5 Tips to Manage the Rush of Post-Holiday Product Returns

With the holiday buying fervor behind us, the avalanche of product returns begins. Given that U.S. retail holiday sales are on track to rise 4 percent to 4.5 percent this year — and, according to Deloitte forecasts, e-commerce sales are expected to hit between $111 to $114 billion during the 2017 holiday season — the frenzy of product returns will hit many retailers hard. Indeed, the National Retail Federation's (NRF) data revealed that nearly two-thirds of holiday shoppers made at least one return last season. Of the anticipated $681 billion in U.S. 2017 holiday sales, an estimated 10 percent will be returned.

The rate of returns on e-commerce products are especially high. A recent article in Forbes noted that return rates between 25 percent and 40 percent are often the norm (compared with approximately 8 percent return rates for brick-and-mortar retailers), with the tide of goods flowing back to online retailers jumping 15 percent during the holiday season, according to UPS. The surge in post-holiday returns is so great that UPS declared a National Returns Day in 2016 and, on Jan. 5, 2017, 1.3 million packages were shipped back to retailers in a single day.

Despite the influx of holiday returns, many retailers still aren't putting enough emphasis on developing and implementing efficient return strategies. A customer’s return experience is as important as their sales experience. Today’s customers expect flexibility, convenience and transparency in their return experience. According to NRF research, of consumers who experienced friction in the return process, 64 percent said they would be hesitant to shop at that retailer again.

Return policies are no longer just part of a company’s back-room logistics strategy; they’re now a valuable lever for brand equity. Amazon.com, Nordstrom and Zappos are largely known for leading the way with return policies that are as simple as their purchase process, and shoppers have taken notice. Zappos, for instance, has a 365-day return policy, and L.L.Bean places no time limit on returns. In today’s highly competitive retail market, hassle-free return policies and quick processing are essential to win over new customers, keep existing ones loyal and, ultimately, turn a profit.

In addition to providing a personalized return slip and a pre-paid return label when the shipment goes out to the customer, here are five tips online retailers need to consider to reduce the friction of their returns process as holiday returns begin to escalate:

1. Make the return process as transparent as the order process.

Even today, there are still online retailers that make the return process as difficult as possible for shoppers by hiding (or not even listing) their return policy, not providing status updates immediately via email, or not notifying the customer when the returned goods have been received. Customer service cannot be deliberately neglected, and constant communication of status should be on the forefront of retailers’ minds, no matter what stage the order is in.

2. Speed up your return processing.

To build confidence and rapport, customers should be informed immediately when their returned items have been received. Speed is on the side of the retailer as well; goods need to be seen as available in inventory and approved for sale to generate revenue. The quicker the returned item is checked for integrity and re-introduced into the system, the faster sales soar.

3. Keep goods handling and customer service separate.

If most returns are managed using a standard process, they won’t need to be reviewed by a customer service agent. The small number of returns that do need special treatment can then be kept separate for customer service attention. By splitting the returns process this way, most returned goods can be put back into inventory much faster, and even shipped more quickly if ordered by another customer. For example, by providing an online portal where customers can initiate a return, the retailer knows from the moment the return is created what items to expect to receive and when.

4. Use automation.

Two areas where retailers can speed up the returns process using automation are reimbursement and inventory management. After a return is processed, the amount owed to the customer should be automatically reimbursed or credited to the credit card or PayPal account. Also, new inventory should be updated immediately via a warehouse management system to establish the opportunity for the next sale in all channels.

5. Consider returns as an important customer service practice.

One could argue that the “return” burden has been lifted from consumers’ shoulders. Today, it’s become the responsibility of the retailer to offer convenient and simple return options for customers. The bottom line is that customers care about returns. Retailers that provide a complete end-to-end customer service experience incorporating flawless returns processing are more apt to see repeat customers and increased revenue.

As holiday returns surge, smart e-commerce players that take these tips into consideration will be ahead of the curve with a more sound, common sense return policy and processing strategy.

Troy Graham is the vice president of business development at Descartes, a provider of on-demand, software-as-a-service solutions for logistics-intensive businesses.