Last year’s holiday season saw more than $626 billion in sales, according to the National Retail Federation (NRF), with $105 billion coming from online and other non-store sales. However, despite shoppers’ good intentions, they didn't always find the perfect gifts for their loved ones. This resulted in billions of dollars worth of returned merchandise. As e-commerce grows in popularity, returns will continue to become a larger issue for online retailers, which see triple the amount of returns than their brick-and-mortar counterparts.
Regardless of channel, returns are an integral part of retail year-round. However, each holiday season we see a common set of challenges that retailers face with processing post-holiday returns:
- The sheer volume driven through holiday returns is higher than any other time of year. Therefore, retailers are challenged with getting returns processed in a timely manner. This may seem like an obvious challenge, but it’s one we see happen year after year for those that don't plan ahead for increased volume.
- Shoppers are not only purchasing for themselves, but are also buying gifts for others. In the case of a parcel return or exchange, it’s all about getting the recipient the right gift — quickly! There's heightened sensitivity with gifting, so retailers are challenged with processing the return and getting the right gift back out as swiftly as possible.
- Once a retailer gets all the merchandise back, it needs to know how to deal with it effectively so it can get the best economic value from the inventory without having to liquidate everything.
On top of these logistical issues, retailers are also challenged by consumers’ growing expectations for more flexibility and options throughout the shopping experience. Returns are no exception. Customers want their money back as soon as they can get it. Retailers need to evaluate all their options, including ones like advanced credit.
With these challenges in mind, here are a few tips for dealing with returns during the 2016 holiday season:
1. Partner up for the planning process. It may sound obvious, but planning well in advance is the most important factor to having a successful returns season. Retailers tend to do a lot of internal planning around the holiday season, but sometimes forget to extend those plans to partners that are vital to the season’s success. Retailers need to share information such as SKU and geographic mixes with partners that can help them plan for the annual spike in returns.
2. Seek out flexible partners. Working with a flexible returns partner that doesn’t charge you for missing your forecast is essential during the holidays. Ensure your partner is willing to adjust with you rather than making you adjust to it.
3. Convenience is key. Not only is it key, it’s the name of the game in retail today. Retailers need to extend this convenience to the returns process by offering pre-paid shipping labels and free pickup from any address. You can’t get more convenient than that!
4. Don't make the post-purchase experience an afterthought. It’s also crucial to think about the post-purchase experience. It doesn’t matter how great the purchase experience was if the customer has a poor returns experience, as that will be the last thing they remember and how they will identify the retailer’s brand. Retailers need to put just as much thought into the post-purchase experience as they do into the up-front part because post-holiday experiences set the tone for the rest of the year.
Many retailers already have their 2016 holiday marketing and merchandising plans firmly in place. It’s imperative to think about the returns process as an integral part of the entire customer journey and one that, if done right, will keep the customer coming back well into the new year.
Patrick Allard is senior vice president, sales and business development, at Newgistics, a full-service provider of small parcel delivery, intelligent returns management and freight management services.