How E-commerce Businesses Handle Return Shipping After The Holidays

With the holiday season behind us, many e-commerce businesses are now focusing on the not-so-jolly part of business; handling return shipping. It’s an inevitable part of doing business that affects all retailers.

In fact, the National Retail Federation (NRF) estimated that the cost of returns for the 2022 holiday season would account for $816 billion in lost sales for U.S. retailers. The good news for e-commerce merchants is that for the first time since the NRF has been collecting returns data, online returns are in-line with the overall return rate as opposed to being much higher than in-person returns.

Still, with an estimated return rate of 17.9% for holiday sales, there is a lot that your business has to prepare for and execute to ensure things run smoothly during the return season.

To help, we’ll review some best practices for handling return shipping after the holidays and provide a real-life example of a Shippo merchant who has mastered their returns process.

Why Do People Make E-commerce Returns

Common reasons why e-commerce returns happen:

1. 1. Item Doesn’t Fit – This is mostly for sellers in the footwear/apparel space. Without a proper sizing chart attributed to each article of clothing’s page description or models wearing the clothes, you can almost guarantee you’ll see returns for this reason. Returns for an item not fitting can also be increased after the holiday season because many clothing items that are bought are intended for someone else.
   2. Wrong Merchandise Sent – This can be a simple hiccup, such as sending something in the wrong size, the wrong color, or the wrong model. This issue can be pointed back to your fulfillment team and is something that can be corrected by ensuring the proper packaging processes are set in your partnered fulfillment center or place of business.
   3. Product Damaged During Shipping – This can often be pointed back to the carrier you used to send the package. However, it can also be pointed back to your fulfillment team if they did not use the proper infill, box, mark the item as fragile, or test the package before shipping. During the holiday season, carriers and fulfillment teams are handling an increased amount of packages. Hence, the risk of packages getting damaged during transit during the months of November and December is much higher.
   4. Buyers Remorse – This is a bit more unpredictable and is solely caused by the buyer themselves. It can be common for shoppers to purchase something they can’t afford and return it later after they’ve thought about the purchase more.
   5. Defective or poor quality – This is an issue that can mostly be attributed to the suppliers or manufacturers that you’re working with. You’ll want to have someone in charge of quality control early in your business’s supply chain (such as at a warehouse), so you can return defective products back to your supplier before they go out to your customers. Before the holiday season starts, you’ll likely have placed a large order to bolster your inventory before sales increase. It’s then that you’ll want to ensure the quality of the products, so you don’t get stuck with return shipping right before or after Christmas.
   6. Item doesn’t resemble what is shown online – This can be an issue more related to your marketing efforts. You’ll want each product you’re selling to have many high-resolution images and possibly videos associated with their product pages on your website. Make sure that the photos you use highlight multiple angles of the product and use a blank background so that customers can properly inspect the item before buying.

Holiday Return Shipping Best Practices

• Make sure customers and fulfillment teams are aware of your holiday shipping policy

Your holiday shipping policy should be written well before peak season starts and featured prominently so that customers know what they can return and when they can return it. But, it’s equally important for your fulfillment team to know the post-holiday return shipping policy. This will help ensure that your fulfillment team is giving the right green light for your billing team to process a refund. Your fulfillment team should ensure that the item was returned within the return window you set, that it is undamaged, and that the sender took all the steps you told them to in the holiday shipping policy.

• Double Check Sender Details To Avoid Returns Fraud

This can be a tricky part of return shipping, especially after the holidays. Many folks who want to return a gift they received might live at a different address or entirely different city than the person who originally made the purchase. They may also want the refund to go to their credit card instead of the original buyer’s card. While this can seem harmless, someone involved in credit card returns fraud could request the same thing. One way to avoid this is to offer store credit to the person making the return or only send back a refund to the original buyer.

• Incentivize Exchanges Instead of Returns

On the topic of offering store credit, this can also be an effective way of offsetting return costs. Instead of simply offering a refund, you can offer a slight discount on an exchange a customer wants. This allows you to make a profit while also providing a better returns experience for your customer. This positive experience can increase brand loyalty and repeat business. In fact, according to our Returns Report survey, 83% of customers would be very or somewhat likely to switch their return for an exchange if they were incentivized with an extra $10 to shop with.

