Post-Holiday Returns: How Consumer Goods Retailers Can Protect Their Bottom Line
The holiday season—spanning from Black Friday through New Year—is the golden window for retail sales. For many eCommerce businesses, these weeks can make or break their year. Yet, for some, the holiday cheer is quickly dampened by an avalanche of returns, turning their revenue gains into costly losses.
Let’s unpack how you can avoid letting returns ruin your hard-earned holiday sales, with real-world examples and actionable strategies to protect your bottom line.
The Return Tsunami: Understanding the Stakes
Returns aren’t just a minor inconvenience—they’re a massive financial drain. Here are some eye-opening stats:
Post-Holiday Return Surge: Following Black Friday and Cyber Monday (BFCM), return rates spike. In 2023, peak season returns increased by 15% year-over-year. (Source: AfterShip)
Return Rates and Costs: During the holidays, return rates average 15.4%, translating to about $148 billion in returned goods.
Industry-Wide Impact: U.S. retailers lose over $743 billion annually due to returns. (Source: National Retail Federation)
Customer Expectations: A staggering 79% of shoppers expect free return shipping, yet only 49% of online retailers offer it. (Source: Soocial)
Bracketing Behavior: About 67% of online shoppers practice “bracketing”—buying multiple sizes or styles of an item with the intention of returning what doesn’t work.
Returns are an inevitable part of eCommerce, but the way you manage them can mean the difference between thriving or just surviving the holiday season.
What Are Other Retailers Doing?
Retailers are taking bold steps to address the returns challenge. Here are a few noteworthy strategies:
Stricter Return Policies:
Brands like Saks Fifth Avenue, Abercrombie & Fitch, and Zara are implementing tighter rules—adding return fees and shortening return windows. These measures help curb frivolous returns but require clear communication to avoid alienating customers.
Returnless Refunds:
Giants like Amazon, Walmart, and Target offer “returnless refunds” for low-value items, saving on reverse logistics costs. While not feasible for every retailer, this approach reduces shipping expenses and operational headaches.
FlexChain’s Tips for Smarter Returns Management
Now that you’ve seen the scale of the problem and what some big players are doing, let’s focus on practical steps you can take to optimize your returns process:
1️⃣ Establish Clear Guardrails for Return Shipping
Not all returns are created equal. Consider adopting a tiered approach:
Customer-Paid Shipping: If the return is due to a change of mind or bracketing, have customers cover the cost.
Retailer-Paid Shipping: For returns involving defective or damaged products, take responsibility, but require proof (e.g., photos) to prevent fraud.
By using reason codes to determine responsibility, you can significantly reduce your exposure.
2️⃣ Partner with a Returns Management Service
Collaborating with a returns processing service can lower costs by consolidating shipments and identifying which items are resellable. This step not only saves money but also improves inventory efficiency.
3️⃣ Track Return Reasons Religiously
Invest in tracking detailed return reasons like:
Quality defect
Damaged packaging
Incorrect item shipped
Late arrival
Changed mind
Use this data to identify trends and address leaks in your system—whether it’s a packaging issue, a supplier problem, or a need for better product descriptions.
4️⃣ Optimize Product Pages and Descriptions
Returns often happen because of unmet expectations. Clear, detailed product descriptions, accurate size guides, and customer reviews can help set realistic expectations and reduce bracketing behavior.
5️⃣ Incentivize Exchanges Over Returns
Offer perks like free shipping on exchanges or exclusive discounts for customers who opt for an exchange instead of a return. This keeps revenue within your ecosystem.
Real Talk: Returns Are Inevitable, But Manageable
No eCommerce business can escape returns entirely—and you shouldn’t aim to. Returns are part of the customer experience, and handling them well can build loyalty. That said, taking proactive steps now can mitigate their impact, keeping your holiday season in the black.
At FlexChain, we specialize in helping eCommerce businesses navigate complex supply chain challenges—including returns management. Whether you’re looking to streamline operations, reduce costs, or improve customer satisfaction, we’re here to help.
Let’s talk about how we can support your success in 2025 and beyond. Reach out today to start the conversation!
