Retailers Brace for Hefty Holiday Returns of Oversize Goods

The many online orders for furniture, fireplaces and other bulky consumer goods during the coronavirus pandemic will exacerbate one of the biggest e-commerce headaches of the holiday season: the return of unwanted items.

Retailers create special places to deal with reverse logistics specialists and expect their sales to increase when consumers see their larger and heavier gifts and purchases in the light after their holidays.

In January, Eric Caldwell, the president…

XPO Logistics Inc.

On the last commercial mile in North America, the mother of all heavyweights returns.

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According to Forrester Research Inc., approximately 25% of all online purchases are returned. Large purchases tend to underperform in the area of wearable products, such as clothing, which industry leaders say are about 10% less efficient.

But this year, many more bikes for training, tanning beds and offices will be delivered to homes, while people will lock up their lives and homes and rebuild their homes to limit the spread of the coronavirus.

At XPO Logistics, which takes care of the delivery and return of goods to customers, including suppliers of fitness equipment, at home.

Platoon Interactive Inc.

Whirlpool Corp.

This summer’s heavy cargo exceeded last year’s holiday volume. Revenues have also increased from about 10 percent to about 11 percent since the pandemic, to much higher levels, Caldwell said.

Easy and cheap revenues have become an important marketing element for online merchants trying to attract customers. Online clothing buyers usually order different sizes and colors, refuse delivery or bring them to a nearby store.

Returning a 200-pound sofa bed or a flat table that is now fully assembled is more complicated and expensive.

An employee prepares to load a refrigerated hydromassage truck for delivery to a distribution centre in Wilmer, Texas before the pandemic begins.

Photo:

Sergio Flores/Bloomberg News

It’s not as easy as buying a pair of shoes and putting them back in a box, said Zack Pollock, Managing Director of Pilot Freight Services, a company that handles the transportation of heavy and bulky items for customers such as.

Bedbath & Beyond Inc,

Walmart Inc.

Sam’s Club and

Dick’s Sporting Goods Inc.

When you collect valuables unpacked in people’s houses, it takes time, Mr. Pollock said. Getting them into the factory can be a very difficult job.

Last year’s supply giants

FedEx Corp.

United Parcel Service Inc.

added a levy of $24 for parcels weighing more than £50 and lowered the levy threshold by £70. Both carriers also charge extra for goods that exceed certain dimensions.

The IBISWorld research group said in February that the online furniture market for private households has grown at double-digit rates in recent years and will reach $45.7 billion by 2020. However, this was before the pandemic sent consumers online in large quantities.

In October this year, the volume of consumer e-commerce in Pilot increased by approximately 37% compared to the same period in 2019, said Mr. Pollock. More shipments are returning as a percentage of annual growth among Pilot’s key customers, he said.

Retailers have extra headaches when returning goods.

Once the unwanted object has been packaged and removed from the buyer’s premises, the sellers must assess its condition and decide whether it should be resold, liquidated or deposited. The sorted goods can eventually be returned hundreds of kilometres back to the warehouse, which involves considerable transport costs.

Some brands have special last mile delivery services, where returned goods are bundled and shipped by a local company. In other cases, unwanted products pass through terminals that handle the cargo of dozens of customers.

A J.B. Hunt Transport Services Inc. A worker from Last Mile delivers a sofa bed to a house in Haslett, Texas.

Photo:

Sergio Flores/Bloomberg News

Some vendors are setting up regional return centers because increased sales are driving up the cost of dealing with unwanted items, says David Commiskey, vice president of customer solutions for GlobalTranz, a real estate and logistics company that helps furniture manufacturers and retailers manage the delivery of large items to homes and advises them on return policies.

You have to understand their network and what it costs to bring something from North Carolina to California, Kommisky said.

The goTRG’s reverse logistics specialist, which handles returns for customers such as Walmart and

Lows

As revenues have increased by 200% since the pandemic, GoTRG Executive Director Sender Schamiss said.

For a home retailer, the average profit increased from 0.6 cubic meters to 1.4 cubic meters. Mr. Shamiss stated that one retail customer had grown from approximately 300 trucks with returns per week to 600-700 trucks.

Profitability after

Wayfair Inc..,

which IBISWorld estimates at 9.4% of the online furniture market, remains at about 5% with no significant change. …during the pandemic, the spokeswoman said. However, sales of online furniture stores are growing so fast that even a constant level of profitability probably means that the company has much more unwanted goods in stock.

Wayfair’s net revenue in the US increased 82.5% in the second quarter and 66.5% in the third quarter over the same periods in 2019 to $3.65 billion and $3.27 billion, respectively.

Detroit-based online furniture retailer Floyd Inc., which also experienced an increase in sales during the pandemic, also posted similarly low returns of around 5%. But no matter how profitable it is, it’s still a complex and costly process, said Aaron Turk, Vice President, Operations and Business Development.

As a general rule, Floyd’s return shipment takes place in the same way as the shipment. Most items are not returned to the warehouse because the packaging is probably damaged, Turk said, so the company sells them at an annual sale in its warehouse in Michigan.

We couldn’t do it this year because of the pandemic, he said. So the stock is getting bigger and bigger.

Write to Jennifer Smith at [email protected].