The Multibillion-Dollar Retail Logistics Challenge: Handling Online Returns – The Property Chronicle
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The Multibillion-Dollar Retail Logistics Challenge: Handling Online Returns

The Analyst

This past holiday season, as with many other times of the year, the difference between making or losing money online came down to one thing for many retailers: How effectively and efficiently they handle returns of merchandise.

Returns are as old as the retail industry itself. But they play a much larger role in e-commerce. That’s why a retailer’s process for handling them, often called reverse logistics, is so critical. It includes everything from the retailer’s processes to its inventory-management systems to the industrial real estate where its returns are handled.

Consider that the average return rate for merchandise bought in stores is roughly 8 percent. The e-commerce return rate is much higher – 15 percent to 30 percent, depending on the merchandise category – due to years of ingrained behavior among shoppers. Specifically, folks tend to buy multiple varieties of a given product online, examine them at home and then return all but the one they opt to keep.

This becomes an expensive proposition, considering the robust growth of e-commerce. To wit, eMarketer estimates that November-December online sales in the U.S. totaled $123 billion. Applying the typical rate of online returns to that estimate means that up to $37 billion of goods came back to retailers in the post-holiday weeks. Retailers endeavored to limit that loss by assessing which goods can be resold, where and how quickly.

How to deal with those returns is a complex challenge that many retailers address with a combination of solutions.

Dedicating Warehouses for Handling Returns

Many retailers and shippers process returns in their own warehouses. But there’s a marked difference between dedicating space to processing returns and just letting them stack up in a corner of an outbound warehouse for examination when time allows.

The Analyst

About Adam Mullen

Adam Mullen

Adam Mullen leads the Industrial & Logistics business in the Americas for CBRE, the worldwide leader in commercial real estate services. In that role, he manages and supports CBRE’s supply chain and logistics business in the U.S., Canada and Latin America. Mr. Mullen oversees an organization of more than 800 professionals who handled more than $35 billion in industrial transactions in 2017 while focusing on delivering exceptional outcomes to both occupiers and investors. Mr. Mullen joined CBRE in 2014 to lead its supply chain business, steadily adding responsibilities until, in 2016, CBRE appointed him to oversee its Americas Industrial & Logistics line of business. Prior to joining CBRE, Mr. Mullen spent almost 10 years in the supply chain consulting industry, advising on design and implementation of supply chain change for many of the world’s top brands across multiple industries. Follow him on Twitter at @adampmullen.

Articles by Adam Mullen

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