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US holiday returns seen surging with booming e-commerce

UPS expects to ship 1.9m items back to US retailers on "National Returns Day"

Los Angeles

UNITED Parcel Service Inc on Thursday expects to ship 1.9 million gifts and other items back to US retailers as e-commerce fuels an anticipated 26 per cent year-over-year volume surge on "National Returns Day".

Jan 2 is the busiest day for holiday returns in the United States. US shoppers return more packages than their peers around the globe, spurred by free shipping on orders and returns - costly perks that squeeze retailer profits.

About 10 per cent of goods sold in the United States go back to retailers every year, resulting in roughly US$369 billion in lost sales, according to a 2018 report from Appriss Retail and National Retail Federation.

Apparel is an outsized contributor. Returns in some categories approach 50 per cent due to inconsistent sizing across brands, said Greg Buzek, founder and president of IHL Group, a research and advisory firm.

"That causes great expense for retailers," said Mr Buzek, who estimated that annual global losses from retail returns are nearly US$1 trillion - up from US$600 billion in 2015.

A new crop of startups aims to take the bite out of returns.

Los Angeles-based Happy Returns promises to slash returns-related expenses up to 30 per cent by reducing shipping costs and customer support calls. It has 700 "return bars" in US retail stores and shopping malls, where customers drop off items and arrange refunds or exchanges. The company charges retailers a flat fee for every item it processes.

"You have to have some free (return) option. Nobody said it had to be the mail," said Happy Returns chief executive David Sobie. Inc also encourages shoppers to return products to its own physical stores or Kohl's locations, where eligible items are packed and shipped for free.

While 30 per cent of shoppers return items to stores, more than twice that many opt for shipping, according to UPS's 2019 "Pulse of the Online Shopper" report. UPS said it handled more than one million returns each day in December, but declined to give an annual total.

UPS and home furnishing retailer Ikea are among the investors in Optoro Inc, which helps retailers sort, resell and dispose of returned merchandise more efficiently. The aim is to prevent products from sitting in a back room losing value or getting routed and rerouted at great expense, said Larisa Summers, Optoro's senior vice president of e-commerce.

"You have to welcome these goods back, otherwise customers won't shop with you the first time," Ms Summers said. REUTERS