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Warehousing & Fulfillment

Holiday Returns Processing for eCommerce Merchants

Warehousing & Fulfillment
December 10, 2020
5 min read
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Returns processing season is in full swing. This year’s unprecedented ecommerce demand will mean a new level of returns volume for ecommerce merchants. This guide outlines consumer expectations, tactics to lower return rates, and the importance of a flexible return policy for online sales.

A Year of Strategic Pivots

The ecommerce boom has brought about many logistical challenges for businesses ranging from small, local merchants to big box retailers. Ware2Go’s merchant survey data showed that 77% of merchants had to pivot their selling strategy in response to COVID-19 shutdowns, with 35% of merchants opening an online store for the first time. The traditional retail industry has seen a major shift as well, as big box retailers pivot their fulfillment strategy to ship-from-store and buy online pickup in store (BOPIS) to accommodate the shifting dynamics of ecommerce vs brick and mortar.

Holiday Returns Processing Starts Earlier & Lasts Longer

Now that the holiday shopping season is in full swing, merchants have one last hurdle to face in a year of unprecedented ecommerce demand. The return rate for ecommerce orders is typically 10-12% higher than brick and mortar at around 20%, and ecommerce holiday return rates sit even 10% higher at around 30%. That means merchants should be prepared for an influx of returns processing this year, and according to recent consumer survey data, those returns will be coming soon.

Returns Processing 88% will return, 52% return within 2 weeks, 24% return in less than 2 weeks

Many returns will come before the holiday shopping season is over. Over half of survey respondents indicated that they have purchased an item as a gift and returned it before actually giving it. The most common reasons for these types of returns were that the item wasn’t as pictured or described, the item took too long to arrive, issues with fit, or the consumer ordered multiple options to compare.

Returns Processing 33% not as pictured, 33% too long to ship, 31% fit, 31% ordered multiple options

These responses show that merchants can prevent many ecommerce returns by optimizing their digital sales channels with accurate product descriptions and photos and by meeting customer expectations for fast shipping. Merchants can also lower return rates by clearly outlining shipping guarantees early in the shopping process. Tools like a countdown calendar advertising the number of days left to purchase to ensure delivery before important holidays create a sense of urgency and set realistic customer expectations.

What’s more, sellers listing on Amazon could see returns on that platform from sales as far back as October 1, due to Amazon’s extended 2020 holiday returns policy. This measure, intended to encourage earlier holiday shopping to ease peak season fulfillment demands, means merchants must be ready to re-stock and re-sell these items quickly to avoid inventory obsolescence. A post-holiday promotion on these items could be a good strategy to move returned inventory, as survey data shows that 92% of consumers plan to shop after the holidays, with 31% saying they plan to start shopping again within the first few days after the holiday ends.

Returns Processing Is the Price of Doing Business

No matter the reason for the return, one thing is clear. Consumers value a simple return policy, so much so that the vast majority indicate that the return policy is important to their decision to make a holiday purchase.

When crafting a return policy, merchants should consider adopting the most lenient policy they can afford as well as quickly processing refunds and exchanges. Consumer survey data shows that merchants would also be wise to offer multiple options for returning items. Consumer preference seems to be split evenly between returning an item in-store and returning it through the mail.

Returns Processing Brings Fulfillment Full Circle

Consumer preference for digital sales channels is likely here to stay. Merchants with a flexible supply chain will find the most success in bringing their fulfillment full circle through the returns process. This holiday returns season is an excellent opportunity for merchants to refine their returns policy and process to build continued brand loyalty and equity.

To learn more about how Ware2Go helps merchants build a flexible supply chain to support full circle fulfillment, reach out to one of our logistics experts.

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