The cost of processing returns is set to significantly insignificantly increase this holiday season, with the rise in warehousing costs, labor shortages and transportation contributing to it.
Recent data from commercial real estate firm CBRE and return technology company, Optoro, shows that an average holiday return will cost retailers two-thirds of the original price, which translates to a 7% hike. Moreover, the cost of processing returns will be particularly high for electronic devices, with average returns costing retailers 15 times higher than apparel as companies must remove personal data from devices.
“It’s increasing because you have many more things that are wired or connected to the internet of things that need to be wiped and you need to be concerned about security,” said Tobin Moore, founder and CEO of Optoro.
“All the watches now have sensors on them. Now there is clothing and shoes having sensors. I see that as something that’s only going to increase.”
This increase in processing cost is particularly significant this year as consumers are projected to spend some $222 billion in November and December. That said, nearly $66.7 billion worth of products are likely to be brought during these two months will be returned, marking a 13% year-over-year increase, according to CBRE.
Not only is this increase going to cost retailers more, but it is also going to have a significant environmental impact.
“Our estimates are that 5.8 billion tons of return packaging will end up in a landfill after this holiday season. Returns from this holiday season will also generate around 16 million tons of carbon dioxide,” said John Morris, the head of industrial and logistics for CBRE in the Americas.