And what happens to the returned goods?
It was, by all accounts, an exciting shopping season, particularly for e-commerce. I figured that out very quickly when things we’d ordered in early December took days longer than normal to arrive. The tracking info showed various issues, including packages getting hung up for days in some warehouse, apparently waiting for the next available spot on a truck.
So here’s the frenzied party.
Now we got the first set of numbers. Mastercard SpendingPulse reported that holiday shopping — not including automotive — from November 1 through December 24 across all payment types, including cash and check, rose 4.9% from the same period a year ago, the largest year-over-year increase since 2011. Folks spent over $800 billion this shopping season, the most ever.
Online sales soared a breath-taking 18.1% year-over-year, “boosted by a late season rally,” the report said. It ate the lion’s share of the increase.
“Overall, this year was a big win for retail,” the report said, which based the results on data from the Mastercard payment network and survey-based estimates for other payment types. A special credit went to those retailers “who tried new strategies to engage holiday shoppers.”
But now comes the record hangover.
Consumers will return about $90 billion in goods purchased during this holiday season, according to estimates by Optoro, which specializes in the business of return shipments. For the entire year, about $380 billion of goods will be returned.
Of the returns following the holiday shopping party, 40% will happen during return-mayhem from December 26 through December 31, and 51% will happen in January, according to Optoro.
Some more return nuggets:
- FedEx’s head of marketing, Raj Subramaniam, told investors last week that about 15% of the goods bought online will be returned, with the return rate for apparel being about 30%.
- The National Retail Federation estimates that 15% to 30% of goods bought online will be returned.
- UPS said that in the first full week of January 2017, 5.8 million packages were returned to retailers. The first full week in January 2018 will likely beat that number.
“Being able to return is now a competitive tool,” Bruce Cohen, head of strategy and private equity for retail and consumer products at consulting firm Kurt Salmon, told CNBC. “If it’s a pain for customers to return items, they will go elsewhere.”
For online shoppers, there are drop-off points scattered around, or they can ship it back, using the preprinted return label that came in the box, with the retailer usually offering to pick up the shipping costs. Brick-and-mortar shoppers get to cool their heels in line at the returns counter.
And what happens to the returned goods?
- Only about half of returned goods are put back on the shelves, according to Optoro, cited by CNBC.
- About a quarter of returned goods are sent back to the manufacturer, with the retailer thus sloughing off the problem.
- Other returns are sold, often for pennies on the dollar, to secondary retailers, discounters, and liquidators.
- And about 5 billion pounds of returned goods get trashed because it’s too expensive for retailers to assess their condition and repackage them, or because they’re damaged.
These returns – and generous return policies that engender them – are very costly for retailers and consistently rank among their top concerns. Many online vendors offer free shipping for returns, which adds to the costs.
But customers take for granted that they can return those boots and clothes they bought and that don’t fit, or where the color looks different in reality than in the shop or on screen, or when the spouse has a hissy fit. Or they find out that the alarm clock they bought has over a dozen buttons and endless complexities and problems that they don’t have the patience and time to debug – it’s just an alarm clock, for crying out loud – and they send the damn thing back. Then there’s the abuse, the party dresses and the like, that get returned the day after the party, stains and all.
People just take returns for granted. It’s part of the service in the US retail environment. That is nothing new. Brick-and-mortar retailers have struggled with this for decades. But online sales exacerbate the problem.
Retailers “simply accept it as a price of doing business,” Jonathan Byrnes, a senior lecturer at MIT’s Center for Transportation & Logistics, told CBNC.
Most retailers report earnings based on quarters that are shifted by a month from calendar quarters. So their holiday-sales quarter might go through the end of January. This makes sure that the nasty hangover from the holiday sales party is also included. Otherwise the next quarter, which is already tough, would be a total fiasco.
For companies, the new tax law looks like a crackdown on excessive debt, as financial engineering gets more expensive. Read… What Will the Tax Law Do to Over-Indebted Corporate America?
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And they said the customers have no money. Plus all the BS of how Millennials are discarding consumption. LOL, mupp*ts don’t fall far from the tree.
