Delivery

FedEx And UPS Want To Reap Rewards From $90B In Returned Holiday Gifts

FedEx and UPS don’t want to simply make money delivering holiday gifts; they also want to benefit from the many recipients of unwanted presents that need to be returned.

CNBC reports news that consumers will return about $90 billion worth of goods this holiday season, according to Optoro, a firm that specializes in the business of return shipments. That is close to a quarter of the total value of goods returned each year, which has been growing steadily as more consumers shop online.

“Being able to return is now a competitive tool,” said Bruce Cohen, who heads strategy and private equity for retail and consumer products at consulting firm Kurt Salmon, a unit of Accenture. “If it’s a pain for customers to return items, they will go elsewhere.”

While shoppers prefer to buy online but return goods in a store, said Rajesh Subramaniam, who heads FedEx’s marketing, both FedEx and UPS are trying to profit from both deliveries and returns by setting up drop-off locations for consumers.

FedEx has pick-up and drop-off locations in supermarkets, drugstores and other locations and has set up centers at more than 7,500 Walgreens drugstores, as well as at some Kroger and Albertson’s supermarkets.

UPS also operates the Access Point network, which has more than 27,000 drop-off points, including those in local businesses, such as dry cleaners and hardware stores. In addition, the company took a stake in Optoro last year to not only make money from returns but to also place unwanted items where they’re most likely to sell.

According to Optoro, at 51 percent, January is peak season for returns, but many consumers get rid of their unwanted items right after Christmas. December 26 through December 31 accounts for 40 percent of returns.

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