New Year, New Products: How to Handle Post-Holiday Returns
In a 2021 study, consumers shared truly shocking revelations about post-holiday returns.
A staggering 42% of holiday shoppers already plan on returning some, if not all, of their holiday gifts this year. And 46% of them, if faced with a poor return experience, vow to never shop with that retailer ever again.
Yes, the holiday rush is nearly upon us and with it looms the impending difficult season of holiday returns, which affects not just the retail level but reverberates throughout the whole supply chain.
But just what is it that makes handling post-holiday returns so difficult, and what can we do in the retail space to make it just a little bit easier?
This is the question we hope to answer in this post. As with all things retail, a little bit of planning can go a long way. So, we’ve drummed up eight tips to help you streamline the holiday return rush, from return policies to using web-based EDI to streamline returns processing. We hope these tips make things easier for your managers, associates, everyone in between, and even your customers. But first, back to the question - what makes it so difficult?
Why Handling Post-Holiday Returns Is Hard
Several things contribute to this difficulty. The first is sheer volume. Retailers are used to handling customer returns—in fact, they can become pretty predictable over time. But when the post-holiday season comes around, returns reach record numbers in a short timespan. Since this is just on the heels of the holiday shopping rush, it can feel like the whole business doesn’t get a break.
Like sales, returns have become an omnichannel operation. While some items will be returned in store, others will be returned at third-party centers (think Kohl’s for Amazon), or mailed back via USPS, UPS, or FedEx. You need to be able to process returns at any of your retail locations, as well as online to keep customers happy. And that means having the right tools in place to minimize returns friction.
What happens after the customer drops off their items in store or to be mailed-- that is a whole other ballgame. We already know that reverse logistics are costly, and the current driver shortage, along with carrier surcharges, are set to make returns even more expensive. Then there’s the matter of keeping track of return items (which is notoriously difficult) as they move back up the supply chain, evaluating the condition of returned orders (most of which don’t happen in-store), and getting stock back on the floor for resale wherever possible.
77% of holiday shoppers just last year planned to return at least one gift, and with the current supply chain issues, that kind of result could be catastrophic, especially since returns are only a single, but large, slice of the reverse logistics pie. The rest is a combination of reselling, refurbishing, recycling, and more. Staying ahead in the post-holiday season may very well rely on keeping reverse logistics costs low and ensuring that each return, no matter how difficult to track, is routed to the designated, appropriate location.
With all of that being said, below are 8 tips for planning for and handling post-holiday returns.
1. Establish and Emphasize a Clear Return and Refund Policy
Whether you’re updating your return policy for the holiday season or not, you must keep the customer at the top of your mind. It’s important to make your return policy clear and free of any jargon or retail-centric speak. Your customers don’t want to be confused by your policy and will only be frustrated if they’re unable to understand it.
Once you’ve outlined the policy clearly, you can place it just about everywhere. Including it on your website under your “returns and exchanges” tab is a great start but, to prevent confusion, you can take advantage of placing it in as many places as possible. You can include it, as is, right on a banner on your website, or include it on every individual item or web page, or include a highly visible link to the return policy. If you’ve got a brick-and-mortar store, you can also post it as large signs, at checkout, at the entrance—you name it.
2. Make Returns Easy as a Click
We mentioned reverse logistics above and, with the right technology, you can reduce the cost of returns while making life easier for your customer. With a single click, your customer can access a prepaid shipping label, which works to save you money in a few ways. First of all, the customer will supply their own packaging and the label will only be paid for if the item is shipped back. This is important because not every single customer who requests a return completes it.
Plus, for purchases from your eCommerce storefront, you can offer your customer the option to bring the return straight to the store (skipping the printed label and shipping process) or to drop it off at a designated FedEx or UPS location.
3. Differentiate Between Exchanges and Returns
You can do this both in your policy and in how you process either of these categories. In other words, you can incentivize your customers to exchange an item as opposed to returning it. Maybe you can offer special deals or flexible return options, which, if successful, means that your store will reduce the amount of money lost, even despite the deal you’re giving them, because you’re still coming out on top as opposed to a return, which is money lost.
Offering exchanges or returns “in-store only” is another tool at your disposal. Not only does this reduce your logistics burden by enabling retail locations to turn around returned items quickly; it can also result in in-store purchases that help counteract the loss from returns.
