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How to revamp your holiday returns policy

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With the holiday season now in full swing, retailers will soon be bearing the brunt of holiday return behaviors. While commentators frequently point out that consumers love playing hard and fast with return rules, this is nothing compared to what can happen during the holidays.

The truth is that managing returns during the holidays requires a very different approach to the rest of the year. With return rates skyrocketing as customers return unwanted gifts, brands need to make sure that their return policy and return workflows can accommodate the quirks of the holiday season.

So, what does a return policy fit for the holiday season look like?

In this blog, we’re going to dive into the world of holiday returns – and how you can prep your return policy to handle the vigors of peak season.

Why does your return policy need adjusting for the holiday season?

Return management can feel like a hassle at the best of times, even without changing key parts of your return policy. So, why do you need to go through the time and effort to change your store’s return policy for holiday returns?

While this might seem like overkill, there are some very good reasons why return policies should be adjusted to accommodate the quirks of peak season:

Return volumes are higher during the holidays

Quite simply, return management during peak season is an entirely different beast than the rest of the year. The array of holiday sales events taking place during Q4 drives a high rate of online purchases – and therefore a high rate of returns. According to the National Retail Federation, 17.8% of merchandise sold during the 2021 holiday season ended up being returned, equating to $158 billion worth of merchandise.

In sum, brands can experience a massive financial drain without a solid holiday returns management strategy. As returns pile up, this can result in lengthy backlogs in return and exchange processing and refunds, which in turn affects the customer experience. Adjusting your holiday returns policy to take pressure off your operations team and make it easier to retain revenue.

Shoppers are holding onto merchandise for much longer

In a typical e-commerce post-purchase experience, the person shopping online receives their online purchase, immediately tests or tries it out, and then decides whether they want to keep it or return it. However, this workflow looks very different during the holiday season.

A holiday return typically takes place a long time after the initial purchase date because the person making the purchase is not the intended recipient. By the time a person finally receives their gift and opens it for Christmas day, the return deadline at the retailer may have passed.

For this reason, a standard policy for online returns might not be able to accommodate the desire for gift recipients to exchange or return purchases. Holiday return policies are designed with this dynamic in mind by covering items purchased during certain sales events or after a specific date, which prevents holiday gifts from being penalized.

Consumers want to be able to return/exchange holiday gifts easily

A standard policy may not be designed to make the return process easy. Whether it’s a short return period, a lack of in-store returns for purchases made online, or offering store credit only, there are dozens of ways that retailers try to disincentivize customers from returning items.

However, this approach can backfire on brands. According to Oracle, 42% of consumers say a difficult exchange/return policy defines a poor omnichannel shopping experience, while 51% of U.S. online shoppers avoid buying from retailers who don’t offer free returns.

During the holidays, giving shoppers the flexibility to choose how and when they return items is one of the best ways to build brand loyalty that outlasts the New Year. Most purchases are forgotten quickly unless the retailer makes an effort to showcase a point of difference, and a generous holiday returns policy is one way to stand out from the crowd.

Designing a holiday-centric return policy: 5 tips for success

Lengthen your return deadline

Although many retailers consider the holiday season as starting in early December, consumers are thinking about holiday gifts long before this. Larger numbers of shoppers are starting their holiday shopping earlier this year to avoid further inflationary price hikes. According to 4Over’s recent survey, 31% say they plan to start their holiday shopping in early November, while 23% plan to buy gifts as soon as possible, which could mean as early as October.

If return windows aren’t lengthened to accommodate holiday returns, a lot of customers this year are likely to miss the deadline. It’s for this reason that Amazon’s holiday return window Kicked in on October 11th – quite a way before Black Friday and Cyber Monday.

To avoid this, make sure you give consumers plenty of time to receive their gift and decide what they want to do next.

Consider whether or not to pay for return shipping

Consumers shopping online are often forced to buy products untried or untested. This means they expect brands to pay for all costs associated with a return – including shipping.

But return rates are much higher during peak season. If merchants are also paying for outbound shipping, this will quickly erode the profits of small e-commerce sellers.

Instead, try looking for a middle ground. For example, if a product needs to be returned due to damage or human error i.e. picking the wrong size, paying for return shipping is a nice gesture to reflect that their experience was not up to standard. Likewise, consider offering return shipping for exchanges only to give your customers an incentive to return or opt for a replacement item.

Embrace self-service returns

Brands want to keep an eagle eye over the returns process to identify fraudulent behavior. But having your staff micromanage returns can be a disadvantage for most retailers during the holiday season.

As return volumes increase, you’ll have to seriously scale up your customer service efforts to avoid manual processing delays. Moreover, having the returns workflow managed by a tedious back-and-forth of emails can result in missed opportunities to retain revenue.

A self-service returns workflow puts the journey in the hands of the customer by enabling them to direct the workflow themselves. Whether that means in-store returns or online, allowing shoppers to initiate a return themselves takes a lot of pressure off your customer service team.

And by offering a straightforward returns process, customers are much more likely to shop with your brand after the holiday season: 96% of consumers would return to a retailer that offers an “easy” or “very easy” return policy!

Include a gift receipt with all holiday orders

If someone is receiving a gift from a loved one, it’s easy for the original receipt to be lost or thrown away by the purchaser. This causes a lot of issues for the recipient if they want to return or exchange an item, as many stores don’t allow returns without proof of purchase.

Including a gift receipt with all purchases made during the holiday period ensures that gift recipients can easily return items or receive store credit. Usually, a receipt will include an order number, the item(s) purchased, and the return deadline so that recipients understand what the terms of the holiday return policy are.

Implement return automation

Every time a customer service representative has to undertake a repetitive action to keep a return request moving is a missed opportunity to automate with the right software solution.

Returns automation enables brands to enforce their holiday returns policy, approve returns, and even suggest alternative products that customers can exchange returned items for – all without needing the involvement of a live agent. Instead of needing prior authorization, shoppers can simply enter their order number in the online returns portal and select which items they would like to return, exchange, or ask for store credit.

Return software such as Loop, Returnly, and Happy Returns by PayPal all offer streamlined automation solutions for the busiest season, allowing your customer service representatives to focus on more complex service requests during the holidays.

Make holiday returns easy in 2022

Return management is a headache for brands large and small. While tightening up your returns policy during the holiday season might help you manage return volumes in the short term, it’s not a long-term strategy to build brand loyalty. By aligning your return policy with holiday shopping behaviors, you can meet consumer needs and give shoppers a streamlined returns experience that promotes repeat purchasing behavior far into the future.

Want to find out more about managing fulfillment and reverse logistics during the holiday season? Check out Ryder E-commerce by Whiplash’s full holiday fulfillment guide for the best tips and tricks for a profitable peak season.

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