Spending was up 5.9 %. The nominal economy (GDP) grew about 2.5 %.
Real maybe 2?
The difference between that and 5.9 could only come from savings or debt.
Call me skeptical, but even part of my family that almost always overspends, noticeably spent less this year on their only child. Many of those I know also spent a smaller amount or none at all.
Given all of the propaganda, what is the likely hood that MasterCard and Visa (an extension of the Too Big To Fail banking system) is not also fabricating numbers? I’ll wait to see Amazons earnings.
Amazon earnings will be good until you look beneath the hood to see what amazon did with accounting.
Ponder this-Amazon is growing sales by 20% or more , however for earlier this year nothing dropped to the bottom line. Wonder if anybody is concerned that sales grow 20% and nothing drops to bottom line which means Amazon is still selling at no profit.
So now, what changes in the 4th quarter? More discounts?
If amazon cuts say technology spending, thats negative for its website and the information it gathers.
So again, whats has changed to suddenly improve profits? Product mix in this quarter? I doubt it. But it would need to be significant to make a difference.
Same here – family gifts noticeably much smaller this year.
Ty, your family confided to us that they really don’t like you all that much, hence the smaller gifts.
“”Or they find out that the alarm clock they bought has over a dozen buttons and endless complexities and problems that they don’t have the patience and time to debug – it’s just an alarm clock, for crying out loud – and they send the damn thing back.””
Ain’t that the truth.
There’s a new wireless-enabled heated coffee mug out – with an app so you can adjust it from your smartphone.
I kid you not.
How dd the human race ever get by without this stuff..?
(answer: with much less stress and far happier, due to not fretting about ‘problems’ which aren’t really problems at all..!)
I was hoping Santa would bring me a new Samsung fridge with a built-in camera. Why would you want to open the door of your fridge and look inside when you can get a photo sent to your smart-phone to see what to put on the shopping list?
Dan:Any thing that can save the world from global cooling must be worth this new technology:HEY?
I swear I’m not going to buy a smart phone and have it plastered on my head. No bird apps. No apps period. No Facebook. No virtual reality world. Just backpacking in the mountains and growing veggies in my garden. Maybe a little face to face contract with my friends. I spent about$40 on Christmas gifts for my wife. Happiness is not things!
I need an “App” to tell me which apps I need. ( Sarc on ).
Seriously, I seem to spend (waste) more of my time “updating ” apps than I do actually using them.
BTW: Credit card companies hate me ……No Fee cards that let me “play ” with their money and that get paid off before any interest charges accrue.
I “skipped” the Boxing Day stampedes altogether this year…..nothing I really want or need at my stage of life.
This happened to me with a coffee maker. I was buying it for someone else and ended it up having to return it for a model without the programmable features my friend didn’t want.
Wait…you’re saying credit card debt needs to be paid off at some point?
I have been doing it all wrong, I thought the goal was to max out more cards than the neighbours. Can’t add interest to a maxed card right??? ;)
Remember when you could deduct all that credit card interest from your federal return?
There can be so many reasons for all of this
* maybe some of those families that bought and gave less are just maturing – realizing the senseless futility of much of the season
* retail is ugly – shopping is ugly, merchandise is often cheap and disposable
* how many gifts do people give that are completely useless and worthless? lots, maybe even the majority
* of course millennials are stupid consumers, they are often the offspring of the boomers – what else would one expect???
I wonder how returns and everything that goes with its (such as shipping, administration, etc.) goes into GDP numbers. On the face of it this should be regarded as double counting.
Anecdotally, it did seem like the old days at the mall. People everywhere buying up loads of stuff. People seemed to be happy and enjoying themselves. I imagine that will fade when they’re still paying the minimum on their credit cards this time next year.
It’s amazing how much stuff those nice Chinese folks can make.
We spent more this Xmas but not on gifts, we had to replace stuff that broke and had no choice, so the numbers can be deceptive. We usually wait for the Xmas sales to buy stuff we need, but this year there were few discounts, and the stuff we needed turned into the gifts. There was definitely less under the tree.
