Every year, the holiday shopping season is quickly followed by another hectic period for ecommerce brands: the post-holiday returns season.
Whether items were the wrong size, wrong color, or just the wrong gift altogether, many shoppers find themselves with gifts to return after the holidays wind down. And ecommerce brands find themselves trying to efficiently navigate the complexity of reverse logistics.
When 73% of retailers already rank returns as a moderate-to-severe issue for their business, the intensity of returns management—and the importance of handling it—only grows in the post-holiday period.1 Preparing for the annual increase in returned products is crucial for retailers to control costs and ensure all new and returning customers have positive interactions to strengthen brand relationships—and it takes a holistic approach to get it done.
How to Improve Post-Holiday Returns Management
Curious about the most effective way to manage post-holiday ecommerce returns? Read on for steps to minimize the number of returns and simplify internal operations while maintaining a positive customer experience.
Develop airtight returns policies
To effectively manage post-holiday returns, brands must first decide what they will accept as a legitimate return and how those items are processed. That means developing a clear, concise, and comprehensive returns policy that is readily accessible to all customers.
A returns policy should include how money will be refunded or converted to store credit, the timeframe for returns post-purchase, and the level of item quality (has it been used, damaged, etc.) that will be accepted.
Brand leaders should compare policies to competitors and conduct customer surveys to understand how a brand’s core audience perceives set policies, as it will help to ensure general expectations are met. After all, it’s important to remember that no brand is alone in facing post-holiday returns and their potential risks and costs. In 2022, 60% of retailers changed their returns policies, with many moving away from the previous standard of free returns.2
Additional tips to consider include:
Be transparent: Transparency builds trust with consumers and strengthens brand relationships. Customers should be able to find and review a brand’s returns policy quickly and easily without having to search the far corners of a website, or comb through dense legal jargon. If a policy contains provisions that are uncommon for the industry — especially charging for returns — it’s critical to be upfront and proactively communicate that information to customers.
Communicate clearly: Providing complete, detailed product information at the point of purchase can mitigate returns, as it ensures that shoppers know exactly what they’re getting. Brand leaders should make sure product information is accurate across all owned digital properties and third-party sites, including marketplaces like Amazon or retail partners.
Respond quickly: Regardless of how quickly the return can be physically processed, it’s important to respond to customers promptly for all qualified returns. Confirmation that their return has been accepted and offering information about refunds, shipping dates, is crucial for fostering positive brand relationships.
Find the right balance to maximize sales
While the return process is obviously a post-purchase experience, a brand’s return policy can have a significant impact on whether a sale is made in the first place. Policies that are too restrictive are off-putting to shoppers and lead to cart abandonment. On the other hand, clear policies can help increase conversion rates by giving shoppers the reassurance they need to complete a purchase. For example, a customer may feel more comfortable making a purchase on Black Friday if the brand’s policy clearly states that purchase will be eligible for return up to a certain date.
The key for brand leaders is to strike the right balance based on strategic goals. When crafting policies, leaders may want to consider factors like customer acquisition costs, the price of returns, competitor policies, and what is standard for a particular market or industry (e.g., fashion brands likely have different policy stipulations than consumer electronics companies).
Offer multiple return options
One of the best ways to ensure a positive returns experience is to provide multiple ways to return items so customers can choose what works best for them. Some options to consider include providing return shipping labels, arranging to pick items up from customers’ homes, contracting with third parties for drop-offs, or allowing customers to return items to brick-and-mortar stores. Including prepaid return labels are especially welcomed during the holiday shopping season, as customers can include them as gift receipts when giving items to others.
All of the options described above come with costs and certain advantages and disadvantages. To decide which route is best, brands should talk to their customers and conduct social listening to identify how shoppers prefer to make returns. Leaders will also want to consider the physical characteristics of commonly sold items (i.e., product size, weight, shape, fragility, shelf life) to determine what makes the most sense from a cost and customer experience perspective. Ecommerce brands selling across borders will also need to factor in total landed cost, including any taxes or duties collected upon delivery, and how guaranteed landed costs will affect reverse logistics.
Watch for fraudulent returns
Research has shown that around 18% of last year’s holiday purchases were expected to be returned, and of those returns, about 10% were estimated to be fraudulent.3 This form of fraud can result from people returning stolen items, returning items that were purchased with stolen credit cards, or returning items the customer knows don’t qualify based on the brand’s returns policy. Overly complicated policies can also move some shoppers to file fraudulent chargebacks instead of initiating a return. Chargebacks are typically more costly for brands than processing returns, so limiting these instances is important to maintain profitability.
Some ways to limit fraudulent returns include:
- Making returns policies more restrictive
- Re-training employees to ensure returns are processed correctly and policies are enforced
- Only offering exchanges or store credit for returned items
- Tracking and analyzing order and returns history at the individual level to potentially identify repeat offenders
Managing post-holiday returns with holiday cheer
Ecommerce brands will never be able to eliminate post-holiday returns entirely. A certain percentage of customers will inevitably find reasons to send items back — legitimately or not.
The goal for brands should be limiting returns as much as possible and ensuring that every customer has a positive experience when making a return. The lead-up to the holiday shopping season is a good time to review returns policies and make any necessary process changes to ensure a smooth logistics experience.
By crafting sound policies and improving efficiency in back-office operations, ecommerce leaders can better control the cost of returns, limit disruption, and ensure both customers and company stakeholders enjoy a very happy holiday season.
Want to improve experiences at each stage of your customer journey, through the holidays and beyond? Connect with Digital River today to learn how our global seller services drive outstanding results for ecommerce brands.