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Preparing for the Post-Holiday Return Surge

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During the pandemic, ecommerce returns majorly impacted retailers’ profit margins. As customers return to in-store shopping, retailers are continuing to face an increase in returns from online and in-store sales. This holiday season, consumers who frequently make returns may be in for a surprise. Many retailers are reportedly implementing new return policies to mitigate the increase in fraudulent returns and exchanges, with some even banning returns altogether.

Holiday shoppers frequently return items purchased during major sales periods like Black Friday and Cyber Monday. In these cases, the return cost can often exceed the value of the item, leading to a loss in profits for retailers. To mitigate the financial repercussions caused by returns, retailers will need to make preparing for the surge in returns a top priority. This article will touch on the impact in-store and online returns make to retailers and will provide recommended strategies to offset the surge in returns this holiday season.

The Cost of Processing Returns

According to the National Retail Federation, over $100 billion was estimated to be lost to return scams in 2023 alone. Returning a purchased product puts more money behind the product, increasing the price per product sold. For retailers, this means that as more returns are made, the cost per product is raised.

Online purchase returns create a different issue, as each year customers return up to 30% of products bought online, leading to 24 million metric tons of CO2 emissions. Since consumers can’t physically interact with the product, misconceptions about the fit, quality and appearance can be easily made. The packaging required to safely deliver online orders creates packaging waste, which negatively affects our environment as a large portion of returns end up in landfills.

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Unmanaged returns create a significant cost associated with damages during transportation or storage of returned items, like clothing, electronics or plastic items. Retailers unable to manage returned goods effectively and restore them to perfect conditions for their customers end up either selling these items at a significantly reduced price or disposing of them entirely. By working closely with return management and reverse logistics service providers, returned items can be refurbished and resold on secondary marketplaces, reducing product waste.

Return Policy Abuse

Returning items can be a logistical disaster and cost burden for ecommerce businesses. Customers are attracted to free return shipping, refunds, and no questions asked policies. These rules are often exploited to benefit the consumer, impacting profits and devaluing inventory. Commonly used tactics for return policy abuse include “wardrobing” (returning used items), using fake receipts for stolen goods and switching high-value items with knockoffs.

Wardrobing is a particularly unique form of fraud, as tags on items can be easily hidden or removed and reattached without evidence of tampering. A 2020 survey by Secure Authentication Brands LLC reported that 37% of respondents admitted to wardrobing, many of whom are knowingly defrauding the system. Another popular trend among social media influencers is “snap-and-send-back,” where items are purchased for photoshoots before immediately being returned for a full refund.

Retailers that have tried to prevent these behaviors have begun implementing strategies to account for frequent and fraudulent returns. These include adding new clauses to return policies, establishing fees for return processing and, in some cases, announcing that a small fraction of frequent returners will be banned from any exchanges or returns. For shoppers looking to make returns, it will be important to understand the policy in each store to avoid surprises.

Return Management Strategies

Leveraging technology can create more efficient processes for purchasing and making returns. By analyzing customer data, retailers can better understand which items are being returned the most, helping minimize the financial losses. Order management platforms can be used to track receipts and assess inventory levels, while tamper-evident return tags can protect against wear and return fraud, tag switching and “snack-and-send-back”.

Changing the return process can improve customer satisfaction, increase brand loyalty and boost sales. Understanding why customers make returns is key to creating processes that ensure business profitability. This can help retailers identify trends that lead to repeat purchases and higher customer satisfaction, leading to return processes that are both efficient and aligned with customer preferences.

The retail industry is in an exciting place of new possibilities, and mastering the return process will be critical for retailers this holiday season. Converting refunds into exchanges, store credits or partial refunds are other ways to increase customer loyalty while efficiently controlling inventory. By leveraging customer insights and expectations, retailers can grow their customer bases and improve the shopping experience for everyone.


Georgia Leybourne is Chief Marketing Officer at Linnworks. She brings 15 years’ experience in supply chain and logistics and joined Linnworks from Transporeon, having previously worked for Manhattan Associations. Leybourne has significant experience in digital commerce and has a diverse background that includes marketing, customer service, sales and project management. She’s dedicated to creating frictionless consumer journeys, enhancing revenue for retail, B2B wholesale and DTC operations. Leybourne holds a BA in Business Studies, a DipM, and is a Fellow of the Chartered Institute of Marketing.

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