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The aftermath of the holiday season features returns, which spells trouble for retailers dealing with the rise of e-commerce. 

Retailers had a good season in sales.

Business Insider reported that from Nov. 1 through Christmas Eve, retail sales were up 4.9% from 2016, according to data from Mastercard SpendingPulse. “That’s the highest rate of growth since 2011.”

Online sales were also up 18.1% due to increased access to last-minute shipping options. Sarah Quinlan, senior vice president of market insights at Mastercard, said in a statement:

“This year was a big win for retail. The strong US economy was a contributing factor, but we also have to recognize that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase.”

The more sales retailers make, the more returns they have to deal with.

The Wall Street Journal (WSJ) reported a recent survey conducted for UPS of 5,800 US online shoppers by comScore Inc., a data-tracking firm. 82% of shoppers “were more likely to complete purchases if free returns via a prepaid shipping label or an in-store option were offered.”

Release from commitment drives sales.

“About 66% of consumers now review a retailers’ return policy before making a purchase,” WSJ reported. “62% of consumers said they had returned an item bought online in 2014, compared with 51% in 2012.

It’s part of the consumer purchase decision-making process. Customers look to information about returns to decide whether to take a chance on a gift that the recipient may reject and return. If a company has a favorable return policy, the customer can feel more at ease in making a purchasing decision.

Aftermath

“Returns make up the bulk of every retailer’s holiday hangover,” according to Business Insider. Optoro, a tech firm that specializes in business return shipments, estimated $90 billion worth of rejected gifts will be returned to retailers.

After high sales over the holiday season, retailers then have to deal with returned goods, and not all of the returns can be resold.

“Online half of returned goods make it back to shelves immediately,” Business Insider reported. The next quarter goes back to the manufacturer while the rest is sold to third parties including discount retailers.

Products that customers returned in opened or damaged boxes cannot be put back on the shelf. It can be cheaper for retailers to throw unwanted products away rather than spend the time and money to process them.

According to Optoro, as cited by CNN Money, “an estimated five million pounds of trash are generated from returned items every year.”

That’s not environmentally friendly.

“Some retailers had as many as 30 trailers full of returns sitting outside their distribution centers waiting to be processed,” Bala Ganesh said according to WSJ. “It’s like Christmas every day, because they have no idea what’s in the [returned] box.”

Counteracting Strain of Returns

Some retailers have dedicated distribution centers to handle returns– mostly made up of online purchases.

“There, trained employees determine which goods can be recirculated and rehabilitate those items,” WSJ reported.

These retailers make the most of the returned goods by trying to salvage as many sales as possible. The other option is to liquidate, though auctioning bulk amounts of items to bidders is not profitable. It’s still the most viable option for some seasonal products that retailers can’t afford to store in inventory.

Delivery giants are attempting to streamline a profitable process for returns, according to WSJ:

“FedEx said last week that it was acquiring Genco, a major player in the returns-logistics industry, which processes more than 600 million returns items each year. UPS is building out its return-services offerings for retailers, including such options as asking customers to specify their reason for returning an item so they can print out a label routing it to the appropriate destination. For example, a defective item might be sent to the manufacturer.”

Easy returns give a company a competitive edge because it gains the favor of the customer, who returns for repeat purchases. Customers can also take steps to avoid the returns process entirely.

“EBay’s a great option for consumers who are looking to sell gifts that weren’t quite right,” said Laura Chambers, eBay’s vice president of consumer selling, in a statement. “As one of the largest marketplaces with 168 million buyers, there’s always someone who wants to purchase what you’re selling.”

Gift cards are a viable alternative. Unlike most products, gift recipients can trade an unwanted card for a different card at sites including Raise.com and CardCash.com.

Save time, energy, effort, and the entire returns hassle. Make every gift a gift card.