Retailers: Now that the holiday shopping frenzy has wound down, it's time to talk about something that doesn't always get the spotlight it deserves in the retail world: returns.
Before we dive in, let’s take a quick look back at peak season numbers from 2023:
- On Black Friday alone, U.S. online sales hit a stunning $9.8 billion, jumping 7.5% from last year. (CNBC)
- Because of this massive uptick, we're now looking at a potential $928 billion in clothing returns in 2024.
These numbers set the stage for the Returns Revolution in retail. This uptick in returns isn't just a byproduct of increased sales—but a pivotal element that is reshaping how retailers and shippers approach the post-purchase customer experience.
Understanding and adapting to this returns revolution becomes imperative for shippers aiming to maintain customer satisfaction and operational efficiency in a post-peak season world—and presents a unique opportunity for growth and differentiation in a saturated market.
Returns: A Strategic Business Driver
Today’s shippers, including giants like Amazon who have recently adjusted their return windows, are now viewing post-peak returns as a crucial aspect of their peak season strategy. With around 60% of retailers rethinking their return policies (goTRG), it's clear that managing returns effectively after peak season is essential for building customer loyalty and gaining a competitive edge throughout the year. This shift from viewing returns as a logistical task to a strategic opportunity is a key lever to thriving in the retail sector.
So, as you start planning for peak season 2024, remember to factor in post-peak returns in your strategy discussions. It's not just about handling the rush—but also efficiently managing the aftermath to stay ahead in the game.
The Benefits of an Optimized Returns Process
A better returns policy is on the minds of retailers. But what are the tangible benefits retailers can expect to see if they roll out a well-managed return process?
- Boost sales and trust: A customer-centric return policy doesn't just improve a brand’s image; it directly impacts sales and customer trust. Data from Parcel Pending shows that 62% of consumers are more likely to buy from brands offering satisfactory return experiences, illustrating how positive interactions can lead to increased sales. Additionally, customers with hassle-free return experiences are more likely to become repeat buyers, reinforcing brand loyalty and trust. The key is balancing easy returns for customers with efficient operational processes.
- Transform returns into repeat business: A smooth and positive return experience is a key driver of customer loyalty. Research from Optoro reveals that 92% of customers are likely to make repeat purchases from a retailer if the return process is easy and hassle-free.
- Capitalize on the convenience of returns: Convenience is a crucial factor in shaping customer perceptions about returns. Surveys show that 60% of customers are willing to pay more for services like doorstep pickup, highlighting the importance they place on effortless return processes.
- Capitalize on the Refund Effect: The "Refund Effect," as highlighted by the Harvard Business Review, shows that consumers are 78% more likely to reinvest money from product refunds compared to other forms of income, potentially leading to increased sales and revenue for retailers.
Tackling the Returns Challenge
We know the benefits of a solid returns process, especially right after a hectic peak season. But let's not sugarcoat it—overhauling a long-standing returns process is tricky.
Returns in the retail world are becoming more challenging, especially with the shift towards online shopping. (And during post-peak season, these challenges can be even more amplified!)
Managing increased volume of returns
A notable challenge in the ecommerce era is the higher volume of returns from online shopping compared to in-store. The National Retail Federation (NRF) reports that online purchases have a return rate of about 30%, significantly higher than the 10% for in-store purchases. This surge requires more resources and efficient handling to manage the logistics of returns.
Efficiency in processing speed to resale
Quick and efficient processing of returns is vital. Delays in processing can lead to financial losses and depreciated item value. Retailers need effective systems to inspect, restock, and refund returned items promptly to mitigate these losses.
Reducing Environmental Impact
Returns significantly contribute to carbon emissions, with over 16 million tons in 2020, as Vogue Business reports. Tackling this means implementing sustainable practices in transportation and returns processing to minimize environmental impact.
But beyond contributing to a more sustainable retail world, implementing sustainable strategies can act as a business strategy to drive your bottom line. 55% of consumers are willing to pay more for eco-friendly brands, indicating a shift in market dynamics. By adopting sustainable practices, companies can tap into this growing consumer segment, positively affecting their bottom line.
To sum it up, the busiest returns season poses logistical, financial, and environmental challenges for retailers. A strategic approach involving efficient processing, consolidation, and sustainable practices is essential to manage these challenges effectively.
Early Planning: The Key to Post-Peak Returns Success
Getting ahead of the game is critical for retailers when it comes to strategic planning for returns management. The surge in returns, particularly after peak seasons, calls for proactive measures well before the rush begins.
Initiating discussions early in the year about post-peak returns is vital. This early foresight allows for:
- Effective strategy development: Early planning enables the development of robust strategies to handle the increased volume of returns efficiently.
- Resource allocation: By anticipating the post-peak returns volume, retailers can allocate the necessary resources in advance, ensuring a smooth process when the time comes.
Incorporating post-peak returns into strategic planning meetings at the start of the year is not just about being prepared; it’s about transforming post-peak challenges into opportunities for growth and customer satisfaction. This forward-thinking approach is essential for retailers aiming to stay competitive and maintain customer loyalty in today’s retail landscape.
How Veho Helps You Optimize Returns Management
Veho revolutionizes the returns process for retailers, focusing on efficiency and customer convenience:
- Efficient Doorstep Returns: Veho's Doorstep Pickup simplifies the process for customers. This convenience significantly speeds up returns, enabling quicker restocking and resale for retailers.
- Sustainable practices and consolidation: Veho minimizes packaging waste in returns, reducing environmental impact. Veho consolidates returns at its warehouse, offering retailers cost savings and less packaging waste with boxless, packageless pickups.
- Customer-friendly policies: With Veho’s Doorstep Pickup customers enjoy a hassle-free experience, boosting satisfaction and loyalty.
Partnering with Veho for Doorstep Pickup transforms this aspect of retail into a strategic advantage, aligning efficiency, sustainability, and customer satisfaction.
Connect with us to learn more about Doorstep Pickup today.