Many Happy Returns For Logistics Providers
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Holiday shoppers are ditching brick-and-mortar stores for the convenience of ordering gifts online, and the trend is creating opportunities in industrial real estate, according to a report from CBRE.
Adobe forecasts online sales will increase by 13.8% this holiday season to $107B, which could result in $32B worth of returns.
“E-commerce is definitely a driving factor in Denver’s industrial market,” CBRE Senior Vice President of Industrial and Logistics Services in Denver Tyler Carner said. “As retailers both expand and adjust their supply-chain networks to better handle returns, we anticipate an additional boost to demand for distribution and warehouse space along the Front Range.”
Historically, returns of store-bought merchandise have amounted to 8% of total retail sales. E-commerce returns range from 15% to 30%, depending on the product category.
Because returned merchandise adds significant costs to retailers and distribution networks, third-party logistics operators and facility owners are in a position to cash in on those returns. It is estimated that returns sold at discount or not resold cost retailers 4.4% of total revenue each year, which is encouraging many online retailers to outsource their reverse logistics operations to cut costs and gain efficiency, according to CBRE.