Episode 18: Managing Excessive Returns After Year-end

Announcer: Welcome to this episode of “60-second Retail” - a BDO podcast keeping you in-the-know on events and trends in retail and consumer products industry impacting your bottom line, in just a few short minutes.

Natalie: Hello, my name is Natalie Kotlyar. I am the National Leader of the Retail and Consumer Products industry group at BDO USA. In this episode we are going to cover how retailers can manage excessive returns after the year-end.

The 2020 holiday was predicted to have $40 billion dollars of revenue shifting from brick-and-mortar to e-commerce. While much of the uptick can be attributed to impacts of COVID-19, the shift to e-commerce was already a trend on the rise.

As online shopping continues to grow, so do the number of items returned annually, especially during the holidays. Naturally, this is because online shopping doesn’t give shoppers the luxury of physically seeing or trying on an item before it is purchased.

Typically, online shopping sees a return rate between 15-30%, with apparel at the higher end of the range.

This equates to around $260 billion dollars in retail products returned each year, and 25% of these returns occur right after the holidays, according to a study by Shopify

In order to keep customers satisfied, retailers should opt to make return policies more lenient and flexible, especially following the holiday season, and even more so after the pandemic, as it may take longer to return unwanted purchases.

Some retailers have chosen to provide the shipping label and/or packaging to allow for free returns, making the process more convenient for customers. While it builds loyalty, not every retailer can afford to absorb this additional cost.

Retailers should also consider offering contactless curbside returns, since it’s a safer and more convenient option for people.

Implementing effective reverse logistics can help retailers manage an influx of returns and determine if returned items can be repackaged and resold to minimize waste to help protect margins.

With these tips in mind, retailers can effectively manage their year-end returns, and gear up for their next sales spike.
Announcer: And that concludes this episode of BDO’s “60-second Retail” podcast.  Don’t forget to tune in for the next episode!  To find more information on our hosts, guests, BDO’s services, or listen to previous episodes of “60-second Retail”, please visit www.bdo.com/60-second-retail.



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