Managing The Rise (and Cost) of Returns

E-commerce was growing rapidly before the COVID-19 pandemic; the U.S. Department of Commerce reported in early 2020 consumers spent $601.75 billion online with U.S. merchants in 2019, a 14.9% increase over the year prior.

Then the pandemic hit, and shelter in place, work from home, and related initiatives accelerated this growth. In the first quarter of 2020, which only contained about two weeks of COVID-19’s impact, e-commerce sales increased 14.5% year over-year according to the U.S. Department of Commerce.

Of course, e-commerce comes with a unique set of challenges, including a greater number of returns. As e-commerce has exploded during the pandemic, returns are on the rise and growing fast. According to Statista, “In 2019, retail merchandise returned in the United States accounted for 309 billion U.S. dollars,” and that number is widely expected to rise significantly in 2020. Setting aside the actual cost of the merchandise, Statista also projects return costs, including delivery and restocking, will reach $550 billion in 2020. This increased return volume will significantly impact many businesses’ bottom lines.