With a new year fully underway, retailers all over Canada are experiencing what can be called an unfortunate yearly trend. It’s return season! Yes, after the holiday shopping rush comes all of the consumers who have gifts that they’d prefer to return to the stores. While returns are an inevitable part of retail, they can impact profit margins, inventory management and customer satisfaction.
“Retailers have been focused on efforts to mitigate returns, as total returns for the industry amounted to $743 billion in merchandise in 2023,” reports the National Retail Federation (NRF), “As a percentage of sales, the total return rate for 2023 was 14.5%.”
Why are returns so common in January?
Gift mismatches are a top culprit. Not every gift hits the mark. Whether it’s the wrong size, colour or style, customers frequently return items because they simply weren’t suitable for the recipients. As well, customers often make hurried purchases during the holiday shopping rush. These impulsive buys can lead to more dissatisfaction and, therefore, more returns.
Flexible return policies are beloved by consumers. As a result, many retailers extend their return policies during the holiday season. It both improves customer satisfaction and boosts sales. However, while this is great for building trust, it also encourages a higher volume of returns in January. Also, it’s common for gift recipients to receive duplicates. This is especially true for popular items. Naturally, it leads to returns or exchanges after the holidays.
What are the hidden costs of returns?
Returns are not just about refunding money. They carry hidden costs that businesses must bear. There are operational costs to consider as processing returns takes time, resources and manpower. Many businesses also face restocking challenges in January. Returned products may not always be resellable at full price. Customer satisfaction risks are another problem. If your store has a complicated return process, it can damage customer trust.
Warehouse space and operations is another hidden cost of returns, explains Julia Ebelthite of ReBound Returns. “If your company manages the entire returns process, this means that you need warehouse space to house all the returned items,” she writes, “Work benches are also required to process and sort the incoming merchandise. The higher the return volume, the more warehouse space you will need, and this costs a lot of money.”
How can selling e-gift cards help your business to reduce returns?
Firstly, e-gift cards give recipients the freedom to choose exactly what they want! This reduces the likelihood of dissatisfaction and returns. Remember, as well, that unlike physical products, e-gift cards don’t require shipping, restocking or additional logistical costs.
Also, gift cards, in general, are known to increase spending. “61% of consumers spend more than a gift card’s value when redeeming, for an average of $31.75 more than the card’s value,” reports Capital One Shopping. In addition, e-gift cards can be delivered instantly via email or SMS. This makes them a convenient last-minute gifting option.
How can Divvia help you to take advantage of e-gift cards?
It’s as simple as giving us a call at 1-877-748-2884 or sending us a message on our Contact Us page. Our electronic gift cards have a long history of inspiring repeat business, attracting new customers and boosting sales all year long!
