Returns to surge after Black Friday? Inventory costs climbing, sellers in a worrying situation

The 2021 Black Friday sales season has come to a close, and according to Salesforce, U.S. shoppers spent $13.4 billion on Black Friday, up 5% year-over-year. This shows that consumer spending in the U.S. market during Black Friday this year is still very good.

However, according to more than half of the sellers, after the peak season, there will be a peak return period. Due to supply chain problems, the major merchants opened early this year, the holiday campaign, but this does not solve the impact of inventory shortages.

Salesforce's general manager of retail said that it has been a dream of merchants to drive demand early in the fall. Due to supply chain bottlenecks and inflation concerns, consumers did participate in early shopping, but the market also encountered low inventory, with a 6 percent reduction in catalogs during Black Friday.

The shortage of inventory, with products taking a long time to hit the shelves, would give consumers the opportunity to browse other stores, causing orders to be cancelled. As a result, sellers had to be concerned because of this!

According to data from a Returns Management Survey released by the Logistics Association of America (RLA), 65% of respondents said product returns will increase in the fourth quarter as online sales activity reaches peak season highs. More than 50 percent of respondents expect the cost of returns to increase in an expensive supply chain environment.

Meanwhile, according to the National Retail Federation 2020, returned merchandise as a percentage of U.S. sales was 10.6 percent last year and accounted for 18.6 percent of online sales.

As you can see, online orders are more likely to generate frequent returns than physical purchases, and sellers have to be prepared to receive return requests. At the same time, the increased rate of returns is not only likely to expose sellers to higher transportation, labor and warehouse costs, but will also exacerbate the already serious logistics problems of rising freight costs, capacity constraints and delays.

This series of impacts caused by the supply chain really makes sellers in this peak season is like a roller coaster ride, the mood of the ups and downs.