• Track Data On Each Return

This part of return shipping is essential no matter the time of the year. Returns management software can help you collect this information and better guide your fulfillment, shipping, marketing, and partnership decisions.

For example, if you require customers to go through a quick online portal to receive their return labels, you can ask them to select an option for why they are making their returns. If you see a large number of returns due to damaged shipments, it might be time to use a different carrier. If many of the answers are because of defective products, it might be time to switch suppliers.

Tracking returns data can also help you identify serial returners and help prevent returns fraud.

• Resell Returned Items Throughout the Year

Just because a customer made a return after the holiday season doesn’t mean that it’s the end of the road for that product. Many products can be resold throughout the year as part of other holiday sales. Those returned products can also be bundled into other product sales to clear inventory and increase your average order value.

Real-Life Example of How Merchants Are Handling Return Shipping

Return shipping for small businesses can be a little tricky. So, in order to highlight what mastering returns looks like in action, we decided to ask for a shining example of this: Online jeweler Bracha.

Bracha – Quality, Trendy Jewelry For A Good Cause

Bracha was founded in 2012 by two sisters (Sayra and Michelle) with different jewelry design styles, but the same passion for helping others. Portions of every sale go to supporting strategic partners like the A21 Campaign, Chain Reaction, and others leading the fight against human trafficking.

Selling beautiful jewelry for a noble cause has propelled them to sell in over 1200 locations nationwide and through their e-commerce store. With all that selling in different places, returns can get a bit complicated. We asked the following questions to help give others insight on how they handle the challenge of return shipping.

(Q.) What is your typical rate of returns after the holidays?

“From purchases made from November 1st – December 31st, our return rate this year was 1.5%.”

(Q.) Do you take any particular actions before holiday shopping begins to help with returns?

“Due to the low number of returns, we have no specific process.”

(Q.) What process do you have in place for returns?

“We switched out last year to a return service called Loop. They have been great to work with and simplify the return for the customer. One of the most significant features we love is the ability to flag items that are not returnable. Loop makes it simple to flag the item, so the customer cannot return it. Once the customer submits the return with Loop, our online manager will manually approve the returns, and she does this daily. We approve them manually in case Loop somehow misses a non-returnable item and to get more information from the customer. We like having human interaction with our customers as much as possible. After gathering data from the entire year, our customers’ biggest complaint was that we did not provide a return label. We switched out our model on January 1st, 2023, and are now providing a return shipping label with a $6 fee that gets deducted from the final return amount. Shippo makes it super simple to look up the order number and print a return label that gets sent to the customer. All of our returns get a USPS label.”

(Q.) Do you incentivize customers who are making a return to place another order?

“Here at Bracha, our mission is to help end human trafficking. A portion of every single sale goes to support our partnered organizations. I mention this because we don’t offer money back, as the amount is accounted for in our donations. Every return gets store credit. The customer usually buys a replacement or a different size and is happy with the exchange.”

(Q.) How do returns impact your business overall?

“Returns can hurt a small business, especially if you don’t have a firm return policy that makes sense for your business. It’s not only a monetary cost of the product but also the labor time cost of the return. Having a high number of returns also hurts your customer loyalty, as it could lead to them not shopping with you again.”

How Shippo Helps With Return Shipping

Giving your customers a simple and easy return shipping experience is one of the best ways to have those customers return to your site to make another purchase. The easiest returns experience possible is to simply include the return label inside of the original package.

With Shippo, you can do just that. You can print return labels at the same time as you print your shipping labels. Best of all, you won’t be charged for a return label until the carrier you choose scans that label and starts the return shipping process. You can also choose a different service level for returns, so even if you sent out an expedited delivery, you could opt for a lower-cost return service.

Sign up to Shippo for free today to start providing a better returns experience for your customer and a smoother return process for your business.