Remember all that stuff that poured out of Reno-area distribution centers in the last month to fill the orders that consumers placed online?
Nearly a third of that stuff is expected pour back after the holidays as consumers return items to Internet retailers.
It’s a little-noticed business, but it’s a big deal in many of the online fulfillment centers in Reno, Sparks and the Tahoe-Reno Industrial Center. And because wholesale trade and the distribution business accounts for more than 10% of the jobs in the region, returns are a big deal for the entire local economy.
About 30% of all online orders nationally are returned, says Brian Addington, professor of logistics operations management and director of the Frank N. Bender Center for Applied Logistics Management at Truckee Meadows Community College.
That compares with a return rate of about 9% for items purchased from brick-and-mortar stores.
Handling those returns well is critical to online retailers’ desire to create return customers. Addington says a survey by UPS found that 73% of consumers say their experience with returns affects their decision whether to continue doing business with a retailer.
Addington says “reverse logistics” — that’s the industry’s term for returns — can generate what he calls “a significant revenue stream” for third-party logistics companies.
Those firms contract to provide fulfillment services for Internet retailers, generally handling orders for multiple companies from a single warehouse. Among the large third-party logistics providers based in the Reno-Sparks area are ITS Logistics, Hopkins Distribution, The Bender Group and Legacy Supply Chain Services.
A study by the logistics software firm Optoro and the real estate brokerage CBRE found that reverse-logistics operations typically require more people and more space than the distribution centers that push merchandise out into distribution channels the first time around.
But reverse-logistics operations don’t necessarily need big new warehouses. In fact, the Optoro-CBRE study found that specialists in reverse logistics often prefer older industrial buildings, and reverse logistics is likely to fill many industrial buildings that otherwise would be left vacant.
Already, CBRE notes that third-party logistics companies are leasing more big industrial spaces nationwide than any other users — more, even, than the major e-commerce companies such as Amazon.