I moved my three-generation family into a larger house right after Thanksgiving; most of the stuff under the tree was home related – lamps, shelves, baby gate, etc. I did splurge on a robot vacuum and our little boy has a ball playing tag with it. Overall, cheapest Xmas in many years, and for the most part Visa and Mastercard got no cut.
There are no returns of gift cards, which have exploded in sales over the years. And many of them are never redeemed. It would be interesting to know what percentage of holiday sales are now little rectangular pieces of plastic.
I gave my son a gift card for some clothing. He is 33, and for sure what I might buy will be wrong. :-) I’ll check to make sure he uses it.
But, our entire family has scaled back big time over the years. I remember about 10 years ago walking through a WalMart Christmas section and felt sick when I looked at all the plastic junk ornaments. There were isles and isles of it. Around that time my daughter specifically requested we not buy them gifts as they were trying to buy their first home and felt they could not reciprocate. From that time forward our Christmas time has been about ‘just getting together’.
And this year we have yet to do even that. We live in the boonies a bit and declined to head for family stays down Island due to the cold temps and the need to monitor chickens, water lines, and older neighbours.. Plus, we prefer our own bed and pillows!! Instead, my daughter’s family will come up this or next week, with the only gifts under the tree for our grand daughter and a basket of food treats for the grownups.
We did have a few gifts under our tree, though. I bought my wife some boots she needed, and I am wearing some new slippers as I write this with two new shirts in the drawer. We barbecued steaks and watched it snow snow snow, ho ho ho. No returns and no waste :-)
How much crap do people need? I look around our house and feel blessed with what we do have. There are no psychological holes to fill with purchases.
My family writes checks or gives cash. No returns, ever.
The gift cards are a big percentage of sales now. The after Xmas sales are pushed off into the new year now because the stores know the cards will be redeemed after Xmas.
We always pass on the cards we don’t use to someone who will use them.
We give those green universal gift cards with the picture of Ben Franklin on the front. They’re good at any store.
I bought myself an artificial xmass tree from Lowes w/800 led bulbs for about $200, and a bottle of Maker’s Mark (the big one 1.75 liter) for $50 at BJ’s.
My plan is to enjoy the Makers on New Years Eve while staring at the xmass tree as I recall many fond childhood memories of Christmas past, relationships, ex partners, life, etc.
I’m gay and recently single at 57. The prospects of finding a new partner that suits my tastes are slim, and will likely remain single the rest of my years, barring surprises.
But no worries – I recently got myself a loyal companion – Rocky, now an 11 month old black Labrador Retriever full of zest for life and anything in general.
A sense of humor is free, and priceless. ;)
i generally prefer the company of dogs over people any day. My family foregoes gifts and donates to a charity that the recipient likes, usually a local animal shelter.
My extended family did not exchange gifts this year. Instead, we went together to help provision the physical education program at a school for refugee / immigrant children in Seattle.
Last year, it was the local women’s shelter.
Very proud of my family.
Christmas reminds me of the Indian custom of Potlatch. Orgies of consumption. The more stuff you are able to give away, the more your status improves. Of course, Potlatches were outlawed because they tended to impoverish the spenders. No such luck with Christmas.
I don’t believe the amazon on-line retail model is viable. On the front end it is alluring to shop via your computer screen however the back end is fraught with issues as witnessed by your return missive. Oh and lets not forget the “porch pirates”. Will insurance rates go up ? 23 million have had their packages nicked .
https://www.nbcnews.com/nightly-news/porch-pirates-driving-package-thefts-holiday-season-n478781
I was running in the park a couple days ago and I saw a pile of Amazon packages that had been torn open and the contents taken–obviously someone had stolen them and left the refuse.
We got burglarized on Christmas Eve once Horrible to come home and find everything taken and your door kicked in
We ordered some food online early in Dec. The package got stuck in a UPS slowdown and we got it a week late. It went straight into the garbage and the company resent it. They told us they were getting compensation from UPS because they missed the delivery deadline.
