U.S. MarketFlash | 3PL Operators Benefit from Rising E-Commerce Product Returns
December 13, 2017
Third-party logistics (3PL) operators and facility owners are benefitting from a rapidly rising rate of product returns, as many retailers outsource their reverse logistics operations to cut costs and gain maximum efficiencies. CBRE Research estimates that 3PL users occupy 700 million sq. ft. of warehouse and distribution space in the U.S. and have been growing by 3% to 5% annually since 2013.
Product returns comprise 8% of total retail sales, but are much higher for e-commerce sales (15% to 30%), depending on the product type and peak during the holiday sales season.
Adobe forecasts that online sales will increase by 13.8% in the 2017 holiday season to $107 billion, which could result in up to $32 billion worth of returns.
Returned merchandise adds significant costs to retailers and distribution networks that are not optimally equipped for the reverse flow of inventory. It is estimated that returns sold at discount or not resold cost retailers 4.4% of total revenue each year.
The solution to the reverse logistics problem is improved and expanded supply chain networks, creating tremendous industrial real estate opportunities as users add additional warehouses and distribution centers to support the reverse flow of inventory.