Holiday Gift Returns Are Potentially Causing More Harm Than Good

Holiday gift recipients are visiting stores to return unwanted items, a move that is a financial burden for retailers.

According to The Washington Post, UPS is set to see one in four Americans return at least one gift before the end of the month following the 2021 holidays. That calculates to about 60 million packages in one return season for one shipping provider.

Part of retailers' concerns is the cost behind each return. Citing analysis from companies involved in the returns industry, the Post reported that for every $50 item a company receives back, it's costing them about $33 to process the return.

The overflow of returns has also made it impossible to return all products into inventory, leaving some items to go into liquidation.

"The flood of returns is so heavy [and growing] that it’s simply impossible for retailers to assess whether each individual pair of jeans, porch furniture combo or Lego set is in resellable condition," noted the news outlet.

Items that cannot be repurposed end up causing an even bigger burden. Faced with an "unmanageable flood of returns," some stores are known to incinerate returned inventory or dump it in landfills.

Senior retail analyst Agnes Stubbs touched on the cost of returns in an interview with Modern Retail.

"Every customer return comes at a cost to a retailer," said Stubbs. "As consumer spending shifts from in-store to online, the value of returns can as much as triple, by comparison."

Stubbs added that with supply chain delays and labor shortages, retailers also have to account for the labor costs that come with accepting returns.

The return issue comes after it was reported that online consumer spending for the 2021 holidays hit $204.5 billion. When compared to December 2020, online prices increased 3.1%.