The holiday season is an exciting time in retail. Once Black Friday rolls around, it can cause a whirlwind of hectic jubilation straight through the end of the year.
However, the experienced retailer knows that this joyous time comes with a curse: returns. When the flood starts, you’ll want to have a Shopify return management strategy in place.
Consumers are willing to spend a lot. The National Retail Federation (NRF) projects that the average American will spend about $1050 on gifts, treats, and travel for the holidays before the dust of credit card statements settles.
Holiday sales, overall, rose more than 3% in 2019 over 2018. In particular, online spending for the holidays increased nearly 20% in just one year. The most wonderful time of the year, indeed!
The holiday sales season is the harbinger of a surge in returns.
The phenomenon is so well-recognized that UPS has designated January 2nd as National Returns Day due to their extreme volume on this day.
And UPS predicted they would handle nearly 2 million returns on January 2nd of 2020, increasing more than 25% from 2019.
Spread the Joy
One of our core values is to give retailers the technology and data they need to take a proactive stance on returns and deliver a customer experience on par with Amazon and Wal-Mart.
Since around 30% of holiday sales come back as returns, it’s not something we can merely forget about until the decorations come up next year.
We wanted to make a list (and check it twice) to ease the affliction of holiday returns.
1. Put a Shopify Return Management Process in Place Now
Whether or not you decide that return management software is the right solution for you, it’s imperative to implement a structured process before your next influx of returns.
As many of us (present company included) have learned from trying to accomplish all our holiday gift shopping the day before, this isn’t the time to get a return workflow in place.
For reference, here are some guiding philosophies on returns and the fundamental components of a return management process.
2. Leverage Operations Metrics to Prepare your Team
Returns are a lagging metric. They follow the purchases from which they originate. Because we know customers will place orders and returns will occur, we can anticipate the volume of incoming returns.
By analyzing the volume of sales and a retailer’s typical return rate, we can estimate the volume of returns a retailer will see from its orders over a period of time.
We can also track the status of a return as it makes its way to your warehouse or 3PL. That means you can see how many units are in transit or waiting to get processed at any given time.
This information is good to know since some of our retailers had a pretty substantial uptick in returns reaching “in-transit” status in the days after the holiday.
For one of our retailers, December 27th had nearly twice as many returns “in-transit” as the average day of 2019.
And the 31st topped that by nearly tripling the 2019 daily average of returns at “in-transit” status.
Retailers can use these reports to staff their warehouse and better prepare for the flood of returns. These are just some of the operational reports we can craft with our retailers to advance their return process.
3. Never Stop Learning
There’s not much we can do to prevent returns from this holiday season. But the returns themselves carry valuable lessons to extract for the future.
Gather your team and ask these questions:
- Why are products being returned?
- Are they too big?
- Too small?
- Is the material uncomfortable?
- What comments are shoppers leaving?
- Are they opting for a refund or exchange?
Perhaps your product descriptions need some adjustment. Return reasons and comments can illuminate both product and description issues to reduce unnecessary returns in the future.
Returns will still happen, but now you can use them to identify and alleviate customer’s common difficulties.
Once you isolate and correct causes for returns, you can observe patterns around exchanges. What products are getting exchanged? And what products are being received in exchanges?
These patterns allow us to see how customers are treating the return on their end. Are shoppers simply selecting a different product variant or opting for a different product altogether?
4. Maximize the Value of Returned Products
Once a returned product arrives at your warehouse or 3PL, its value to you depends on its condition.
An important and often overlooked data point of any returned item is its disposition.
The product disposition classifies the state of the product – according to the retailer – and determines what will become of it.
The ecosphere of resale, liquidation, and wholesale is in many ways the last frontier of e-commerce. The principle remains – the way you handle returned products can either lose or retain 15% to 40% of sales revenue.
Most retailers intuitively recognize that some returned products are ready for resale, while others are in some way damaged and can’t be restocked.
But the difference is made in intermediary dispositions and appropriate classification based on the condition of a product.
Dispositions that indicate products are just below “A” grade – such as “dirty” or “minor damage” – can help salvage some value from returned products that would get discarded otherwise.
For one of our retailers, nearly 25% of units returned in 2019 got marked as an intermediary disposition. This percentage equates to over $250,000 of sold merchandise.
Your Shopify return management strategy needs to restock ready-for-resale inventory quickly.
Properly categorizing returned products based on their condition is the first step in recouping the value of these products.
Let’s Wrap It Up
The hustle and bustle of the holiday sales season has come to an end. But returns season has only begun.
It’s never too late to improve your Shopify return management and take proactive steps to optimize returns in the future. Start your journey by downloading our free “Return Optimization Checklist: 7 Best Practices to Reduce Your Return Rate.”