On November 1st, I went to the local supermarket to find the mums and pumpkins stashed away, and the Christmas trees out in all their red, green, and gold glory. Even though the term “Christmas Creep” was first used 30 years ago, it truly does seem like the holidays, and holiday shopping, starts earlier and earlier each year. What we know definitively is that holiday returns have been trending earlier each year.
What is National Returns Day?
In 2016, UPS designated January 5th as National Returns Day—the day when the most packages are sent back to retailers—predicting 1 million packages would be returned on that day. Since then, the volume of packages being delivered has steadily risen. In 2018 National Returns Day happened before Christmas with consumers sending back 1.5 million packages 6 days before Christmas, a result of customers taking advantage of early-season sales and retailers making the returns process significantly more seamless for customers. Last week, UPS released its annual predictions for National Returns Day 2019:
- Holiday returns will peak on January 2, 2020 with 1.9 million returns– a 26% increase from last year –Consider that this number has nearly doubled since 2016
- Expected: 1.6 million returns per day the week before Christmas.
- Record-breaking returns volume illustrates how e-commerce is changing the way consumers buy during the holidays.
According to eMarketer, 2019 is the first year that US Holiday Sales will surpass 1 trillion, and it’s easy to see dollar signs as those sales flow in. But, given these growing returns spikes, it’s important to prepare accordingly. Since four of the top five most returned holiday gifts are classified as apparel, fashion and apparel retailers are particularly vulnerable to taking a bottom-line hit this time of year. All signs point to retailers needing real solutions to minimize the harmful impact of returns. Some things to consider:
Convert Gift Returners
Returns are such an important factor in customer experience. Not only do most consumers look at return policies before deciding to make a purchase, but consumers are also significantly less likely to shop again with retailers who have cumbersome return policies and processes. When someone returns a gift to your store, it may be the first time they’re ever interacting with your brand. Consider optimizing your holiday return process for gift returners by doing things like:
- Extending return windows: Footwear News reports that “38% of consumers noted in-store returns as the preferred option, [yet] only 10% had returned their last item at a store location.” What this indicates to me is customers avoiding the madness of the mall. An extension of return windows and promotions, just a couple weeks could entice more customers into your physical store.
- Creating a frictionless online return/exchange portal that offers alternatives for exchange and captures customer data points whether they’ve shopped with you before and maybe even custom return reason codes for holiday shoppers (“Not My Style”, “Wanted Something From Another Retailer,” and you could even get cheeky with “My Grandma Means Well, But…”)
- Follow-up with gift returners via email and encouraging them to provide detailed feedback on the product they received in the form of an online review.
Continuously review return data during the holiday season
While many items being returned during the holiday season are unwanted gifts, many people are still shopping for themselves this time of year. That means issues of damaged goods, incorrect item shipped, and inaccurate product descriptions still occur frequently. To ensure you can resolve those issues in a timely manner (by pulling stock for review or adjusting website copy and imagery, etc.), returns data needs constant analysis. Waiting until an end-of-holiday postmortem to review sales and returns data is a missed opportunity to prevent returns from escalating out of control.
Start preparing for next Christmas’ returns, today
Reducing returns is possible. And even a 1% reduction leads to significant savings for retailers. Don’t believe me? Check out our Returns Reduction Calculator and see how much your business can save. A comprehensive returns reduction strategy includes policy development, process development, and creation of insightful return reason codes. From there, it’s important to have the means in place to determine the root cause of returns and institute meaningful action to reduce returns spikes. Newmine is working with several retailers to revamp their returns reduction efforts for 2020. Part of this entails a historical, 2-year retrospective of returns data called a Look Back Analysis. Reviewing the past gives our clients a view of Y-O-Y sales and returns trends like they never had before and allows them to keep an eye on products that may have been returned frequently in the past.
Just like Christmas Creep, returns can’t be completely avoided around holiday. But with a sound strategy and a positive perspective, retailers can minimize the negative financial impact of holiday gift returns.
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