🌀 Multimillion-dollar returns problem

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🧠 The Big Story: 
Retail returns are a multimillion-dollar problem

📊 The Key Data:
Private equity plans to deploy more capital into CPG

📖 The E-commerce ecosystem news
📣Polish billionaire sues Meta for fake advertisements
📣Google Ads debuts Brand Report for advertisers
🛠️Klarna becomes default payment for Woo merchants
🛠️Honey accused of hijacking influencer affiliate revenue
🚚FedEx to spin off FedEx Freight as new public company
🚚Amazon and UPS lead seasonal hiring shift in 2024

+ over 15 other hot news from the last week you need to know 🔥

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Retail returns reached 14.5% of U.S. sales, costing $743B, with fraud at $101B. Rising habits like "bracketing" and "wardrobing" strain retailers and sustainability.

📊 The $743B Retail Returns Problem

In 2023, U.S. retailers faced $743B in returns, accounting for 14.5% of the $5.13T in total retail sales. Online purchases had a return rate of 17.3%, much higher than the 10% for in-store sales, according to NRF. Fraudulent returns alone cost $101B, or 13.7% of total returns. January, often called "Returnuary," sees a surge in holiday returns, adding unpredictability to profits. Many returned items are unsellable or heavily discounted, hitting retailers’ bottom lines. This trend has worsened since 2012, when returns were only 8.8% of sales.

🛍️ Consumers and Costly Habits

Consumer behavior is fueling the returns crisis. About 66% of shoppers engage in "bracketing," buying items in multiple sizes or colors and returning what they don’t want, per Happy Returns. Another 70% practice "wardrobing," returning items after a single use, according to Optoro. While some retailers tighten policies—81% have shortened return windows or added fees—this creates a dilemma. Shoppers expect free returns, with 75% saying stricter rules discourage them from buying. Returns also harm sustainability, as many products end up in landfills and generate carbon emissions during processing.

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A Hahnbeck survey shows 67% of private equity firms will increase capital deployment in 2025, prioritizing brands with strong margins and omnichannel models.

💸 Private Equity Ramps Up CPG Investment

A recent Hahnbeck survey reveals that 67% of private equity firms plan to increase their investments in consumer packaged goods (CPG) in 2025. The survey included 50 firms with assets under management ranging from $250M to over $200B. Respondents cited expanding opportunities in the sector despite a minority (33%) who see fewer attractive deals. This aligns with broader trends in private equity, where firms are doubling down on resilient and profitable industries.

📊 Profitability is the Key Priority

The focus on profitability is stronger than ever, with 92% of respondents prioritizing brands with strong profit margins. Investors now view robust margins as a baseline for investment, especially in volatile markets. Hahnbeck’s findings show that margin benchmarks vary by category, but brands exceeding these benchmarks consistently outperform peers. Firms believe strong margins ensure higher returns and better adaptability in challenging economic conditions.

🏬 Omnichannel Models Outshine DTC

Omnichannel brands are significantly more attractive than direct-to-consumer (DTC) models. Two-thirds of survey respondents prefer omnichannel strategies, citing broader reach, scalability, and consumer trust as key advantages. Only 8% of investors favored DTC, while 25% saw no difference. Hahnbeck highlights that a strong brand identity is still critical, whether in omnichannel or DTC models. For DTC brands, expanding into retail can create sustainable, long-term value by diversifying revenue streams and enhancing customer trust.

Polish billionaire sues Meta for fake advertisements. Rafal Brzoska and his wife plan to sue Meta over fake ads on Facebook and Instagram. They demand compensation and action against rights violations globally.

Google Ads debuts Brand Report for advertisers. The new tool simplifies campaign tracking by consolidating key metrics, offering insights on reach, frequency, and demographics in one unified view.

Google Merchant Center offers first-order discounts. Google's new feature allows retailers to set first-order discounts for new customers. Merchants can specify discount terms, enhancing e-commerce strategies.

Google Ads’ keyword auto-switch sparks concern. Google Ads may change exact keywords to broad match during bidding changes, leading to increased ad spend. Advertisers and experts flag this as a costly issue.

Klarna becomes default payment for Woo merchants. Klarna expands its partnership with WooPayments, now a default payment method for merchants globally. This move supports Klarna’s mission to be at every checkout.

Honey accused of hijacking influencer affiliate revenue. PayPal's Honey extension allegedly intercepts influencer earnings by replacing affiliate links, raising ethical concerns about its coupon practices and transparency.

fabric launches AI Order Cloud for seamless retail ops. fabric’s AI-powered OMS centralizes orders, inventory, and fulfillment, enabling smarter decisions and a unified customer journey for global retailers.

WooCommerce Expands Affirm as Default Payment Option. Merchants using WooPayments in the U.S. and Canada can now offer Affirm's pay-over-time plans, increasing sales and cart sizes with no late fees or hidden costs.

Yoast’s ex-CEO proposes federated WordPress governance. Joost de Valk calls for a decentralized approach to WordPress, urging community leadership and open trademark use. Mullenweg pushes back, favoring the current model.

FedEx to spin off FedEx Freight as new public company. FedEx plans to separate FedEx Freight within 18 months, creating two public companies. The move aims to boost growth and unlock value for stockholders and customers.

Amazon and UPS lead seasonal hiring shift in 2024. Seasonal jobs moved from retail to fulfillment centers this year. Amazon added 250K jobs, UPS added 125K, as 75% of Americans shop online for holiday gifts.

Swap launches AI feature for Shopify returns. Swap introduces an AI-powered tool to streamline returns for Shopify brands, partnering with major fashion players like Nadine Merabi and Motel Rocks to lead the innovation.

ReturnGO partners with Easyship for eCommerce shipping. ReturnGO teams up with Easyship to enhance post-purchase solutions, unveiling LabelGO and advanced shipping features. Merchants benefit from lower rates and seamless logistics.

JD Logistics launches warehouse in Japan with robots. On Christmas Day, JD Logistics opened a self-operated Tokyo warehouse. Equipped with robots, it boosts efficiency and targets fast delivery across Asia-Pacific.