Andria Cheng shines a spotlight on the staggering amount of consumer returns across the globe, which is leading to serious margin erosion for retailers, according to the recently released “Retailers and the Ghost Economy: The Haunting of Returns,” an IHL Group report, commissioned by DynamicAction. It’s a first-of-its-kind report that details the causes and financial impact of merchandise returns in retail and suggests ways retailers can improve processes and technologies in order to reduce returns.

Here are a few key excerpts from her story:

“Returns account for an estimated 4.4% of $14.5 trillion in global retail sales, IHL said. Clothing retailers see an average of 10% of their sales returned, the highest of the retail segments. Electronics, books and other hard-goods retailers follow, with an average of 8.8% returns.

Why is this a big problem? Only 48% of what’s returned can be resold at full price, according to a Gartner survey of 300 retailers.  Those surveyed expect returns will grow as they increase online sales and increasingly offer free returns along with free shipping.

“Driven by growth of digital commerce, return is going up,” Said John Squire, president of DynamicAction, which commissioned the study and whose clients include Wal-Mart’s U.K. chain Asda, Neiman Marcus and Abercrombie & Fitch. ”This cuts into the cash flow.”

Read the full story here.

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