After the Christmas high comes the returns, here’s how to break the cycle

Christmas and end-of-year sales are big business for retailers but they also drive enormous returns.

The high volumes of unwanted gifts and remorseful sale purchases have implications beyond the bottom line – the environmental impact of emissions, repackaging and damaged goods is becoming excessive.

The Australia Institute projected an estimated $1 billion worth of unwanted Christmas gift waste in 2024, with 27 per cent of Australians expected to receive gifts they will not use.

The rise in post-Christmas returns can be attributed to several trends, with the growth of eCommerce being a leading factor. Online shopping has made it easier than ever for consumers to purchase goods, and consequently, return them,” Nicholas Woodward, country manager of Pack and Send, told Inside Retail.

“Unlike in-store shopping where items can be inspected or tried, online purchases can fail to meet expectations, resulting in higher return rates,” he added.

Christmas chaos

Retail’s issue with returns is not exclusive to Christmas but there are some unique factors around the holiday season that exacerbate the problem, including festive packaging.

According to Woodward, both businesses and consumers need to reevaluate their packaging choices and consider the environmental consequences of excessive packaging materials that often come with the celebratory Christmas period. 

“The consequences of overpackaging are huge. A lot of the packaging typically used during the festive season isn’t biodegradable, so it sits in landfill for years,” explained Woodward.

“Even recyclable materials, while better for the environment, require energy-intensive processing to reuse,” he added. Overpackaging means bigger parcels and more space taken up on delivery trucks and ultimately more fuel is required to ship them, particularly during the holiday season when volumes skyrocket”.

“Retailers can be more sustainable in the returns process by reducing packaging waste, using eco-friendly materials and not over-packing items. This helps lower material use and reduce space in delivery trucks, ultimately lowering emissions.”

Beyond the decorative packaging, Christmas also comes along with a delivery deadline for many retailers as customers start to expect rushed shipping with last-minute orders.

“Before Christmas, there’s this rush for express shipping – everyone is trying to get their gifts delivered in time and speed often takes priority over sustainability,” Woodward shared.

“After Christmas, the dynamic changes completely. We see a massive wave of returns, often from people changing sizes, or returning things they didn’t need,” he continued.

There has already been an increase in retailers experimenting with different returns policies and protocols – sometimes streamlining the process for customers and some deterring returns altogether.

The Iconic continues to have a 30-day free returns policy but extends the return window for the Christmas season, to ensure customers who bought gifts ahead of the Christmas rush can return or exchange them.

Meanwhile, Asos rolled back its free returns policy for change-of-mind purchases in 2023 – raising the price to $8.99 – and is still holding strong despite feedback from customers who previously enjoyed ‘wardrobing’.

Creating order  

If retailers are looking to make a change in their shipping logistics and improve returns, Woodward encourages them to lead with transparency and follow with incentives.

“Share the data and show your customers what happens to returned items and their environmental footprint – simple campaigns on email, social media or even at the checkout process can highlight these facts,” Woodward elaborated.

One-day shipping is one of the largest culprits in contributing to emissions during the Christmas and end-of-year sales period due to its heavy reliance on air transportation.

“During high-return periods like Christmas and the end-of-year sales, businesses can encourage customers to choose slower, consolidated shipping options,” Woodward encouraged.

“Offering small discounts or incentives for choosing no-return options or eco-friendly packaging can work well,” he followed.

“Customers are often open to it if they know it’s a more sustainable option, and it can also help take the pressure off the logistics network.”

While returns in retail are inevitable, there are steps retailers can take to mitigate the volume not just during the holiday season but all year round.

“Setting the right expectations through detailed product descriptions, accurate images and even videos can go a long way,” said Woodward.

“Offering streamlined customer support such as live chats for pre-purchase queries can help customers make more informed choices”.

These solutions are not only designed to deter future returns but also reduce the impact on retailers’ bottom lines as well as the environment.

“When everyone plays their part, the impact can be significant,” concluded Woodward.

The post After the Christmas high comes the returns, here’s how to break the cycle appeared first on Inside Retail Australia.