Product Returns: A Guide to Managing Holiday Returns

It's that time of year again when retailers should start preparing their businesses for holidays returns. The holiday returns season is a very important time of year for both retailers and manufacturers. A typical retail chain will process more than 45 percent of its total annual returns volume between the first week in January and the first week in March. Manufacturers of consumer goods, in turn, will get hit with this same tidal wave of seasonal recalls and product returns about a week to two weeks later as their retail customers process and ship returns to them.

A company's ability to process this onslaught of returns during the first quarter of the year will have a big impact on its bottom line. This is true for traditional brick-and-mortar retailers and especially online retailers, many of whom will see as much as 80 percent of their annual returns during the post-holidays flood.

The key to managing holiday returns is to have a good plan in place months before the returns season begins. This plan should include the merchandising, store operations, vendor relations, accounting and supply chain teams. This cross-functional team's goal is to "think returns" and communicate with each other about their expectations and concerns around holiday returns volume and processing from the store level through to final disposition.

To help your company prepare for holiday returns, I've put together a 30-point checklist that can be used to guide its preparation. It's like Santa's list only it not about being naughty or nice. This list is about maximizing the value of goods that will be coming your way after Christmas and minimizing the cost of processing those goods.

✓ Update defective returns estimates based on sales that have taken place since Thanksgiving.

✓ Update all seasonal recall volumes by both SKU and vendor/original equipment manufacturer/original design manufacturer.

✓ Review existing processed inventory waiting to ship and reduce returns inventory as much as possible prior to December.

✓ Prioritize shipments by value and cube to reduce inventory and create space.