‘Tis the (Return) Season Part 2: How to Manage Holiday Retail Returns’ Burdens

Attempting to manage holiday retail returns is a complex task. With higher-than-average returns’ rates, holiday returns can turn the most stable of supply chains into a logistics nightmare. However, retailers that understand the issues that contribute to higher-than-average return rates during the season and follow a few best practices can successfully reduce their costs.

Why Companies Fail in Trying to Manage Holiday Retail Returns 

The problem with trying to manage holiday retail returns goes back to the basics. Holiday shopping involves shopping for others, so it is common for customers to have a higher rate of returns than other periods. Consider these top statistics:

  • Up to 71 percent of holiday purchases involve multiple sizes or variations with the intent on returning.
  • Approximately 77 percent of returns come from repeat customers.
  • Among all customers, 89 percent have returned online purchases.

Since the overwhelming majority of holiday purchases will involve at least one return per customer, having the capability to scale returns management during the holidays is crucial. In addition to moving more merchandise in holiday sales, the flow of reverse logistics must continue. Failure to do so may result in added costs as well as problems with managing the outbound flow of merchandise.

Holiday Retail Returns Will Always Cause Problems

The first thing retailers must understand about holiday returns is their perpetual nature. It is impractical and harmful to customer service to block all returns. However, there are ways for companies to encourage consumers to keep their purchases. This might include limiting return periods for on-sale merchandise, offering store credit instead of refunding a purchase, and more. Understanding the need to continue offering an easy returns’ process is crucial. Instead of trying to eliminate the problem of holiday returns, retailers can leverage holiday returns to create a competitive advantage, increase profitability, and differentiate their brands.

How to Minimize Holiday Retail Returns

A few best practices to minimize the burden of holiday retail returns include:

  1. Keep your customers informed by providing easy access to the returns’ policy. Retailers may disseminate the returns’ policy for online shoppers by presenting it to shoppers on the check-out or cart page, as well as ensuring it’s located on the in-store policy notification.
  2. Establish a returns’ management infrastructure. A strong returns’ management infrastructure should provide a defined path for sending products back to the manufacturer or restocking in existing warehouses. In addition, the infrastructure should include a comprehensive breakdown of logistics, storage, assessment of the product for damage, and more.
  3. Consider the value of private, online auctions to liquidate returns instead of restocking. Private, online auctions can help retailers recapture costs of managing returns while still making a profit on the sale of merchandise.
  4. Increase visibility into inventory, including distribution centers, warehouses, returns management centers, storefronts, and everywhere else, such as automating labeling and shipment scheduling.
  5. Consider offering subscription benefits that come with enhanced returns management, which increases profitability and may pay for returns management in itself.
  6. Get it right the first time! According to ChainStoreAge, Up to 22 percent of returns are the result of customers receiving the wrong product. This means that effectively increasing accuracy of order fulfillment could reduce return rates by up to 22 percent. Meanwhile, increasing the level of detail and viewing options of online products can ensure customers only order what they want and need, not what it may be.

Cut Returns’ Costs This Holiday Season

Returning merchandise is often viewed as a terrible practice on the surface. It immediately results in added expenses for retailers, but the connotation can change and provide significant benefits for companies that succeed and manage holiday retail returns successfully. Of course, a well-integrated supply chain, as well as connected, updated systems, provide significant assistance in maintaining the sudden spike in demand and returns that accompany the holiday shopping season.

Veridian, a Manhattan Associates, HighJump, and JDA warehouse management system implementation company, can help you realize your supply chain success. Fill out the contact information below in order to schedule a consultation call with one of our supply chain professionals.