Retailers are grappling with an influx of returned holiday gifts, but a significant portion of these items won't return to store shelves. Instead, they'll be sent to warehouses and auctioned off at a fraction of their original prices. The National Retail Federation estimates that over 15% of the $966 billion spent during the recent holiday season will be returned, a trend fueled by the generous return policies of the e-commerce era.
The reverse logistics market, which encompasses all aspects of handling in-store or online returns, was valued at $939 billion in 2022 and is projected to grow at a compounded annual rate of 12% through 2032. According to Insider Intelligence, returns in 2023 were expected to reach $627 billion, representing over 26% growth from 2020 and accounting for 8.5% of total retail sales. The share of returns attributed to e-commerce was also expected to rise from 33.7% to 34.3% during this period.
To cope with the surge in returns, many retailers are adopting "returnless refund" policies, with about 59% of them offering this during the holiday season. These policies typically apply to lower-cost purchases, but some brands, like Wayfair, are even allowing customers to keep higher-value items like furniture.
