Why are holiday gift returns spiking before Christmas this year?
Revealing another wrinkle in the rise of online selling, the peak volume of holiday returns for the first time has arrived before Christmas, according to UPS.
UPS said it expected to ship and process a record 1.5 million returned packages on Wednesday, December 19, dubbing the day, “National Returns Day.” In years past, returns have spiked as the new year began.
“Consumers who got a jump on online shopping in the days before Black Friday are expected to begin returning more than 1 million packages each day in December, jumpstarting the holiday returns season earlier than ever,” said UPS in a statement. “The spike is driven by self-gifting due to retailer promotions, express shipping for deliveries and returns, simplified returns processes and advanced re-stocking and management systems.”
For UPS, National Returns Day will set a record for the sixth consecutive year.
The earlier returns and generally higher return rate throughout December is attributed to retailers increasingly offering holiday discounts well before Black Friday and turning Black Friday weekend into a five-day shopping bonanza, from Thanksgiving through Cyber Monday.
But return rates are climbing overall as e-commerce grows as a percent of sales — online return rates are higher than in-store.
Online holiday spending is being boosted by expanded free shipping options from a number of retailers. Easy returns (free with online and offline options) also support the higher return rate. A new survey from returns specialist Optoro found that 97 percent of consumers are more likely to buy something again from a retailer with which they had a positive returns experience.
According to the “Pulse of the Online Shopper” study from UPS:
- Seventy-nine percent of e-commerce shoppers surveyed said free shipping on returns is important when selecting an online retailer;
- Forty-four percent said the top issue encountered when returning an item online is paying for return shipping.
Retailers’ desire to be generous with free shipping will again face challenges as both UPS and FedEx recently announced plans to increase their delivery rates by 4.9 percent on average post-Christmas and also increase surcharges for additional handling, overages on maximum limits and signature requirements.
- Number Of Packages Returned Expected To Peak Before Christmas, Reflecting E-Commerce Shift – UPS
- For the first time, UPS will handle the most returned packages before Christmas – Washington Post
- The busiest day for holiday returns won’t come after Christmas this year, UPS says – CNBC
- UPS Announces U.S. Rate Changes – UPS
- Shipping Rates to Increase for FedEx Express, FedEx Ground and FedEx Freight Services – FedEx
- Analyst: FedEx, UPS surcharge increases to play ‘big role in the future of free shipping’ – Atlanta Business Chronicle
DISCUSSION QUESTIONS: What do you see driving the trend toward continually-increasing and earlier holiday gift returns? Are the higher rate of holiday gift returns largely a cost challenge for retailers or does it present execution challenges as well?