CBRE Forecasts Online Returns Could Total As Much As $37 Billion This Holiday Season
12월 28, 2018
The voracious growth of e-commerce brings with it a costly byproduct – online returns – that CBRE calculates in a new report could total as much as $37 billion for this holiday season.
Online returns often draw additional attention in December due to the large volume of e-commerce during the holiday season. But the challenge of processing and reselling those returns – often called reverse logistics – is a year-round conundrum for retailers and shippers.
Whereas the traditional return rate for goods purchased in stores is roughly 8 percent, the rate for online purchases ranges from 15 percent to 30 percent, depending on the merchandise category. CBRE applied that range to eMarketer’s projection of $123 billion of online sales in this year’s November-December period to arrive at this season’s maximum value of online returns: $37 billion. That’s markedly more than CBRE’s forecast from last holiday season of $32 billion in online returns.
“Reverse logistics as its own sub-specialty has created additional demand in the already over heated New Jersey industrial/logistics real estate market,” said William Waxman, Executive Vice President, CBRE. “This trend will continue to grow as this sector matures and expands over the next few years. The reverse logistics phenomenon should also help to act as a buffer in any coming recession.”
For its latest annual report on reverse logistics, CBRE teamed with Optoro, a technology company that powers returns optimization for retailers and brands, to generate additional insights on the cost of online returns and value of potential solutions. Among those insights:
- Consumer electronics, once they are returned to a retailer, can lose 4 percent to 8 percent of their value for each month they’re not resold, according to Optoro. That illustrates why a critical factor in retailers’ efforts to limit their losses on returns is how quickly and efficiently they can process them and put them back on the market.
- Other categories can lose value even more quickly. For example, fashion apparel can lose 40 percent to 50 percent of its value over an eight-to-16 week span after being returned, according to Optoro.
- Companies that opt to handle online returns within their own supply chain often need to add warehouse space to do so, because processing returns is labor- and space-intensive. Optoro calculates that reverse logistics can require, on average, 15 percent to 20 percent more square footage than the typical outbound supply chain.
- Another option – hiring a third-party-logistics firm, or 3PL, to handle returns – is a popular choice. CBRE found that 3PLs accounted for more than half of the 50 largest U.S. warehouse leases in the first half of 2018. Nationally, 3PLs have expanded their real estate footprint by a healthy 3 percent to 5 percent annually.
“With ecommerce sales and returns, on the rise, retailers and brands need systems in place to route inventory quickly and efficiently,” said Joe Hsu, Senior Director of Solutions at Optoro. “Using a returns optimization platform can help retailers, recoup costs, get inventory back to stock and available for sale faster, and improve the customer experience through faster refunds.”
To read the full report, click here.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.