Omnichannel retailers and e-commerce sellers rightfully dedicate significant time, money, and resources to making sure everything goes exactly right during the holiday peak season. But even when perfect order rates are sky high, consumers will inevitably choose to return some of the items they purchased or were gifted over the holidays.
To this end, retailers surveyed by UPS and Happy Returns say that they expect just under 16% of their annual sales to be returned in 2025, while the National Retail Federation estimates that more than 19% of purchases made online will be returned by shoppers this year. When applying those percentages against the massive sales volumes between Black Friday and Christmas Day, that amounts to a significant spike in returned goods come January.
With peak season already ramping up, many retailers may feel it’s already too late to make any additional preparations to handle that increased return volume. While you’re probably out of time to install new technology or open new facilities before the wave hits, there’s still time to make adjustments that will help streamline returns management in the new year. Here are five ways retail supply chain professionals can still boost efficiency before January’s returns peak.
1. Re-forecast and staff up for Peak 2.0
When the holiday rush ends, that doesn’t mean labor needs to end with it. Returns season is its own special type of peak season, and it requires extra hands to get the job done. To ensure you’re properly staffed to handle returns, you can:
- Leverage historical data. Look at returns data from the last few post-peak returns seasons to project incoming volumes by category, SKU, and channel.
- Retain top-performing holiday hires. If you staff up using temporary labor, don’t cut them all loose on December 26. Identify top performers and ask them to stay on through January to help with returns.
- Train additional warehouse associates. Most of the year, returns get processed in their own area by a subset of the warehouse staff that knows what to do. Make sure you train extra warehouse workers to help with the additional volume.
Even modest improvements to your returns forecast can help to reduce bottlenecks around the three Rs of returns: receiving, restocking, and refunds.
2. Improve visibility for both you and your customers
The easier you can make it for customers to return items, the easier it will be for you to streamline processing and minimize costs. Allow your customers to initiate returns at physical stores, online, or via mobile apps to avoid delays and keep the experience as positive as possible. Integrate real-time tracking data with your customer management systems so representatives can quickly answer the most important question customers will have: Where’s my refund?
Also make sure the customers have access to that data through automatic updates, which will relieve strain on your call center and keep ancillary costs down. Doing all you can to provide transparency to customers does more than simply remove complexity from the process; it also builds trust with shoppers. When they can see their return moving through the system, it increases the likelihood that they’ll purchase something else because they know they can trust you when something goes wrong.
3. Reevaluate your disposition options
The unfortunate reality of returns management is that not every item will be suitable for a return to inventory. While some goods can be resold or refurbished, some will also arrive damaged, and some product types can’t be resold. After all, nobody wants a previously opened bottle of nail polish or package of undergarments.
When your associates are doing triage on returns, maximize the paths available to recover as much value as possible. Some additional options besides disposal or restocking may include:
- Recycling
- Tax-deductible donation to eligible charities
- Bulk liquidation to resellers/wholesalers
- Allowing customers to keep items that will be disposed of anyway (like that open package of undergarments, for example)
4. Leverage the returns expertise of your 3PL
Many retailers and online sellers choose to let their third-party logistics (3PL) partner handle the post-holiday returns wave. Doing this can offer significant savings on in-house labor, while ensuring efficient processing of returns. A capable 3PL can bring:
- Scalable capacity for temporary volume spikes
- Labor that is already trained in inspection, refurbishment, and re-labeling
- Optimized transportation networks that can consolidate inbound shipments to reduce costs
- Existing technology platforms that provide real-time visibility into return status
“Returns aren’t just a cost center; they’re an operations signal,” says Frank P. Crivello, CEO of Phoenix Investors. “When you process returns quickly and intelligently, you protect margin and gain a clearer picture of product and merchandising issues that matter next season.”
A good 3PL partner can help to return items to inventory faster, collect and analyze data to identify return patterns, and facilitate fast processing that results in quick refunds for customers. Your partner can help you stop reacting to returns and instead help you learn from them.
Making the Best of Peak 2.0
Returns are inevitable for any retailer, but chaos doesn’t have to be. With a little proactive planning, streamlined workflows, and the right logistics partnerships, you can turn the January rush from a cost center into an opportunity for continuous improvement.
Looking for assistance with the peak returns rush? Reach out to Phoenix Logistics today to see how we will help you optimize your holiday returns.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistics competitors work to win 3PL contracts and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our clients’ needs.
