holiday buying, but all reports seem to indicate it hit the USPS hardest.

“Between August and October 2020, Returnly saw USPS usage drop from 45% to 38%, with merchants moving to UPS and FedEx,” he said. “It’s likely that concerns around delivery times drove more merchants to switch to competitors, even if USPS is still the most cost-effective provider.”

David Malka, chief sales officer at goTRG, said the increased use of “bracketing” – consumers buying multiple items, with the intention of keeping just one – plus overly generous returns policies in light of COVID and the Christmas season, are contributing to the exceptionally large holiday returns wave now washing in.

“The mindset of people this year is, everything is going to be sold out,” said Malka, whose company processes returns on behalf of major retailers and ecommerce companies including Lowes, Costco, BJ’s, Target and Amazon. “Last year, if you wanted something, you generally had the luxury of waiting and buying. The problem is, that means it takes longer for retailers and companies like ours to get all the returns in and process them.”

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