How Retailers Can Prepare for Holiday Gift Returns and Win New Customers In the Process

The returns process continues to trouble retailers, and the holiday season is expected to exacerbate existing problems. In addition to the large volume of initial orders, gift returns are a common source of customer dissatisfaction, said retail software company Narvar in a recent consumer report. But retailers can implement a few changes to help minimize the strain of holiday returns.

“We consistently see that gift returns cause consumers more frustration than regular returns,” said Amit Sharma, CEO and founder. “This may be in part because returns are oriented around the buyer, so the recipient has limited options. For example, a gift return will often not provide a refund option without alerting the gift giver.”

According to Narvar’s The State of Online Returns report, 33% of U.S. respondents described their returns experience as “okay” or “difficult,” as opposed to “easy.” And the stakes are high: A poor returns experience can lead to the loss of future sales, with 13% of consumers saying they wouldn’t revisit a retailer based on their last experience.

One of the biggest problems in the returns process is a lack of clear instructions. Shoppers emphasized the value of having the returns policy listed in easily accessible places online, such as the homepage (24%) and product pages (32%).

“First, make online exchanges easier,” said Sharma. “Consider suggesting options for exchanges based on price point so customers can more quickly pinpoint an exchange they’ll be happy with.”

The shipping method is also an opportunity to improve the customer experience. While 38% of consumers noted in-store returns as the preferred option, only 10% had returned their last item at a store location. Narvar recommends that retailers make this option available where possible, especially during the holiday season when shipping services are overburdened.

In-store is often preferred because customers can receive their refund sooner, while also eliminating concerns about lost packages. Yet during the busier holiday season, many people need the convenience of mailing a package. Retailers can improve the mailed experience by incorporating the positive elements from the in-store method; a quicker refund policy and the provision of tracking information can minimize concerns.

“To reduce consumer anxiety, lengthen the window for returning or exchanging gifts,” said Sharma. “Also, recognize that gift returners may already be existing customers — treat them accordingly and provide flexible options for refunds or credit.”

For those who are not existing customers, the exchange of holiday gifts can lead many recipients to discover new brands and become customers themselves. But throughout the study, Narvar found that new customers were the most vulnerable to bad experiences. By implementing protocols that streamline the returns process, retailers can improve their chances of winning new customers both during and after the holiday season.

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