Four Returns Management Trends for Peak Season 

Merchants face many returns management challenges in 2024. Total returns for the retail industry amounted to $743 billion in merchandise in 2023, which prompted many retailers to implement new returns policies this year. With peak season on the horizon, eCommerce merchants will soon face increased returns out of the holidays as well. 

Radial recently hosted a webinar on returns management with eHouse Studio and Loop Returns to discuss key returns management trends and insights. Here are four trends to consider ahead of 2024’s peak season. 
 

The current economic outlook is uncertain. Many merchants are focusing on balancing costs across supply chains—including returns management.  
 
But retailers must still prepare for potential surges in holiday sales. In fact, the 2024 holiday season will see eCommerce sales grow at fastest rates since 2021, according to EMARKETER. 

Brands are increasingly forced to strike a delicate balance between effective cost management and delivering great customer experiences. Many eCommerce leaders examine the full purchase journey to discover new opportunities to drive customers’ trust and loyalty. That includes returns management. Many brands can unlock cost savings by automating returns processes—all while still retaining customers. The result: happy shoppers and repeat purchases. 

Consumers are returning items in greater volumes. Retail Dive found that 87% of consumers purposefully order extra items to try on at home. They then return what they do not want. Retailers call this trend “bracketing.”    

For retailers, this means that margin calculations, inventory management, and operations workflows become more unpredictable. But consumers like bracketing. They avoid in-store fitting rooms and confusing online charts for the comfort of at-home fittings. Per recent Radial research, 64% of consumers make returns in apparel, shoes and accessories—more often than any other product. 

Some retailers are considering whether to implement return fees ahead of peak. Many brands waived or modified returns fees in the past to build customer loyalty and create repeat sales. Now, retailers are caught between managing the cost of returns via returns fees and risking customer relationships. Will this cost retailers their customers’ loyalty? 

According to Loop Returns panelists on the recent Peak Returns 2024 webinar, results may vary.  Many merchants working with Loop discover that their customers are willing to pay reasonable returns fees, if the returns experience is good.  

In contrast, per recent Radial research, 48% of consumers claim they will avoid returns if there is an out-of-pocket cost. Another 43% of consumers are hesitant to pay returns fees but may consider it depending on the cost of returns. In short, retailers may need to assess their customers’ price sensitivity, along with other reverse logistics costs, to develop appropriate fee policies. 

Retailers can implement returns fees while also adjusting their returns management process holistically. By focusing on a great returns experience, leveraging returns partners, emphasizing communication, and even adjusting fees based on relevant customer data, they can manage returns costs more effectively—and retain loyal customers. 

Finally, many retailers are preparing for the rise of returns fraud and policy abuse ahead of peak season. Returns fraud and policy abuse occurs when a customer or bad actor attempts to defraud a merchant or take unfair advantage of return policies. Cases of both fraud and abuse are on the rise. Per recent Loop Returns research, 53% of US merchants said that returns fraud is the biggest challenge to their business followed by policy abuse. 

Merchants can prepare for both fraud and policy abuse this peak season by tightening returns eligibility criteria or requiring more detailed information at checkout. They must do so while still creating positive returns experiences for loyal customers. For example, retailers can create eligibility tiers via loyalty or rewards programs. Loyal customers may receive more lenient returns policies, and retailers can better protect themselves from potential returns abuse. 

Returns are a difficult but crucial part of any successful eCommerce business. With peak season on the horizon, Radial is here to help.  

Radial has been helping retailers streamline returns management for more than 30 years. We have the technology, partners, and operational expertise to set up a program that is customized for your business needs and makes the experience as easy as possible for your customers. Returns are inevitable, but we can reduce the costs and hassles associated with the eCommerce returns process. 

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