Building a Returns Management Strategy for the Holiday Season

With the holiday shopping season quickly approaching, retailers should be preparing not only for the surge in sales but also the surge in returns. Without careful planning, returns can have a serious impact on your supply chain-including eroding margins, complicated inventory flow, and added stress to your warehouses.

For every $1 billion in sales, the average retailer incurs $145 million in merchandise returns. In terms of holiday sales retailers can expect to see an average of 14.5% of merchandise returned, equating to nearly $743 billion.

The elements of a successful returns management strategy

Companies that improve their returns management strategy can enhance the consumer experience while not disrupting forward supply chain operations, minimizing business impact of returns.

A strategic returns management process focuses on three key elements: convenience, visibility, and control.

Returns convenience

Consumers expect the returns experience to be simple, straightforward, and free. They also expect speed.

One of the easiest ways to improve speed is moving to a more automated workflow. First, make sure you're collecting meaningful information from your customer about the product being returned, such as condition and reason for return. Using the data, an automated system can quickly determine whether an item coming back to your warehouse is suitable for resale or needs to be scrapped, repaired, or sold in a secondary market.

Automating decisions based on key criteria like item condition, raw material cost, and retail value removes the potential for human error and vastly increases the speed of operation. Returns can then be categorized into disposition lanes and moved promptly to the correct location.

Returns visibility

Of all the elements of returns management, visibility may be the most important. Retail and customer returns can be unpredictable, seemingly following no obvious pattern. Visibility delivers data on the types of items being returned, if there are packaging or quality issues, and which items are moving to inventory, liquidation, or disposal. Knowing that data helps you keep closer tabs on items as they enter transit.

Once an item arrives, the importance of visibility continues. From confirming that the item being returned is correct to knowing the contents of each package, visibility to product is crucial to preventing unnecessary inventory loss and avoiding penalties for breaking disposal regulations.

Returns control

Control and visibility are closely intertwined parts of reverse logistics. Control begins with determining which items should come back to you. Having every return sent to your dock or warehouse can unnecessarily tie up operations. Controlling which items go back to your warehouse and which can be disposed of or donated will keep your warehouse running smoothly and focused on your forward supply chain.

Maintaining strict control over the reverse flow of items also keeps you in compliance with regulatory bodies. By clearly stating what needs to be done with specific goods, you reduce the risk of improper disposal, internal costs, and the potential for fines.

Three tips for the upcoming holiday season

If you deal in retail goods or ecommerce, these tips will help you run a smooth and successful reverse logistics strategy during the holiday season and throughout the year.

1. Prepare for an increase in returns

Though it may seem obvious, being prepared for a greater number of returns can save your business a lot of money and frustration. Properly planning for an increase in returns ensures you maintain convenience, visibility, and control in your supply chain. This may require hiring additional warehouse workers, engaging with a third-party logistics provider, or putting your customer service team through additional training.

2. Focus on customer service

Customer service can be one of the most overlooked elements of any good returns management strategy. From the consumer side, the returns process can often feel difficult and frustrating. To leave a good impression and make customers feel appreciated, be flexible and understanding. Whether a customer represents a single purchase or a pallet's worth of goods, great customer service helps ensure repeat business. According to Invesp, 92% of consumers will purchase again if the return process is easy.

3. Clearly communicate your returns program

The more clearly you communicate your returns program, the smoother it will be for your customer. A clear returns program does more than just satisfy customers - it leads to greater return control and increased visibility of returned items. If your plan is laid out clearly, it can even reduce the burden on your carriers and customer service team by streamlining the amount of times freight needs to be touched.

Need help building your returns management strategy?

Putting together a comprehensive and effective returns strategy can feel overwhelming. While the number of variables, data points, and potential curve balls can seem daunting at first, the right level of expertise can simplify the process.

If you want help developing a returns management strategy, C.H. Robinson experts can help. We provide a global suite of services-including reverse logistics, return shipping solutions, LTL, and consolidation-to help you build an effective returns management strategy. For help this holiday season, contact us today!

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