How E-Commerce Returns Impact Industrial Real Estate

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Have you ever wondered what impact your e-commerce returns have on industrial real estate’s supply chain?

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How companies handle returns has a meaningful impact on the warehouse and distribution real estate market, as well the need for dedicated returns processing space to restocking, liquidation, or the need to outsource some or all of these needs to a third party.

Companies have these variables to consider:

  • Handling returns in-house
    How are returns processed, from where (a store or a dedicated logistics facility, or a portion of one) – and are goods re-stocked into existing inventory? How will this impact future space needs and facility utilization?
  • Outsourcing of the returns process
    To mitigate costs and capitalize on external efficiencies, using a third party logistics provider (3PL) to handle returns provides flexibility within the supply chain for many companies. This could provide an additional future boost to space demands around the country from 3PL’s that offer these services.
  • The costs of shipping returns
    How companies bear the costs of returns (free or with a re-stocking fee), the frequency, the impact on valuable customer loyalty and the final destination of a returned product is a complex supply chain issue and depends on the seller.How are online purchases that are returned to a physical store accounted for? If the costs of re-stocking or re-selling returns is too high, is a wholesaler or liquidator eventually a potential option to unload returned or unwanted inventory?

Further growth in e-commerce seems inevitable, and as a result, growth in returns. The need for logistics space to facilitate returns and reverse logistics is expected to increase as well. As competitiveness in the global omnichannel marketplace grows as well – the companies that can create efficiencies for returns in their end-to-end supply chain and leverage their physical distribution network to help reduce costs will benefit the most.

For more on JLL’s Industrial Impact series, check here.

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