Third-party logistics firms, or 3PLs as they are commonly called, will see a large increase in traffic this holiday season due to the rise of e-commerce.
E-commerce returns could amount to as much as $32B this year, CBRE reports. For retailers, this could be disastrous for their bottom line. Returns that were sold at a discount or that cannot be resold can eat into 4.4% of their total annual revenue. But for 3PLs, the influx of returned products could be profitable.
The 3PL market has grown substantially over the last few years; users now occupy an estimated 700M SF of warehouse and distribution space across the country. This has grown between 3% and 5% annually since 2013, CBRE reports.
Online shopping typically leads to a more returns than brick-and-mortar sales. Merchandise purchased online has a return rate of between 15% and 30%, depending on the product category, while items purchased in stores have an 8% return rate. This is largely attributed to the fact that consumers are unable to test or try on merchandise before they buy it online. Many e-commerce shoppers will buy a number of versions of a product with the intention of returning any that do not fit or are not suitable.
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