Retailers face rising holiday-return costs due to supply chain issues, a new report says

Free returns are certainly not free for retailers.

In fact, the cost of processing returns will increase this holiday season, according to logistics forecasts, especially against a backdrop of rising inflation, labor shortages and Covid precautions.

The average holiday return will cost retailers two-thirds of the original price for the item when factoring in labor, transportation and warehousing costs, new data from commercial real estate firm CBRE and return technology company Optoro showed.

CNBC received an early look at the annual CBRE-Optoro report, which indicates a 7% increase in the cost of returns, also called reverse logistics — with electronics like computers, tablets and mobile devices having return costs as much as 15 times higher than clothing, because workers must remove personal data.

“It’s increasing because you have many more things that are wired or connected to the internet of things that need to be wiped and you need to be concerned about security,” Tobin Moore, founder and CEO of Optoro, told CNBC. “All the watches now have sensors on them. Now there is clothing and shoes having sensors. I see that as something that’s only going to increase.”

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Meredith Guerinot

Senior Brand Specialist