For example, when customers return their Amazon purchases to Kohl’s, they receive $5 in Kohl’s Cash. And unlike normal Kohl’s Cash, which usually has future dates for use (designed to bring customers back in), this Kohl’s Cash is usable immediately. And since Kohl's strategically places their Amazon returns near the back of the store, that offers plenty of opportunities for them to inadvertently capitalize on increasing their daily sales volumes. Amazon, in turn, is able to reduce shipping costs by consolidating returns at Kohl’s locations.
Of course, not every retailer and brand have a partnership like this, but the strategy can be mimicked by offering incentives to return in-store, and using your retail locations to resell some items, and consolidate shipments of others.
4. Automate the Return Process
Getting the return process right is essential to keeping on track with your goals in the post-holiday season. With the right EDI solution, you can streamline the processing of return documentation to ensure that the information is exchanged across retailers, brands, and logistics companies in real-time.
This prevents the labor-intensive manual entry (and reentry) of fill-in information as returns are processed along each stage. By removing this step, you effectively free up your team members to focus on the more hands-on return processes so they can keep things moving along.
5. Reduce Return Fraud with Employee Training
The retail industry loses about $24 billion annually as the result of return fraud, which is the act of a person buying something with the intent to return it immediately or to use duplicated receipts to get money back. Oftentimes this is done with stolen goods, stolen receipts, fabricated receipts, etc.
Fighting return fraud starts with your return policy and ends with your retail employees. In some sense, return fraud will always be a problem but your goal should be to reduce it. You could make an ironclad, highly restrictive return policy but, as mentioned above, it’s important to keep the customer in mind.
So, the second step is training your employees to understand the policy, what is acceptable, and what is suspicious. There isn’t necessarily automated technology that can help you here but your employees should be able to quickly pick up on things like fabricated receipts or receipts that don’t match the item. If you can train your teams in advance, they will have this knowledge solidified by the post-holiday rush, which should help reduce the problem of return fraud.
6. Leverage an Omnichannel Order Management System (OMS)
Streamline your orders by making order entry and processing more efficient. Some OMS solutions contain a complete customer relationship management (CRM) that you can utilize to gain an edge over your competition, complete with the ability to send out bulk emails or do search engine optimization. In addition to a suite of tools at your disposal is one of the most important and informative things of all - your analytics.
Use these tools to generate reports that can track returns and exchanges from this year so you can learn and apply what you’ve learned when preparing for next year’s holiday season. Yes, it’s more of a long-term solution, but you’ll be sure to see just how valuable the information is once you receive it.
7. Differentiate by Quality of Returns
Earlier we discussed differentiating by type of return. In another sense, it’s important to keep reverse logistics costs in mind when considering the quality of returns. While some products are received back in the same, brand-new condition they were in when they were purchased, others are returned in less-than-stellar condition.
This type of situation should be accounted for, specifically by training your team members to process returns while regarding the quality of the item, even if it’s just three possible tiers. This protocol will enable your team to make clear decisions on what should be restocked, refurbished, recycled, or resold. And, once again, by keeping track of the number of returns and their qualities, you can build on these data points to make educated projections for next year’s inventory.
8. Make Refunds Easy for Your Customers
Returns should be easy for customers, especially since 57% of millennials say they will not shop with a retailer again after being hassled about a return. In addition to having a clear, concise return policy that your team members enforce, it’s important to be flexible about refund options when possible, whether that’s chargebacks to credit cards, store credit, cash, etc.
It’s also important to keep in mind that not every return warrants having to bring the item back in order to process the refund, since there are situations where that would cost more, and potentially be a source of frustration for the customer and, in the end, for your team, who will already be swamped with returns. So, it will be important to set a specific figure or decide on specific products that don’t require a physical return to process a refund.
Make Handling Post-Holiday Returns Easier Than Ever with TrueCommerce
With a clear, defined return policy, well-trained staff, and a few digital tools to supplement your workflow, the post-holiday customer returns rush doesn’t have to be as awful as it could be. If you need help optimizing your policy or your workflows, our experts at TrueCommerce can help. Contact us today to find out more about our in-depth, fully scalable solutions to see what suits your business best during the holiday rush and the returns that follow!
About the Author: Josh Wayne is Vice President of Commerce Products at TrueCommerce and a supply chain expert with 17 years of experience developing integrations for shipping & fulfillment, eCommerce, EDI, and more. Today, he oversees Product and North American eLearning for our eCommerce platform, storefront integrations, and multi-carrier shipping software. Josh lives in Columbus, OH, and in his spare time he is an active volunteer with the Boy Scouts of America. When not at work or volunteering, you can find him out on his Harley or in the woods hiking and camping.