Operational Challenges of Processing Holiday Returns, and How to Optimize for Low Return Issues

Most ecommerce businesses need to deal with returns, and post-holiday sales returns management can be a very challenging aspect of the sales cycle.  

It’s worth noting that holiday sales are often considered the winter holidays, between Thanksgiving and Christmas, but not all ecommerce brands have their biggest spike in sales during this time. Many products are in higher demand during different seasons—for example, sexual wellness products are hot in February for Valentine’s day, and digital frames have higher demand before Mother’s Day. 

Whenever your sales hit peak volume, processing returns, don’t let dealing with returned merchandise create a big headache for your operations team.  

Here are six solutions to common challenges for post-holiday returns.  

High Volume of Returned Merchandise 

The sheer number of post-holiday returns can overwhelm retailers—it’s a time when many customers decide to return unwanted or defective items. Managing and processing a large volume of returns can strain resources and impact operational efficiency.  

Take a proactive approach to this issue by communicating more clearly to customers before they buy. Update product listings to give consumers a better understanding of your product specs, details, uses, and limitations.  

Extended Return Period 

During the holiday season, many retailers offer extended return periods, allowing customers to return items well into the new year. This can further contribute to the influx of returns after the holidays, making it difficult for retailers to anticipate and plan for the volume of goods coming back.  

The biggest problem that arises is returned items may not be resalable if they are out of season, damaged, expired, or otherwise unwanted.  

The obvious fix for this is to shorten your return period. Just be sure to make that very clear to customers, as they are likely to be disgruntled if they aren’t able to send back unwanted items.  

Work with your 3PL or fulfillment team to get returned items back into good stock faster. Receiving, refurbishment, and restocking should be areas that are heavily resourced. Streamline these departments and processes pre-holiday rush so that you don’t have to worry about any issues when it really matters.  

Product Refurbishment and Disposal 

Not all returned items come back in resalable condition. Products may come back damaged, used, or incomplete, which require additional efforts for evaluation and determination of appropriate actions, such as refurbishing, repackaging, or disposal.  

This is a big problem particularly for high-value goods. Refurbishment or disposal may be costly per unit. 

To solve this problem, communicate clearly to customers how and when they can return their items. Provide proper packaging for the return shipment so that no damage is done in transit. Work closely with your fulfillment provider to create a refurbishment or disposal program that works for your brand.  

Some businesses will donate used or outdated merchandise which can be a positive marketing campaign for positive branding. 

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Reverse Logistics Costs 

Processing returns involves the management of reverse logistics, including product retrieval, quality checks, and restocking. Retailers may also incur additional shipping costs associated with returns, cutting into their profit margins.  

Offering free shipping strategies, especially free returns, can help capture more orders and higher average order value. It can also come back around to cause issues. If you are spending too much in returns shipping fees, then you are likely losing money.  

Ensure your customers know that returns will cost extra—even if it’s just the shipping fee, you’ll still be paying the operational costs to process the return. Factor these expenses into your product prices, and don’t forget to think about the cost of reverse logistics when you create sales campaigns and holiday discounts.  

Inventory Management Issues 

Returns can disrupt inventory management systems, especially if returned items are not immediately made available for resale. Sellers need to handle returned items efficiently, particularly ones that are being restocked.  

Some warehouse operations teams face the challenge of properly tracking returned goods. This stems from outdated or low functioning warehouse management systems.  

The best solution to combat holiday inventory management issues when dealing with returns is a great WMS (warehouse management system). Make sure you invest in the best technology tools to integrate all systems to properly restock returned items. Your warehouse tracking system needs to integrate with your ecommerce platform in order to show the correct amount of stock available.  

Fraudulent Returns 

Some customers may exploit lenient return policies to engage in fraudulent activities, such as returning used or counterfeit items or exploiting loopholes to obtain refunds without returning the product. 

While a small percentage of fraudulent returns is inevitable, it’s important to protect your brand before this happens. Sellers should implement fraud detection mechanisms and create clear operational guidelines for many different scenarios that may come up. 

Any fraud protection program you implement will have to leverage your operations staff and customer service team. Be sure they are all synced together when executing.  

When optimizing the returns management aspect of your business, you’ll need to look at all the ways your customers interact with your brand. Ultimately return rates can be lowered by tweaking the parts of your customer experience that need improvement.  

Take a look through the checkout experience and your product listings to ensure buyers have all the information they need before making a purchase. Create a very clear returns policy and make sure it’s communicated with customers. Take the time to provide customers with proper packaging for returned merchandise. Finally, work with your supply chain partners, like shipping carrier and fulfillment provider to track returns all the way back until they can get back into good stock.  

The best defense against lost revenue to returns is to prioritize prompt resolution of all returned merchandise and regular analysis of your return operations.  

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