12 Strategies for Managing the Logistics of Returns After the Holiday Rush
The holiday shopping season always brings a major uptick in sales for e-commerce retailers. However, the other certainty about the holidays is that January inevitably brings a huge wave of product returns. In fact, Optoro estimates a massive $173 billion worth of holiday gifts were returned in 2023 alone!
As an e-commerce merchant, efficiently processing these high return volumes while keeping customers satisfied presents some major logistical and financial challenges. In this post, we’ll explore 12 fulfillment and reverse logistics tips to smooth out the post-holiday returns rush.
Accurately Forecast Return Rates
The first step is understanding your baseline return rates and how they fluctuate during the holiday peak. With this data in hand from past years, you can more precisely predict and plan for the upcoming returns influx. Being proactive also lets you strategically line up additional 3PL warehouse capacity or staffing to handle January order volumes.
Offer Free Returns
Our research shows 51% of customers will refuse to shop with an e-commerce merchant again if return shipping isn’t free. So offering free returns is critical, even though it eats into margins. Consider building estimated returns shipping costs into your base pricing structure to offset this.
Enable Online Return Requests
Allowing customers to instantly request and print return labels online makes processing returns quicker and more efficient for everyone involved. Customers appreciate the self-service convenience too. Integrating your order management system with your 3PL’s WMS platforms enables seamless return merchandise authorizations (RMAs).
Set Realistic Return Window Policies
Prominently display your returns policy and timeframe—whether 30, 60 or 90 days—across your website, especially at checkout. Be upfront so customers clearly understand the constraints before their purchase. However, also consider extending return windows over the holidays when gift-giving is common.
Set Realistic Return Window Policies
Thoroughly examine every return at your inbound processing facilities before reselling, discarding or refunding. This order quality control safeguards against reintroducing damaged inventory back into saleable stock. It also provides valuable product failure data to share with suppliers.
Improve Online Product Listings
For apparel brands, sizing issues are among the top reasons for e-commerce returns. Ensure your product detail pages display accurate garment measurements and size charts. For hard goods, precisely showcase dimensions, materials and colors with consistent, high-quality photography. Reducing disconnects between listings and actual items shipped curtails “not as described” returns.
Consider “Keep it” Discounts
Crunching the numbers may reveal that certain low-cost products are unprofitable to ship back through reverse logistics. One of the newer ways to manage holiday returns is to offer customers instant discounts—say 10-15%—if they simply keep the item instead of returning it. The customer saves on return hassles and you avoid transportation costs for that SKU.
Refine Demand Forecasting Inputs
Every e-commerce operation battles inventory inaccuracies between projected and actual demand. As returns roll in after the holidays, analyze which items are most commonly sent back due to excess stock that didn’t sell. Refine your demand planning models to better realign future purchase orders and safety stock levels with true consumer demand.
Renegotiate Carrier Return Rates
Don’t assume your 3PL’s outbound shipping contracts include the same rates for returns. Reverse logistics often command higher per-package rates. Reconfirm existing contracts or negotiate customized returns rates with your small parcel, LTL and FTL carriers to minimize transportation costs.
Centralize Returns at Regional Hubs
Consolidating returns processing at fewer, strategically located warehouse facilities increases efficiency through higher shipment volumes per inbound route. This lowers per-unit transportation costs considerably. It also lets you specialize staff that gain expertise handling returns at designated sites.
Explore New Resale Channels
Finding secondary markets to profitably liquidate all those returns is crucial. Consider Business to Business (B2B) bulk sales of written-off inventory to discount retailers or liquidators. Or develop new direct-to-consumer online outlets focused exclusively on selling refurbished or open-box items at a discount.
Analyze Root Causes
Finally, categorize and analyze why items were returned after the holidays. Identify products with repeated quality problems for remedial action. Spot trending characteristics of most returned SKUs to guide future product designs, forecasting and stocking decisions before next holiday season rolls around.
Beginner’s Guide to Third-Party Logistics (3PL)
The world of e-commerce is always changing, therefore understanding the roll of Third-Party Logistics is integral to keeping up. In light of this our beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.
Read More…
Implementing even a handful of these reverse logistics best practices will promote major post-holiday returns process improvements for your organization. Moreover, through elevated customer service levels and supply chain efficiencies, your enterprise can turn this yearly challenge into a competitive advantage. Partnering with an experienced 3PL provider equipped with the transportation, warehouse and staffing assets to flexibly scale is an invaluable asset too.
