CBRE Report: Holiday E-Commerce Returns Could Reach $32 Billion As Online Sales Surge

12/14/17

Returns Of Merchandise Bought Online Typically Amount To 15%-20% Of Overall Sales, Far Outpacing 8% Return Rate For Goods Bought In Stores

As e-commerce claims an increasingly larger portion of holiday retail sales, retailers’ efficiency in limiting and handling returns of merchandise bought online – which could amount to as much as $32 billion this year – will make or break the holiday season for many, according to CBRE.

E-commerce consistently generates more returns than brick-and-mortar retail, partly because shoppers often can’t sample online merchandise before buying it and partly due to the widespread practice of online shoppers ordering several versions of a product and returning those that don’t appeal.

Historically, returns of store-bought merchandise have amounted to 8 percent of total retail sales. However, for e-commerce, that share ranges from 15 percent to 30 percent, depending on the product category.

Assuming that those percentages hold true, the value of returns this season will increase by the same 13.8% that Adobe Analytics predicts for the increase in online sales this season. Adobe foresees online sales this season reaching $107.4 billion, up from approximately $93 billion last year. By extension, CBRE calculates that the projected ceiling for returns is $32 billion, up from roughly $28 billion last year.

“The increased amount of e-commerce returns will benefit Pennsylvania’s I-78/I-81 industrial corridor,” said Vincent Ranalli, senior vice president, CBRE.“We have a huge presence of 3PLs, public warehouses and reverse logistics firms in the area which are able to receive and process returned goods. In the past few years, we have witnessed shipping companies invest heavily to bolster their networks to accommodate the increased online traffic. Since the I-78/I-81 corridor is located within a day’s truck trip of 40 percent of the nation’s population, we believe the region will be an ideal location for returned online goods,” added Ranalli.

Those well positioned to thrive in the online-returns market – also called reverse logistics – include third-party logistics firms and owners of 3PL facilities, according to CBRE. Many retailers opt to contain costs and preserve their retail focus by outsourcing reverse-logistics functions to 3PL firms that specialize in that field.

To read CBRE’s latest report on holiday-season reverse logistics, click here.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated 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.

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