Will Fresh Retail Policies Curb Reverse Logistics?

Strasmann: “It will be a continuing trend until someone solves it. E-commerce is growing and at the very beginning stages.”

NEWPORT BEACH, CA—As retailers grapple with the cost of e-commerce returns and toy with the idea of having customers pay a premium for it, the industrial sector may reap the benefits, CBRE’s senior managing director Kurt Strasmann tells GlobeSt.com. E-commerce returns, known in the industry as reverse logistics, is defined as “the movement and management of products and resources after sale and delivery to the customer, including product returns for repair and/or credit, according to the Council of Supply Chain Management Professionals.

Historically, retail returns comprise 8% of total sales. However, e-commerce return rates are much higher at 15% to 30%, depending on the product type, according to CBRE. eMarketer recently reported that online sales were projected to rise 17% in the 2016 holiday season to $95 billion, which had the potential to result in up to $29 billion worth of returns. Returns add significant costs to retailers and distribution networks that are not optimally equipped for the reverse flow of inventory. It is estimated that returns, either sold at discount or disposed of, cost retailers 4.4% of total revenue each year.