And, Amazon managed to lose an order I was waiting for, nothing exciting just some replacement electric toothbrush heads. But at least they’re understanding and I’ll get my $17 back. I guess I’ll just buy the toothbrush heads locally.
An IPSOS poll conducted in Canada several weeks before Christmas this year says 52% would like to give and receive fewer gifts; 24% say gift giving in their families is out of control and that 24% of gifts are useless junk.
My “hang-over” occurs not from overspending but from when I step on the scales January 1. Thinking I’ll have to “borrow” from Lent a little earlier than usual in 2018.
I gave up all Christmas-related gift giving a few years ago and it’s remarkable how much seasonal stress has dissipated. I am atheist for one thing, so the religious aspect meant nothing, and the relentless commercialisation of the holiday is just obscene. A small group of friends used to exchange gifts but now we don’t bother with that and just meet up for a good meal and drinks and laughs.
I am all for gift giving but better to do it when it really means something.
(I understand of course the situation is very different when one has kids.)
.8 Trillion dollars spent on stuff and 5 Billion pounds of it ends up in the midden pile…..say it isn’t so.
LoL, watched the intake, only up 2 pounds since before thanksgiving.
I didn’t get much this year, on purpose. Only wanted one expensive gift- Scan OBD2 tool. I want to do my own resets and get detailed answers on my vehicles. Tired of borrowing it from everyone else.
The retail apocalypse is coming- had a discussion about selling a commercial property with a realtor friend in a hot neighborhood. She said the prices had gone insane, and I said, so why not have your mother finally sell the property- the tax break is going to save $50k- and prices will not go up once reality starts setting in with retail.
The restaurant trade in Phoenix is becoming a killing field- investors come in, spend big, either blow up, make good, or silently exit after two or three years.
Mostly exit and blow up.
Someday this war’s gonna end…
I have long been fascinated by a category of shopping season staples that do not end up in the “returns” statistics: unwanted Christmas gifts.
ING (the Dutch bank) had a survey carried out in the EU and found out 25% of those interviewed had received unwanted gifts. Of these 25% re-gifted them to some poor unsuspecting soul, 14% sold them (usually on eBay), 10% returned them to the store and 5% sent them back to the gifter. The rest were either thrown away or donated to charity.
The same survey also said 42% of those interviewed felt “forced” to buy Christmas gifts, even if they had no idea what to buy.
This is astonishing.
Even if these gifts are in the “petty cash” territory, for business relationships, distant relatives or whatever, it means an enormous amount of money gets spent aimlessly.
Amazon, Apple, Ikea etc manage to capture a small part of that flow with their gift cards (a truly nice idea, but beware of giving an iTunes gift card to somebody using an Android phone!) , but I am honestly surprised these megacorporations haven’t tried to capture even more customers by offering a “gift consulting service”. I mean: if I were a retailer I’d want to get a slice of that huge pie.
If Alphabet can waste prodigious amounts of money coming up with advertising programs trying to sell unlikely products to unlikely customers, I don’t see why Amazon or another titan can come up with a gift selector.
ING Bank love them They pay me 4 percent on my dollar account I have with them here in Turkey
I just returned from the EU and this article triggered a thought about the traffic problems in Paris (transportation has pretty much broke down in Paris in many places) and other EU cities. At what point is Amazon obsolete based upon transportation delivery challenges alone? Every where I went I incurred transportation problems starting at PDX and continuing at AMS Schiphol and points beyond.
Even back in my home city of Portland, Or, Amazon (et al) delivery times seem slower and more cumbersome due to weather and traffic congestion issues. I’ve noticed they’ve enlisted help from private delivery drivers.
I bought a new water heater, put it on my CC. I spent about 600, which is the national average for holiday spending, and I won’t be returning it. I did my part. (Got my neighbor to help install it NC)
This Christmas was the least amount spent ever. Main gift, books. We are all working-at getting off line and retraining our brains to have more than the attention span of a gnat. I am still going through my elderly parents HUGE pile of flotsam they have hoarded, going on 6 years now. I spend much time offloading my stuff, I am seeking spartan. I know of many in my age demographics doing the same. I see hard tough times for retail in the coming years. Who needs all this new crap. If I need anything, really need it? go to craigslist and get some pretty nice stuff for pennies on the dollar. What do I accumulate? tools , useful things that can make useful things, quality stuff. what do I want for Christmas or a gift? tools and yeah, I am a chick and love the smell of sawdust …arh arh arh….
