How Retailers Can Prepare Themselves for Holiday Returns Season

Come December 26, a new holiday begins: returns season. Is your retail business prepared for the onslaught of unwanted merchandise?

While most shoppers are focused on the frenzy of pre-Christmas shopping, the season of gift returns that follows requires just as much preparation from retailers. After December 26, about 10% of all holiday items purchased, amounting to $70 billion worth of merchandise, will be heading back to stores for refund or exchange. The post-holiday return rush poses a unique challenge to retailers, who must provide attentive customer service, transport goods back to the warehouse, manage inventory repairs, and drive sales of refurbished products -- all while keeping costs low.

Given the complexity of reverse logistics, it’s crucial for your company to establish a solid plan for dealing with inevitable post-holiday returns. With these strategies in place, companies can strengthen their reverse logistics system to maintain customer satisfaction and maximize efficiency.

The Customer is Always Right

After December 25, your company’s priority must shift from selling gifts to accepting the gifts that didn’t quite meet holiday expectations. The stakes for customer retention are high during this period: whereas a clunky returns system will leave customers disgruntled, a positive returns experience can actually build brand loyalty. According to data from Endicia, 95% of shoppers return to vendors who have offered a good returns experience in the past.

The first step to a great returns system actually begins during the holiday purchasing season. Be sure to provide an easy-to-access return policy that customers can consult while shopping or during checkout. This policy should furnish the shopper with free return shipping (and even a pre-printed label), refund information, contact information, and clearly stated rules for the return. Your return policy can be modified for the holidays, as well. For example, you may want to extend your usual return window to give customers leeway in sending merchandise back, allowing for international shipments or non-traditional holidays that extend into the New Year.

Just as important as a solid returns policy is a well-trained staff. When crunch time hits, your customer service reps will add a crucial human touch to an automated returns process. Keep employees on hand to review individual return requests, answer questions, and process refunds speedily. Finally, since effective communication is at the heart of the returns process, returns season is a chance to learn from your customers. Consider sending each customer a follow-up note requesting feedback or suggestions to improve the process in the future.

Processing Returns Intelligently

To better navigate the many moving parts of reverse logistics, invest in a specialized returns system software. Ideally, this software will manage returns receipts, order information, credit services, and replacement fulfillment. In tandem with a well-defined credit policy, the software can determine how much reimbursement a customer will receive depending on the merchandise’s condition. With an automated system in place, companies can better avoid incurring the costs associated with incomplete and invalid returns.

Once the merchandise is out of the customer’s hands, it enters the more complicated territory of the warehouse. The physical condition of each returned item will be different, and therefore require different treatment, which makes processing especially challenging. There are a number of options: should the item be returned to the manufacturer, transferred to another store, refurbished, repacked, liquidated, reassembled, recycled, donated, or discarded?

Working With 3PLs

While some items can be easily reintroduced to stock, items in less ideal condition must be liquidated, recycled, or discarded.

For greater return on investment, savvy companies look to retailers and 3PLs in the $400 billion secondary market for returned goods. By selling items to outlets, auctions, and salvage centers, retailers regain 12-15% of the original price of the returned item, as opposed to less than a 2% return from recycling. Or, companies can cut out the 3PL middleman entirely with a web-based solution. An online liquidation auction platform can be customized and marketed based on your inventory, and will speed up the sales cycle by selling directly to consumers. Retailers who take this technology-driven approach can increase their returned merchandise recovery by as much as 30-80%. Finally, instead of discarding goods altogether, think about what raw materials can be resold. Extract any high-value and rare earth metals for resale instead of sending products straight for the landfill.

With a robust warehouse management system and well-coordinated, hands-on customer service, companies can take the returns frenzy in stride -- maximizing profits while facilitating a painless returns process for weary holiday shoppers.