Brief

UPS: Surging e-commerce sales to drive record holiday returns

Dive Brief:

  • United Parcel Service expects to deliver a record 5.8 million returns packages to retailers during the first week of January and 1.3 million returns just on Thursday, Jan. 5, which the company has dubbed National Returns Day.
  • By comparison, shoppers returned around 1 million packages on National Returns Day 2016 and 5 million parcels during the first week of last year, according to UPS.
  • A recent UPS Pulse of the Online Shopper study also found that making returns is getting easier: Between 2012 and 2016, shoppers reported fewer issues paying for returns shipping (decreasing from 66% to 50%), paying restocking fees (decreasing from 43% to 27%) and experiencing a delay in receiving credits or refunds (decreasing from 41% to 27%).

Dive Insight:

The holiday rush isn't over yet for shipping companies. This week, consumers will flood the parcel delivery company with ill-fitting sweaters, gaudy jewelry and other unwanted holiday gifts to be returned.

For retailers, the reverse supply chain problem can be costly: The National Retail Federation estimates returns cost U.S. retailers more than $260 billion in lost sales. “Retailers are continuously improving their returns programs,” Teresa Finley, chief marketing officer for UPS, said in a statement. “The next great opportunity is to unlock the value of these returned products through a sophisticated reverse logistics program.”

But that program isn't quite up to par yet. A December report from software developer ShipMatrix showed that UPS and rival FedEx were already struggling to meet delivery demands ahead of the holidays due to increased e-commerce sales, and in effect, they stretched delivery times on some routes, suspended on-time delivery guarantees and refunds in some cases and no longer promised delivery times in other instances.

Record-setting e-commerce sales this Black Friday, Cyber Monday and throughout the holiday season have placed greater strains on shipping companies. Cyber Monday sales reached a record $3.45 billion, well past a forecast for $3.36 billion and a 12.1% increase over the year-ago period, according to an Adobe Digital Insights report. Online shopping accounted for $36.5 billion in online revenue by the end of November, with 26 out of 27 days in November generating $1 billion each day, Adobe adds. Despite anticipated record shipments, both FedEx and UPS earlier this year said that they planned to hire roughly the same number of seasonal employees during the holiday season as they did for the holidays last year.

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Filed Under: Logistics
Top image credit: Levent Ali