The Busy Time of Year for Product Returns: A Holiday Season Recap

As the holiday season comes to a close, retailers are preparing for one of the busiest times of the year: product returns. According to the National Retail Federation (NRF), 17% of holiday purchases will be sent back to stores or online platforms in the coming weeks. In this article, we'll summarize the key points from the NRF's estimate and provide insights on what retailers can do to prepare for this influx of returns.

The Scope of the Problem

The NRF estimates that 17% of holiday purchases will be returned. This translates to millions of products being sent back to stores or online platforms, with an estimated value of billions of dollars. To put this into perspective, if we assume an average return rate of 1.7%, this means that approximately 2.4 million more returns are expected in the first quarter of 2023 compared to the same period last year.

Causes of Product Returns

There are several reasons why products may be returned during the holiday season. Some common causes include:

• Size and fit issues: Many customers try on clothing or shoes at home, only to discover that they don't fit properly.
• Quality concerns: Products may not meet customer expectations in terms of quality or performance.
• Gift returns: Gifts purchased for others may be returned if the recipient doesn't like them.
• Change of heart: Customers may change their minds about a purchase and return it.

Consequences of Inadequate Return Policies

Retailers that fail to have adequate return policies in place can face significant consequences, including:

• Lost sales: Returning products can result in lost sales, as customers who return items are unlikely to make future purchases.
• Damaged reputation: Retailers with poor return policies may damage their reputation and lose customer trust.
• Additional costs: Returning products can be costly for retailers, particularly if they need to restock or replace items.

Preparing for Product Returns

To prepare for the influx of product returns, retailers should:

• Develop clear return policies: Retailers should have clear and concise return policies in place, including any applicable deadlines or restrictions.
• Train staff: Staff should be trained on handling returns, including processing refunds and exchanging products.
• Invest in technology: Retailers can invest in technology solutions that streamline the return process, such as online return labels or mobile apps.
• Offer flexible payment options: Retailers should offer flexible payment options to customers, such as allowing them to pay for returned items over time.

Best Practices for Handling Product Returns

Retailers who handle product returns effectively can:

• Process returns quickly: Process returns quickly and efficiently to minimize the impact on customer satisfaction.
• Communicate with customers: Communicate clearly with customers about their return options, including any deadlines or restrictions.
• Respect customer preferences: Respect customer preferences when it comes to returning products, even if they don't meet retailer standards.

Conclusion

The holiday season is one of the busiest times of the year for product returns. Retailers can prepare for this influx of returns by developing clear return policies, investing in technology solutions, and offering flexible payment options. By handling product returns effectively, retailers can minimize lost sales and maintain customer trust. Whether you're a seasoned retailer or just starting out, understanding the importance of product returns is crucial to success.

Additional Considerations

In addition to preparing for product returns, retailers should also consider the following:

• Sustainability: With growing concerns about waste and sustainability, retailers can take steps to reduce packaging and minimize environmental impact.
• Personalization: Retailers can use data analytics to personalize return policies and better meet customer needs.
• Employee training: Employees should be trained on handling returns, including processing refunds and exchanging products.

Common Mistakes to Avoid

Retailers who make the following mistakes are more likely to experience difficulties with product returns:

• Inadequate inventory management: Retailers should ensure that they have adequate stock levels to meet customer demand.
• Poor communication: Clear communication is key when it comes to handling returns. Retailers should communicate clearly with customers about their return options.
• Lack of flexibility: Retailers who fail to offer flexible payment options or return policies may experience difficulties with customer satisfaction.

By avoiding these common mistakes and taking steps to prepare for product returns, retailers can minimize lost sales and maintain customer trust. Whether you're a seasoned retailer or just starting out, understanding the importance of product returns is crucial to success.