Return to Santa: Consumers are sending more than a million packages a day back to retailers, says UPS

Key Points
  • UPS says customers returned 1 million packages a day in December.
  • Online shopping is driving higher return rates.
  • Consumers will return $90 billion worth of goods this holiday season, according to Optoro.
Holiday delivery scorecard: FedEx vs. UPS
Holiday delivery scorecard: FedEx vs. UPS

The business of unwanted gifts is booming. Just ask United Parcel Service.

UPS customers have been shipping more than 1 million packages a day back to retailers this month, according to the delivery giant.

UPS on Wednesday said it expects customers to return a record 1.4 million packages on Jan. 3, an 8 percent jump from a year earlier. The company calls that day "National Returns Day." Returns generally peak in January.

The boom in returns is part of the breakneck growth in online shopping. Consumers will return about $90 billion worth of goods over the holiday season, according to Optoro, a logistics technology company that specializes in returns. UPS invested in Optoro last year.

The trend is good news for both UPS and FedEx, which stand to gain from not just the surge in online shopping but handling packages that are sent back.

Employees sort packages at the United Parcel Service (UPS) Chicago Area Consolidation Hub in Hodgkins, Illinois.
Daniel Acker | Bloomberg | Getty Images

UPS estimates it will have delivered 750 million packages between Thanksgiving and New Year's Eve of this year, 40 million more than the same period in 2016.

FedEx told CNBC on Wednesday that it posted a record-breaking holiday delivery season but data on returns was not immediately available.

Consumers have come to expect generous and user-friendly returns policies from retailers, who often foot the bill for getting the goods back to warehouses or stores.

January marks the peak of returns, accounting for just over half the number each year, according to Optoro, but many consumers waste little time in returning their unwanted items right after Christmas. Dec. 26 through Dec. 31 accounts for 40 percent of returns.

UPS said 5.8 million packages were shipped back to retailers in the first full week of January this year.

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Climbing return rates plague retailers, especially in the e-commerce space: Optoro CEO
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