Companies and individual consumers have always returned products for reasons ranging from item defects to incorrect size or color to simply a change of heart about the purchase. And when those transactions took place in small numbers, the companies would handle the returns in whatever way made sense at the time. Often, there was no clearly defined process.
According to the National Retail Federation, holiday sales represent roughly 20% of annual retail activity. For some types of retailers, like those that sell toys, games and hobby-related items, the number can be even higher—closer to 30%.
Fast-growing companies can’t get new warehouse space built fast enough or may have revenues earmarked for other initiatives. Organizations with sales spikes don’t want more permanent warehouse space, as it becomes a financial burden when volumes drop.