How Holiday Gift Returns Affect the Supply Chain
Rebecca Fox

November 2, 2023

The increased volume of returns that comes in after the holidays can have a significant impact on the supply chain, so it’s important to take proactive measures to streamline your supply chain and handle holiday gift returns as efficiently as possible.

The Impact of Returns on the Supply Chain During the Holidays

63% of customers prefer to do their holiday shopping online, so high post-holiday return volumes can have a considerable impact on eCommerce supply chains in particular.

Keep these things in mind when considering how holiday returns may affect your supply chain:

Increased Workload for Warehouses

During the holiday season, warehouses are already operating at full capacity, so when returned items start to come in, it can add a significant workload for the warehouse staff, making it difficult to process orders and ship new products on time.

Returned items need to be unloaded, sorted, inspected, and restocked. However, if your warehouse workers are still busy fulfilling a high volume of new orders coming in each day, trying to handle elevated volumes of returns and new orders simultaneously can result in serious bottlenecks.

By addressing the increased workload and making some smart adjustments such as using a warehouse management system together with a returns management system (more on this later), your warehouse will be able to smoothly handle the holiday returns influx while continuing to meet order fulfillment goals.

Overstocking

Carefully managing your inventory levels is crucial during the busy holiday shopping season. While you’ll need to order enough products to meet customer demand and accommodate expected returns, avoid the temptation to overstock substantially. Too much excess inventory can lead to reduced warehouse capacity, increased costs, and reduced profits.

The implications of overstocking include:

  • Financial drain – Overstocking limits your business’s financial flexibility for other critical investments by locking up a lot of capital in unsold inventory.
  • Profit loss – If excess inventory remains unsold after the holiday season, you may have to discount these items, reducing your profit margins and impacting your bottom line.
  • Space issues – Overstocked items can clutter your warehouse, causing space constraints and complicating logistics for both returns and new inventory.

To avoid overstocking this holiday season, take time to analyze your historical return rates for different products. Study past trends to determine realistic return rate forecasts for this year, and then build a buffer stock level just slightly above those expectations.

Additionally, using inventory management systems can help you keep track of your stock levels and return inventory. When combined with ReturnGO’s exchange stock management tools, you will be able to make data-driven decisions, ensuring that you have the right amount of inventory on hand and reducing the risk of overstocking.

Increased Costs and Delays

Returned items need to be processed, inspected, repaired, and restocked, which can slow down your order fulfillment workflows and increase your costs. The resulting delays in new order turnaround times and shipping speed can impact your customer satisfaction levels as well as your bottom line.

While costs and delays are common challenges associated with holiday gift returns, a well-planned approach, powerful technology, and process optimization can turn these challenges into opportunities for a more cost-effective and efficient supply chain.

Holiday gift returns lead to unexpected expenses for several reasons:

  • Labor costs – Processing returns requires additional labor for tasks such as inspecting returned items, restocking, and managing reverse logistics, increasing payroll expenses during the busy season.
  • Repackaging and refurbishment – Some returned items may need to be repackaged or refurbished before they can be resold. These processes involve additional materials and labor costs.
  • Transportation costs – Shipping returned items back to your warehouse can incur transportation expenses, especially if you offer free return shipping for gifts.
  • Restocking and inventory management – Having a designated return area in your warehouse can increase storage costs, and make inventory management more difficult.

How to Mitigate the Impact of Holiday Returns on the Supply Chain

While holiday returns bring a certain set of challenges, they’re also an opportunity to stand out by providing a smooth and transparent return experience.

By taking proactive measures like setting clear holiday return policies, investing in a returns management system, and creating transparency throughout the supply chain, you can streamline the process of holiday returns and ease the burden on your supply chain.

Here are a few things that you can do to streamline the holiday return supply chain:

Set Clear Holiday Return Policies

Clarity is the name of the game. When customers know exactly what to expect from the gift returns process, they’re more likely to choose your eCommerce store for their holiday shopping. 

52% of customers say that the return policy affects where they’ll do their holiday shopping, so make sure to create a dedicated holiday return policy to eliminate any ambiguity and set a firm foundation for customer expectations. 

