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LOS ANGELES—It's that time of year again: National Returns Day,when consumers across the US send back to retailers items purchasedor received during the holidays that they don't want. United ParcelService forcasted that on Jan. 2, 2020 a record 1.9 million returnswere expected, up 26% from last year—the seventh consecutive recordNational Returns Day, which it chalks up to growing e-commerceactivity.

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In another measure, CBRE notes that total online holiday salesare forecast at $138.5 billion, up by 13.5% from last year, andapproximately $42 billion worth of those purchases are expected tobe returned.

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For retailers returns are, obviously, not going to enhance theirbottom lines. Shipped returns present challenges in processingtimes, liquidation recovery and manual processes that can result inmore than $50 billion in profit loss, according to reverselogistics provider Optoro, which collaborated with CBRE on a recentreport about online returns.

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In addition, as the overall return rate continues to grow by 10%annually, a higher amount of inventory is subject to depreciation.Optoro estimates that fashion apparel depreciates by 20% to 50% ofits value within eight to 16 weeks. Depreciation levels vary byproduct type, with electronics losing between 4% and 8% of theirvalue per month.

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Fortunately retailers are becoming more adept and comfortablewith handling returns, John Morris, CBRE Executive ManagingDirector and Americas Industrial & Logistics Leader tellsGlobeSt.com, especially as new options for reverse logistics comeonline. "In the next several years we might see percent of itemsreturns go down as the entire retail ecosystem becomes moreprepared," he says.

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Such measures might include return policies fine tuned tominimize fraud and providing better information about sizing duringthe sales process, perhaps via virtual apps. "All of this will havea beneficial impact on returns," according to Morris.

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In the shorter term, retailers also have a number of ways toaddress the issue. For example, CBRE tells of third-party providerHappy Returns, which provides a service for customers to send backtheir online returns by dropping them off at a kiosk. Someretailers without physical locations are partnering withbrick-and-mortar retailers, allowing customers to return items to astore, CBRE also says. "Amazon now offers free returns for Primemembers in more than 1,150 Kohl's locations, allowing customers todrop off their unpackaged items at the store while receiving a 25%discount at Kohl's," according to the report.

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In general, Morris says, retailers can take one of a handful ofroutes to smooth their return process.

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One is better collaboration and communication with supply chainpartners

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Two, a retailer can outsource some of these business functionsto a third party.

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The third option is to review and revisit how reverse logisticsis being managed, including the possibility of establishingdedicated return centers.

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A fourth possibility is to temporarily lease a less expensive,less automated facility on a short term basis as a return center.It should be noted that distribution facilities handling returnsneed 15% to 20% more space than a traditional facility for outbounddistribution because the volume, dimensions and final destinationof returned goods are inconsistent and varied.

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Older, Class B buildings are good candidates for this option,Morris says. "When the products come in, they are not notefficiently packed so the building doesn't have to have a clearheight." The downside is the retailer is adding buildings to itsnetwork and that adds to the complexity, he adds.

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Of all of these, there is no 'best' option, Morris says. "Muchdepends on the retailer and what it has in place."

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He does believe that the outsourcing option will see the mostgrowth. "The number of reverse supply chain providers isincreasing." These companies will also be inclined to use Class Bspace for the services they provided.

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