The holiday shopping season is a make or break time of year for most e-commerce companies. Having a successful holiday retail season requires more than piling up sales, however; it’s the aftermath that can truly change everything.
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The Importance of Holiday Returns
Managing holiday returns well can enhance your customer’s brand experience and strengthen customer relationships. Holiday returns give retailers the chance to build strong customer relations, increase brand value, and commit higher sales along the year.
According to DotCom Distribution, 74 percent of consumers report that a hassle-free return policy can persuade them to buy from an online retailer, regardless of whether or not they have purchased items from the retailer in the past.
This past holiday season was the time for increased selling opportunities, strong sales, and an abundance of customers. It’s also the season of post-holiday returns. According to Bargainista, one in three people returned at least one gift last year. National Retail Federation reported that total annual returns reached $260.5 billion in 2015 — or 8% of total retail sales.
Too many online retailers gear up for holiday sales and then fall short when it comes to managing holiday returns that inevitably happen in late December and January. Online retailers experience 10 to 15 percent return rates – and that number skyrockets to 20 to 30 percent for apparel.
E-commerce businesses can find themselves in a difficult position if they aren’t prepared to handle the sudden influx of returns after the holidays. Most customers have no patience for brands that fail to process returned merchandise fast and accurately — they just want their money back, NOW. So how do you handle your ecommerce returns quickly and effectively?
There are two aspects of handling ecommerce returns for businesses: customer satisfaction and company satisfaction.
The first part of handling returns is satisfying the customer. Retailers should make it easy for customers to return their purchases. If a purchase is difficult to return, both company and customer satisfaction will suffer. From your customers’ perspective, post-holiday returns should be simple and seamless. Prepaid return labels, flexible return shipping options and other details improve loyalty by making it easy for customers to return unwanted items and receive either a refund or replacement.
The second part of handling returns is essential for business satisfaction. If you handle your returns by sorting them with reasons such as “Resalable”, “Return-to-vendor”, or “destroy”, return categorization will not only be efficient, but fast, too. Retailers should take necessary actions to complete these processes in the most efficient manner. Three ways to do this are:
- Use a WMS to receive returns. Not all products are returned for the same reason. Although some returns can be reintroduced to inventory, other returns (e.g., broken or defective items) can’t be resold. A WMS defines the rules and processes that you need to sort returned goods fast.
- Effective workforce labor planning. Even automated return processes require human intervention. However, many online retailers don’t scale staffing to accommodate post-holiday returns. If you can’t accurately plan your workforce or return volumes, it’s critical to work with an experienced third-part logistics provider to make sure that you have the people in place to handle high return volumes.
- Real-time return-status monitoring. It’s extremely frustrating to not be able to see when merchandise has been returned, especially when inventory problems arise. Warehouse management systems offer the functionality to report the return status.
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Logiwa ensures accurate and real-time inventory management across all your warehouses. Our software provides detailed reporting so that you can:
- Predict reoccurring spikes in customer demand
- Avoid out-of-stock situations
- Avoid overstock situations
- ... and more
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Written by Cagdas Yildiz
Cagdas Yildiz is the Chief Customer Success Officer and Co-Founder of Logiwa.