As e-commerce continues to rise, traditional brick and mortar retailers are feeling the heat. More and more consumers shop online every day, opting to skip the in-person trip to the store. In 2017, e-commerce accounted for $2.3 trillion in sales, and that number is expected to double by 2021. In the U.S. alone, online shopping makes up 10% of all retail sales, and that number continues to grow every year.
This shift in consumer shopping trends has already hit brick and mortar retailers hard. Major retailers such as Sears, Toys-R-Us USA, and most recently Forever 21 have filed for bankruptcy and began to shutter their stores. E-commerce giants such as Amazon are not wholly to blame, but it is interesting to note that many retailers that struggle refocus their companies to prioritize online sales. For example, since closing down in 2018, Toys-R-Us is now set for a limited time re-launch online in partnership with Target.
While many people like to pit e-commerce and brick and mortar retailers against one another, these two industries have begun to see value in each other. As the number of online orders increases, so does the number of returns. Reverse logistics is a growing sector of the logistics industry and one that consumers are starting to care more about. 96% of consumers state they would repeat business based on a good return experience.
Getting returns from customers isn’t as easy as fulfilling outbound orders. That’s why major logistics companies have begun partnering with brick and mortar retailers to become drop-off locations.
Earlier this year Amazon announced a partnership with retailer Kohl’s. More than 1,100 of Kohl’s stores in the U.S. now accept Amazon returns. This move has been beneficial to both companies since its launch. Participating Kohl’s stores have seen an 8% increase in revenues and a 9% increase in new customers. Amazon meanwhile has made the return process more convenient and localized for consumers and drivers.
Due to Amazon’s success, UPS has recently announced a partnership with Michaels. Michaels, which has 1,200 stores across the U.S. and Canada, will now serve as a pick-up and drop-off point for UPS. So far, this announcement has created a rise in Michaels’ stock, which had been in decline all year.
FedEx has also decided to work with brick and mortar retailers. Return label printouts will now be implemented at thousands of Walgreens stores within the next few weeks. Online retailers will be able to email customers a return code, which can be given to a Walgreens store associate who will print the return label. This will make the returns process as easy as possible and customers will no longer be required to print labels at home.
E-commerce shows no signs of slowing down, and reverse logistics will play an increasingly vital role in the supply chain. As the holiday season approaches, both online and brick and mortar stores, and logistics companies must prepare for the influx of orders and returns. Collaborative partnerships have proven to be mutually beneficial to both industries and is something more companies should consider moving forward.