How to Handle the Surge of Holiday Returns

Businesses are faced with a set of daunting circumstances as more people turn to the internet for their holiday shopping. Shoppers want fast, free shipping and the comfort of easy returns to convince them to buy online to begin with. If companies fail to meet these standards, customers can easily find another online retailer who does.

A key issue for businesses is the mounting costs of “free” shipping and, even more so, free returns. A struggling supply chain and overburdened shipping carriers only make matters worse. What can retailers do about it? A few tactics can help businesses handle surging holiday returns with less stress for everyone involved.

1. Try simulation and AR

One way to manage holiday returns is to prevent customers from needing to return items to begin with. Remember, most people don’t want to send things back. It’s time-consuming and generally disappointing when an item isn’t what they were hoping for. In particular, over half of all returns are related to clothing size. Clothes are one of the most commonly returned items purchased online because customers can only guess what size will fit.

Many businesses are implementing technological solutions to help customers avoid returns by finding the right size from the start. For example, some stores use sizing quizzes based on a customer’s fit preferences. Others are implementing augmented reality (AR) to allow people to try on items virtually or simulate how something might fit with 3D body scanning. Solutions like this can help prevent returns and exchanges.

2. Optimize initial costs

Online shopping brings in massive amounts of revenue for businesses, and unfortunately, shipping costs are part of the price they have to pay. However, there are ways to limit the financial damage returns cause. Planning ahead for these expenses often starts with finding ways to optimize initial shipping costs.

For example, it’s become more popular for retailers to offer free in-store pickup at brick-and-mortar locations. Local delivery and pickup options are among the best ways to save on shipping costs. Experts also recommend that businesses do thorough research before settling on a carrier. Some may have better pricing options than others, especially if flat rate shipping is an option.

The best part about these money-saving strategies is that they can work well in reverse, too. Offer to let customers return their packages at a physical store if possible, rather than shipping them. Similarly, make sure to partner with a carrier that has a friendly, convenient returns system.

3. Sell to the secondary market

Part of the challenge of handling holiday returns is their sheer variety. Items aren’t always in new condition anymore by the time they are returned. In fact, less than 10% of returned items go back on store shelves. This leaves retailers with large quantities of products that are almost new but no longer qualify for new sales. This can be a major hit when businesses are also footing the bill to ship, return and process these items.

However, there is a solution. Businesses can resell these items, whether they are in new condition or not. Secondary markets are a great option for managing holiday returns, even if it simply means getting them out of warehouses and sorting facilities. Resale businesses, thrift stores, wholesalers and even online resale markets are all potential buyers for goods sent back in holiday returns. Selling returned items to these businesses allows retailers to offset some of the costs associated with the returns process while also keeping stockrooms clear.

4. Tiered returns policies

Holiday returns can be more stressful to manage than those at any other time of year because there is a significantly higher volume. Expanding the return period can help mitigate congestion and spread shipping expenses over time. More businesses are using tiered returns policies to accomplish this.

A tiered returns policy creates more flexibility and convenience for customers while alleviating pressure on businesses. This often occurs by letting people pay for a membership of some sort with the retailer, which grants them access to discounts and extended returns windows. The cost of the premium membership covers things like returns expenses and allows extra time for customers to return items. This also gives people more time to reconsider their return or even gift the item to someone else.

5. Optimize resources

Retailers have to make the most out of every resource they have. Handling holiday returns is all about optimizing how every dollar and resource is utilized. For example, getting packages shipped, returned and processed in a timely manner can be improved by optimizing shipping routes. Identifying ways to clump orders together can save money and get more packages on the road in fewer vehicles.

Businesses can use inventory management strategies in warehouses and sorting facilities to optimize the flow of incoming and outgoing returns. For example, RFID scanning was used by 48% of manufacturers in 2015 to manage their inventory with speed and accuracy. Specialized logistics software can be helpful, as well.

Even the packaging that is used for returns can be optimized. Retailers should use boxes that can be opened and resealed. This is easier for the customer and also saves businesses money if something needs to be returned. Make sure packages aren’t being shipped in boxes or bags that are larger than required since this wastes valuable materials that could be reallocated to larger orders.

Getting on top of holiday returns

Holiday returns can seem like a flood following surging seasonal sales. However, these tactics can help businesses handle them more effectively. A combination of preseason preparation and optimized shipping and returns strategies can ease the process. Companies would be wise to implement these ideas and fine-tune them throughout the year so the process becomes smooth and straightforward. That can leave everyone feeling jollier about the holidays and lead to many happy returns.