The holiday season is nearly over, but most retailers haven’t slowed down yet. Shoppers that were on the hunt for the perfect gift a week ago are now contending with the gifts they received—returning them, exchanging them, or spending them.
This will likely present additional challenges for small retailers over the next few weeks on top of the supply chain issues they’ve faced for many months. Having the right returns solutions and strategy in place is essential to minimize the impact of the losses that come with post-holiday returns.
- Returns will be a bigger challenge this year
- How to make post-holiday returns smoother
- The positive impact of positive return experiences
Returns will be a bigger challenge this year
Last year, Optoro found that two out of three consumers typically return a holiday gift. Under normal circumstances, managing the losses that come with returns—a process called reverse logistics—is enough of a headache on its own. Effective reverse logistics often requires more budget and infrastructure than a small business can afford, which means they are often left with unpredictable inventory surpluses and no way to address them.
On top of inventory issues, returned merchandise is expected to cost retailers two-thirds of their original price this year when factoring labor, transportation, and warehousing losses. Larger corporations can absorb these costs without detriment to their bottom line, but small businesses usually don’t have that much padding in their margins.
The inventory shortages and shipping delays brought on by the supply chain crisis have exacerbated this issue even further. Consumers who ordered merchandise that didn’t arrive in time for the holidays might be looking to cancel or return their orders and have their money refunded.
Exchanges can present yet another challenge. Many businesses are experiencing inventory shortages, so a customer might not be able to exchange their item for the exact one they want and may choose to get a refund instead.
How to make post-holiday returns smoother
It may seem counterintuitive, but the best way to address reverse logistics challenges is to make returns as simple and flexible as possible.
Communicate return policies clearly
This process starts at the beginning when a customer decides they want to make a return. You should make your return policy as clear as possible on your website and in your brick-and-mortar store. Failing to do so could lead to confusion and frustration on your customer’s end, which ultimately results in more negative interactions.
Offer online and in-person returns
Most customers prefer to process their returns from an online customer portal, but some prefer to talk to a human being to make sure everything goes smoothly. Offering both of these options gives customers the opportunity to choose the best experience for them.
For businesses that are solely online or in-person, this might present a challenge. There are third-party services that can help from a logistics perspective, but this is further evidence that hybrid commerce is a must for SMBs.
Leverage fulfillment software
Then, it’s important to prioritize return flexibility by providing your customers with options that will best suit their needs. This is best accomplished by using a fulfillment software that includes features for returns management. Not only does this software help manage outgoing orders, but it also provides customer retention opportunities when the purchased merchandise doesn’t work out.
For example, you can combine your fulfillment software with your customer relationship management (CRM) platform to recommend items for an exchange. You can also use the software to offer an instant credit for the merchandise before offering a full cash refund. Optoro’s research found that providing instant credit can lead to three times the repurchase rate compared to processes that require possession of the returned merchandise before issuing a credit. The instant credit offer also provides some flexibility to address the supply chain issues.
Customers also want flexibility with how they return their merchandise. For some customers, it’s easier to drop a package in the mail, but for others it’s easier to return their items in person. Implementing the right fulfillment software can make it easy to offer this level of flexibility regardless of how the merchandise was originally purchased.
The positive impact of positive return experiences
In the first few weeks after the holiday season, businesses of all sizes experience more returns any other time during the year. This can create problems for a small business’s ability to stay afloat, but it can also create opportunities for customer satisfaction. The difference comes down to the software solutions a business has in place.
With the right tools for returns management, businesses can minimize their losses and give their customers more flexibility with their shopping experience, so they’ll be more likely to return in the future.