By Liz Young

Competition for holiday parcel shipments is turning into a fight over who gets to handle the returns.

DHL Supply Chain said Thursday it has acquired returns-service provider Inmar Supply Chain Solutions, a division of Winston-Salem, N.C.-based retail-services company Inmar Intelligence.

The deal extends DHL's reach into the business of managing returned merchandise that has become a significant wing of the retail market.

Shoppers have been sending back more merchandise in recent years after retailers rolled out generous returns policies to attract customers amid a pandemic-driven surge in online orders. Consumers last year returned an estimated 16.9% of items they purchased, valued at $890 billion and more than double the percentage of goods returned in 2019, according to the National Retail Federation and returns company Happy Returns.

The surge in returns has become a problem for many retailers, with the costs eating into their profit margins and the growing volumes forcing them to cope with unpredictable piles of goods, much of which comes back in poor condition and can't be resold.

Tom Enright, a retail analyst at research firm Gartner, has said companies lose some 50% of their margin on returns when accounting for the cost of initially selling the item plus processing the return.

Retailers in general have absorbed those costs, believing generous returns policies help attract customers and increase sales. But the volume of returns has grown more recently "to a point where everyone's starting to take notice," Enright said.

Some merchants are responding by clamping down on returns policies and others are tightening their management of the process, in some cases turning to outside providers that specialize in handling returns.

United Parcel Service in 2023 acquired one of those operators, Happy Returns, for $465 million.

Under the new agreement, DHL Supply Chain, a division of German logistics giant Deutsche Post DHL Group, will add 14 U.S. warehouses dedicated to handling returns to its logistics network.

Terms of the deal weren't disclosed. Inmar Intelligence said it would retain its business handling pharmaceutical returns.

Write to Liz Young at liz.young@wsj.com

(END) Dow Jones Newswires

January 09, 2025 16:07 ET (21:07 GMT)

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