Your holiday return policy should be transparent, addressing important aspects such as the timeframe within which items can be returned, the specific conditions items must be in for eligibility, and a step-by-step guide on how customers and gift recipients can initiate a return.

Keep in mind that people often begin buying holiday gifts as early as October or November, and if your return window is only 30 days, it may be too late to return the gift by the time it gets to the recipient.

Consider offering an extended return window during the busy months. For example, Amazon’s return deadline is January 31 for orders shipped between November 1 and December 31, giving gift recipients plenty of time to return holiday gifts.

A clear holiday return policy demonstrates your commitment to their satisfaction and boosts your reputation. Clear holiday return policies convey your dedication to a seamless shopping experience, even in the face of returns, which can be transformative for your store’s long-term success.

Make Gift Returns Easy

Make it easy for gift recipients to return items. The more effortless the return process, the happier everyone will be. 

79% of gift recipients return at least some of their holiday gifts. If you don’t offer easy online gift returns, gift recipients will be stuck either asking for a regular refund (which awkwardly goes back to the gift giver) or being stuck with something they can’t wear or use.

Only 27.72% of gift recipients say they’d tell someone giving unwanted gifts to stop next year, 42.25% may comment on the unwanted gifts, and 30.04% won’t say anything, because after all, it’s the thought that counts.

Put the gift recipient in control by enabling them to return their gift online, without needing to go through the gift giver or contact your support team. Let gift recipients easily and discreetly get a refund in the form of store credit or a gift card that they can use to get an item that they’ll actually use.

Use a self-service return portal like ReturnGO’s to simplify the gift returns process and let gift recipients return holiday gifts discreetly, without the original buyer ever knowing. This respects the privacy of gift recipients while giving your eCommerce store a unique selling point during the holidays.

The easier and more automated the gift return process, the more efficiently you can handle the holiday season, resulting in long-lasting, positive impressions that will benefit your eCommerce business long after the holidays are over.

Use a Returns Management System

To streamline your supply chain and minimize the disruptive impact of holiday returns, consider implementing a returns management system. 

By automating the returns process, you can reduce manual labor and ensure that returns are handled swiftly and accurately, which is crucial during the peak holiday season when the volume of returns can be overwhelming.

ReturnGO is a great solution for managing your holiday returns and exchanges. It provides advanced data and insights that can help you streamline your supply chain and minimize the impact of holiday returns. 

ReturnGO can also help ensure that your warehouse, shipping carriers, and customer service team are all in sync with the relevant information. This synchronization is essential for maintaining a smooth supply chain during the holiday season, as it minimizes disruptions and keeps your business running smoothly.

Use ReturnGO to get real-time updates on your inventory and make better business decisions based on the data provided, thus reducing the impact of holiday returns on your supply chain and improving the customer experience.

Chat with our experts to boost your customer return experience and LTV today.

Create Transparency Throughout the Supply Chain

Transparency is the key to a well-functioning supply chain, particularly during the holiday season. When you optimize the supply chain in both directions, you lay the foundation for a smoother process that can minimize future issues and provide a better customer experience. 

One effective approach to achieving this kind of transparency is by integrating a warehouse management system into your logistics process. This enables you to continuously and accurately track incoming and outgoing inventory. 

Additionally, by integrating your warehouse management system with your returns management system, you can ensure that your warehouse, shipping carriers, and customer service team are all in sync with the relevant information. This can help streamline the supply chain and minimize the impact of holiday returns on your logistics.

With this level of transparency, you can make better business decisions as well as give your customers real-time information about what’s happening with their orders and returns.

Take Proactive Measures to Streamline Your Returns

The holiday season, with its surge of returns, can definitely have an impact on the supply chain. By implementing the strategies outlined above, you can effectively manage this challenge and turn it into an opportunity. 

From clear return policies to user-friendly return processes and the integration of cutting-edge returns management systems like ReturnGO, there are many things you can do to optimize your supply chain.

So as the holiday season approaches, use these proactive measures to transform returns into a strategic advantage for your business, ensuring a smoother and more efficient supply chain while improving the shopping and return experience for customers and gift recipients alike.

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