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CBRE Group:Returns of online holiday purchases could reach $32B

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CBRE Group:Returns of online holiday purchases could reach $32B

Returns of holiday purchases made online could reach $32 billion this holiday shopping season, bumping up costs for retailers and impacting total annual revenue, according to a report by CBRE Group Inc.

The real estate investment firm based the figure, which would mark a $4 billion increase from the roughly $28 billion in returns of online purchases made last holiday season, on e-commerce's rising portion of holiday shopping.

The $32 billion figure was based on the $107.4 billion in online sales this holiday season projected by Adobe Digital Analytics, which would mark a 13.8% rise from the $93 billion in 2016.

CBRE officials said that online shopping results in more returns than shopping at brick-and-mortar stores, in part because customers cannot sample or try on the merchandise before making a purchase. The group also said that the trend of ordering several versions of a product before returning unwanted items also contributes to the greater online purchase returns.

David Egan, CBRE's global head of industrial & logistics research, said in a news release that retailers' ability to handle online returns requires "many" components, including a network of warehouses and extensive management systems to limit the probability of returns.

"Speed and efficiency in processing e-commerce returns, with an eye toward preserving as much value of the merchandise as possible, often separates the top-performing retailers from the not-so-successful ones in the weeks after Christmas," Egan said.

Although product returns comprise 8% of total retail sales, that percentage rises to between 15% and 30% for online sales, CBRE noted, adding that returns sold either at discount or not resold cost retailers 4.4% of total revenue annually.

"Returned merchandise adds significant costs to retailers and distribution networks that are not optimally equipped for the reverse flow of inventory," CBRE said in the report.

According to the National Retail Federation, more than 58 million consumers shopped solely online during the five-day Thanksgiving weekend.

Adobe Digital Insights also estimated that the 2017 holiday season could be the first to surpass $100 billion in online sales, driven partly by the $50 billion in online shopping revenue seen in November. Adobe said that Cyber Monday this year was the largest online sales day in history, with more than $6.59 billion in e-commerce sales.