Recently, the Arizona State University published an article where discussed returns of the holiday gifts with Hitendra Chaturvedi, a professor of practice in the Department of Supply Chain Management in the W. P. Carey School of Business.
The National Retail Federation predicted that in 2021 overall holiday spending will grow up to 10,5% compared to 2020. Total online sales are going to reach $215 billion – about 20% of all holiday retail sales.
According to the data provided by the professor, the return rate differs for online and offline sales. It is around 25% for the websites and for the offline stores – about 8%. So, according to those numbers, the expected amount of returned gifts is $54 billion if only online sales are taken into account and up to $120 billion overall. All those items are going to impact logistics and decrease the profit of the sellers because they need proper handling. This may not be an issue for high-end electronics, which usually get refurbished and resold on different platforms like eBay. Still, very often, cheap electronics, plastics, etc., are going to be scrapped, and only part of such items are actually recycled. And, for example, fast fashion items made from synthetic materials are often just thrown away or get burned.
So, the problem is not only financial. It affects the environment as well. To avoid it, professor Chaturvedi recommends acting in a different way. For example, a gift card may be a good option, allowing the recipient to pick the thing they need. Another way is to purchase some kind of service. That will let you avoid unnecessary load on the logistics and, at the same time, will support the service industry, which was hit by the pandemic.