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Retailers are preparing for large holiday returns of oversized items

During the coronavirus pandemic, online orders for furniture, fire pits, and other bulky consumer goods flooded with a major new issue in returning unwanted items, one of the biggest holiday season headaches in e-commerce. Will be added.

Retailers have set up dedicated handling sites and reverse logistics in the hope that consumers will see larger and heavier gifts and purchases in the light of the holidays, which will increase their large revenue growth. We have an impressive deal with professionals.

Eric Caldwell, president of XPO Logistics, said it will come in January. Of a corporation

North American Last Mile Business Unit, “You will have a mother for all return seasons of heavy goods.”

According to Forrester Research Inc, approximately 25% of all e-commerce purchases will be returned. Bulky purchases tend to have lower return rates than portable items such as apparel, accounting for about 10%, industry executives say.

But this year, far more exercise bikes, lounge chairs, and office desks have been added as people redesign their lives and homes around blockades and telecommuting orders aimed at limiting the spread of the coronavirus. It will be delivered to your house.

XPO Logistics handles home delivery and returns for customers, including fitness equipment retailer Peloton Interactive. Co., Ltd.

And whirlpool Co., Ltd.

This summer’s heavy shipments exceeded last year’s vacations. Since the pandemic, Caldwell has also increased his rate of return from about 10% to “about 11% for much larger quantities.”

Cheap and easy returns have become an important part of marketing when e-commerce retailers try to seduce their customers. Online clothing shoppers regularly order multiple sizes and colors. Delivery will be refused or dropped to a nearby store.

I will return £ 200. Fully assembled sofa beds and flat pack desks are more complex and more expensive.

Workers are preparing to load a Whirlpool refrigerator into a delivery truck at a distribution center in Wilmar, Texas, prior to the pandemic.


Photo:

Sergio Flores / Bloomberg News

“It’s not as easy as buying shoes and putting them back in the box,” said Zach Pollock, chief operating officer of Pilot Freight Services, which arranges the transportation of heavy and bulky items for customers such as Bed Bath & Beyond. Co., Ltd.

Walmart Of a corporation

Sam’s Club and Dick Sporting Goods Co., Ltd.

“It takes time to pick up unpacked valuables in people’s homes,” Pollock said. “It’s very tedious to put it back in the factory package.”

Last year’s delivery giant FedEx Co., Ltd.

And United Parcel Service Co., Ltd.

We’ve added a $ 24 fee for packages over £ 50 and lowered the surcharge threshold from £ 70. Both carriers will charge an additional fee for shipments that exceed certain dimensions.

Research group IBIS World said in February that the domestic online furniture market has grown at double-digit rates in recent years, reaching $ 45.7 billion in 2020. But that was before the pandemic sent a large number of consumers online.

As of October, pilot consumer e-commerce volumes increased by about 37% compared to the same period in 2019, according to Pollock. In the pilot’s top-class account, “more shipments are being returned as a year-over-year growth rate,” he said.

Retailers are facing more headaches when it comes to returns.

Once the unwanted items have been packed and removed from the customer’s home, the retailer must evaluate the condition and decide whether to resell, liquidate, or send it to the landfill. Rejected items can eventually return to the warehouse for hundreds of miles, which can result in significant shipping costs.

Some brands have a dedicated last mile delivery service that locally integrates and ships returns from one company. In other cases, unwanted products go through terminals that handle the cargo of dozens of clients.

A final mile worker at JB Hunt Transport Services Inc. delivers a sofa bed to his home in Haslet, Texas.


Photo:

Sergio Flores / Bloomberg News

David Commiskey, Vice President of Customer Solutions at GlobalTranz, a freight brokerage and logistics company, has set up regional returns centers for some merchants as higher sales volumes increase the cost of handling unwanted merchandise. We also advise on oversized items and return policies.

“We need to understand their network and the cost of bringing something back from North Carolina to California,” Komiky said.

GoTRG, a reverse logistics specialist handling returns for customers such as Wal-Mart and Loews, has “increased the size of returned units by 200%” since the pandemic, said Shamiss, CEO of goTRG. I will.

For a home improvement retailer, the average return size went from 0.6 cubic feet to 1.4 cubic feet. Shamiss said a retail customer moved from returning about 300 trucks a week to 600-700 trucks.

Return rate on Wayfair Co., Ltd.

IBISWorld estimates that the online furniture market is stable at around 5%, with no “significant changes during the pandemic.” Still, online furniture retailers’ sales are growing so rapidly that even a stable rate of return can mean that the company has far more unwanted merchandise on hand.

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

Floyd Inc, an online furniture retailer based in Detroit. However, sales surged during the pandemic, but the return rate was also low at around 5%. “But with any rate of return, it’s still a challenging and costly process,” said Aaron Turk, vice president of business and corporate development for the company.

Floyd returns are usually shipped the same way they were shipped. According to Turk, most items aren’t returned to inventory because the packaging is likely to be damaged and are sold annually in warehouses in Michigan.

“I couldn’t do that this year because of the pandemic,” he said. “So the inventory is piled up.”

How does a pandemic affect American retailers? As states across the country struggle to get back into business, the WSJ will investigate the evolving retail environment and how consumers shop in the post-pandemic world.

Write to Jennifer Smith (jennifer.smith@wsj.com)

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Retailers are preparing for large holiday returns of oversized items

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