How Retailers are Preparing for More Returns Than Ever This Holiday Season

Right now, retailers are focused on getting items to customers in time for the holidays. But come January, they’ll have a new headache to contend with: processing all of the items that ultimately get returned.

Some research has shown that items bought online are more likely to be returned than those bought in store, with online apparel having some of the highest return rates. Given that people are expected to do more of their holiday shopping online this year in lieu of visiting a store, retailers are also bracing for the likely scenario that people will want to make more returns this year than ever before.

To prepare, many retailers have extended their return policies, giving customers more days to send back unwanted items. They’re also trying to give customers more ways than ever to return items. Retailers like Lululemon and Levi’s have made it easier for customers to initiate returns within their mobile apps, while returns processing startups like Happy Returns and Narvar have struck partnerships with companies like FedEx and Walgreens so that shoppers can make returns at more places than just a retailers’ store.

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When most essential retail stores closed during the spring months, some customers waited to make returns until stores opened back up again. That created a huge backlog of returns that retailers had to get through, and their customer service lines were flooded with customers checking on the status of their refunds. So much so, that some retailers had to hire more customer service workers to keep up — in June, Wayfair announced plans to hire 500 more customer service workers, while Lululemon temporarily shifted 500 store workers to its customer service center, the Wall Street Journal reported at the time.

Now, retailers want to avoid a repeat of the spring — and to ensure that the money they have to spend shipping and processing returns doesn’t eat too much into their margins.

“Merchants are under enormous pressure to cut costs,” David Sobie, co-founder and CEO of Happy Returns said in an email. “Returns are getting more expensive with Covid-19 surcharges, holiday surcharges and annual general rate increases.”

The most cost-effective way for retailers to process returns is for an item to drop it off at its own store. But that’s not convenient for every customer. So some retailers are allowing customers to make in-person returns at other stores. Amazon, for example lets its customers return items at Kohl’s. This was a trend that has picked up the past few years — but it has accelerated in the lead up to the holidays this year…   ModernRetail

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