You uncovered the secret to happiness – get rid of the crap. For me it was a relief to get rid of most of my junk. A huge weight is lifted when you throw off the burden of the stuff you drag through life. Tell the people you care about, let them know you love them but you really hate receiving consumer goods as gifts and let them know you mean it. 30 years ago I told my girlfriend I wanted her to sleep with me under the stars on Christmas eve and she obliged – it was a really nice gift and I still that memory today.
One of the great lines ever on Wolfstreet:
retraining our brains to have more than the attention span of a gnat
Thanks for the smile. And we should all only strive for QUALITY stuff.
This is the first Christmas in a while that I did not have to buy my now 23 truck a “present.” So I guess my holiday spending is probably down considerably this year…
Giving and receiving gifts has become a hollow experience and a hollow sentiment. Our society is awash in consumer products and people’s garages are already full of crap they don’t want to deal with. Most people already have more crap than they want and don’t want to get stuck with another bauble that they didn’t even choose to own.
A half century ago, before society drowned under a flood of cheap plentiful consumer goods, it was special and exciting to receive a gift but now it’s just a burden to be donated to the goodwill – slough the problem off on charity.
Don’t give gifts unless the recipient is a child they will never enjoy it.
To paraphrase George Carlin:
“Christmas giving” = buying crap made in China that nobody really wants for people we don’t necessarily like with money we don’t actually have.
Apart from that a fine tradition.
For years now we have a soul-less and bankrupt society looking for a quick fix to the big whole they have inside their spirit, so they shop. They even wait in line on black Friday. The only thing they will end up with is the big hangover from the debt. How despicable and embarrassing many in our society have become. When this finally blows….holy cow I can’t even get my head around it.
Can you imagine standing in long lines to buy stuff? Like those zombies who stand in line overnight to buy the newly released iPhone. You have be real dumb, and your life must be real empty, and boring to stand in line overnight to buy more crap.
Has anyone else noticed more package stealing and break-ins this year? This is definitely the case in area I live in, and I asked a few co-workers, and 3 of them said the same has happened in their neighborhoods; basically more break-ins and theft.
That was then and this is, too!
For Christmas we purchased AncestryDNA kits for our small family of 3, which we had planned on for some time. It just so happened that Christmas was coming….so, the DNA kits became our gifts.
Other than that, home cooked meals with family and friends and a visit to Church were all we needed.
We count our blessings not our piles gifts…and many of our friends are the same.
Well for what little it may be worth, I , for one, have some good news to share with all of you. As my over-well publicized (starting with my nosy neighbor Dickens’ report), bout with delirium, as will be so, unfortunately, well known to all of you, (due to, I am now certain, the ingestion of an inadequately cooked bit of potatoe) I have now fully recovered my faculties. While I do confess my recovery was made more tedious and difficult, what with wrestling so absurdly with the delusional moral implications proffered by those three phantasmic personages, it does so richly please me to inform you, , my colleagues, that I now enjoy a full restoration of my mental health.
Moreover, as you all know me to be tight lipped, some have had the temerity to suggest tight fisted as well, I have the pleasure to share with you the news that I have regained my privileged position at the exchange this very day and have just now returned from a most sumptuous luncheon with my good friend and mentor, the honorable Lord Rothchild. Breaking with my customary habit, solely due to a moment of celebratory excess, I suspect, I now choose to share with you all, a bit of financial advice, normally held close to my chest, from His Lordship Rothchild himself … his advise is to commit all of your considerable resources, with ” complete abandon ” to the acquisition of crypto currencies forthwith. Trusting you will be grateful for his Lordship’s advice and not fail to remember, appropriately, who shared this insight with you, I remain, Your faithful Servant Ebenezer S.