Top-Five Strategies For Avoiding An Avalanche Of Post-Holiday Returns

The holiday sales season is “make it or break it” for retailers everywhere with many of them making up to a third or even a half of their yearly revenue during this time. This year’s Black Friday set a new record with shoppers spending $7.4 billion online, the second largest Internet shopping day ever right after last year’s Cyber Monday’s $7.9 billion. With online sales up about 20% from last year, Christmas sales are on track to break records as well.

With high sales inevitably come high returns. In the U.S. alone returns are expected to cost retailers $550 billion in 2020. Fashion, an industry already known for some of the highest return rates online, is forecasted to be the second-most-shopped category this holiday season, which means that fashion online-retailers will be hit extra hard.

Online retailers are bracing for the avalanche of returns and deploying various pre- and post-purchase strategies to minimise the negative impact of returns on their business.

1. Helping the shoppers find the right size

The wrong size and fit is the number one reason for returns in fashion e-commerce accounting for 52% to 72% of all returns. Sizes differ dramatically between brands and even within one brand. While trying to navigate the complexities of sizing, shoppers often end up either buying an incorrect size or buying several sizes to try at home.

One way retailers are trying to address this issue is by providing more information about their products and how they may fit customers. For example, UnTuckit, displays fit information about its shirts and suggestions on which shirt might be a better match for a customer depending on their body type. Gender Free World, a brand designing gender neutral clothing, provides even more detailed guide to ensure that shoppers pick the right fit and model.

Many retailers today are turning to sizing and fitting technology services to help their shoppers and avoid excessive online returns. The solutions vary in price, simplicity of use, input required from shoppers, integration and maintenance resources required. It goes from interactive size charts based on shopper’s measurements to mobile applications using augmented reality and 3D scans.

New generation of sizing and fitting technologies rely on big data and sophisticated machine-learning algorithms to ensure that the right size recommendation matches not only shopper’s body shape but also their unique style.

2.  Improving gift buying

With an estimated 77% of consumers planning to return some of their gifts, according to a survey by Oracle, improving gift buying can be a great strategy for retailers.

Brands like Allbirds are embracing gift certificates and take it to the next level–one can buy a digital gift certificate and let their loved ones pick the size, color and a model of their environmentally-friendly sneakers. Other retailers, like Target and Uniqlo are employing a similar strategy by using GiftNow platform. This approach combines a personal thought and touch while avoiding unfortunate mistakes in sizes, colors and styles.

Improving the exchange process is another way to mitigate high returns of gifts. Customers are likely to end up returning an item if an online-store doesn’t offer a hassle-free and an easy exchange flow.

3. Knowing which products to promote and how

Getting insights into customers’ return behaviour can be valuable for retailers in the short- and long-term.

Ash & Erie, an apparel company that designs, manufactures, and sells everyday clothes for shorter guys, gathers regular post-purchase feedback from its shoppers. Valuable insights, like whether sleeves were too long, or a shirt was too tight in a belly, as well as the overall satisfaction with a product, allow the brand to improve its offering and build a stronger relationship with its customers.

Birdies, a direct-to-consumer footwear company, through customer feedback has determined that its Heron slippers were too narrow, causing high returns. The brand adjusted the design and the fit of the slippers and was able to address the issue.

Analysing shoppers return habits can also help identify high-return products, that disproportionately contribute to returns. This year, there has been a decrease in promotions of products with hard-to-determine sizing. According to Edited, 18% fewer footwear products and 14% fewer bottoms have been actively advertised over Black Friday. At the same time accessories, that do not have the same sizing problem have accounted for 23% of all fashion discounts.

4. Having a clear, coherent and generous returns policy

According to a survey by Radial, 51% of U.S. digital buyers will avoid purchasing goods from online retailers that do not offer free returns. Generous and clear return policies, including free returns are key to customer conversion.

The return policy should include information about the return channels, prices and whatever limitations may apply. It should also comply with local legal requirements relating to refunds and returns.

There is definitely a wide range of returns policies in the e-commerce space. From the most generous—like Zappos which offers a 365-day, free two-way shipping and return policy—to other online retailers that merely comply with the legal requirement of the shopper's locale.

5. Returning in store beats other options

Omnichannel retailers have a definite competitive advantage over pure play online retailer. For instance, when you buy from Zara online and would like to return, all you need to do is pop in to the local Zara in your area. This online-to-offline returns flow not only mitigates logistical costs for the online retailer, it also gets the returned purchase back faster to the shelf for resale.

Many online retailers opt for return spots to facilitate the returns process for their shoppers.  Return spots may be dedicated points, or even corners or stands facilitated by local retailers within their existing business.

The returns spots provide a physical space wherein the shoppers can bring in their returns, easily and without fuss. It is a near hassle-free drop in service that will not antagonise the shopper and make them avoid online shopping because of the fear of needing to potentially endure the returns process in the future.

The data speaks for itself

The new generation of shoppers grew up expecting easy and free returns. 62% of shoppers would buy again from a brand offering free returns or exchanges and 69% of shoppers are deterred from buying online by having to pay for return shipping.

High returns is a problem that online retailers, especially in fashion, can no longer ignore. Every return comes at a high price to a retailer. Shipping costs, processing and unpacking items, dead inventory, add up and sometimes cost retailers as much as 20% of their revenues.

Returns are not only costly, they’re also one of the key drivers of negative environmental impact. Worldwide, approximately 17 billion items are being returned every year. This totals to 4.7 million metric tons of CO2 emitted yearly, and if we are able to decrease that figure with just 10%, it would be the equivalent of the power used by 57,000 U.S. homes for an entire year.

With the right strategy and tools brands and online retailers can combat high returns without compromising on shoppers’ expectations and experiences. From sizing and fitting solutions to facilitating returns in stores is being utilised to move the needle and offer a safe passage through the hurricane of returns.

Ronit Mayer, a writer, entrepreneur and cofounder of OtailO, a smart and sustainable end-to-end AI based solution for online product returns management, contributed to this post.

This post was originally published on Forbes.com.