Nearly two months after the last holiday jingle played, gift return season is coming to an end. Finally, ecommerce and brick and mortar stores can analyze how returns affected their bottom lines and refine their strategies to maximize profits.
Nearly two months after the last holiday jingle played, gift return season is coming to an end. Finally, ecommerce and brick and mortar stores can analyze how returns affected their bottom lines and refine their strategies to maximize profits. In 2019, holiday sales increased 3.4% from the year before. That’s great news and yet product returns incur a disproportionately higher cost. The National Retail Federation estimates that returns cost retailers 10% of sales year over year. The reason for soaring returns is multifold, but a key factor may be changing purchasing trends illustrated by the rise of the “bulk returner.” Another main reason is that gifts are inherently risky and many will not meet agreeable recipients. To help retailers understand consumer behavior, goTRG surveyed 500 holiday shoppers. We wanted to learn who the biggest return culprits are, how they shop, and what they like least. Here’s what we found:
What do customers return the most?
This holiday season, goTRG personally processed 2.2M units of returns from major retailers like Walmart, Lowe’s and Target. After reviewing the data, we found that electronics and apparel led the most purchased categories. While apparel regularly appears in the top spot for returns, our data showed an interesting rise in electronic returns. Apple Airpods 2nd Generation were the most purchased product in the electronics category and the most returned gadget this holiday season. Tablets were another huge gifting category. Our analysis showed that customers much preferred Apple to other brands, with Samsung and LG among the most returned tablets. Aside from apparel and electronics, home appliances was the third most purchased and returned category this year.
Who returns the most?
Women are most likely to purchase, and return gifts after the holiday season. The least likely candidates are women over 60 years old, yet more than 55% of shoppers in this category returned at least one item. The most likely returners were women ages 30-44 with 70% indicating an intent to return.
Wondering about gen z and millennial shoppers? While less individual younger shoppers reported plans to return, as a whole this age group contributed more returns than other categories. According to goTRG’s survey, young shoppers are more likely to be online shoppers who buy in bulk, with the intent to return.
What trends are responsible for returns growth?
Young shoppers are more likely to “bracket” shop, or bulk return, because they regularly buy items with the intent to return before reaching checkout. Young shoppers told goTRG they returned more than 3 items on average each this holiday season, beating the return average for all age groups by nearly 20%. Of those who returned 5 or more items, young people also made up the majority. Bulk returners made up just 16% of holiday shoppers, yet they accounted for more than 40% of all items returned.
32% of survey respondents and nearly 50% of shoppers ages 18-29 said they buy multiple items during the holidays with plans to return. What’s more, nearly one third of bulk returners say they utilized this strategy more in 2019 than the year before. Unfortunately premeditated returns is the outcome of lenient retail policies like free shipping and unlimited returns, which customers have grown to expect. These customer-centric policies have marked a stark growth in returns that retailers must manage through intelligent technology, increased manpower, and storage space in order to prevent financial loss.
Why do customers return?
In addition to premeditated returns, nearly 90% of respondents told goTRG they return items for reasons that are challenging to prevent. Incorrect size was the most common motive for returning apparel, followed by simply disliking or not needing a gift. In a TechSee survey, 65% of customers who returned electronics early on cited frustration over how to install and/or use the product. On the other hand, only 8% of customers told goTRG the product was damaged and a mere 2% cited returning an item because the order was filled incorrectly. goTRG and TechSee’s data indicate retailers are doing a good job of delivering quality merchandise, correctly. However, retailers must consider creative strategies to tackle bulk returns and the wrong-size problem.
How do returns affect retailers?
According to goTRG’s research, retailers spend more than 21 days reshelfing and relisting returned holiday merchandise. When considering “apparel time,” 21 days may make the difference between “hot and fresh” and “so last season.” After 3 weeks in limbo, returned items can lose 87.5% of their value, according to the Aberdeen Group. Unfortunately many retailers do not have the resources to consolidate and process returns based on data driven insights. Stores with multiple locations are especially vulnerable to costly mismanagement. That’s why retailers must analyze customer behavior and reform their reverse supply chain technology to tackle the cultural shift toward increasing holiday returns.