Why Returns Happen More Around Peak Season and What to Do About Them

As August returns, shippers' concerns over the big show—the holiday peak shipping season—begin to come to life. There is a massive push to increase inventory in advance, and everyone starts thinking about how they will survive the holiday rush, from food supply chains to other goods. Carriers begin to implement changes to their surcharge schedules, and shippers look for ways to get the most customers at the lowest cost without sacrificing product or service quality. Those are usual worries in any year, but the 2022 peak shipping season is shaping up differently. It comes on the heels of the two most prominent peaks in history.

Meanwhile, worries over an economic downturn are starting to trickle into everyone's minds. The upcoming peak season is also on track to be one for the record books again. Consider how e-commerce grew through the first half of 2022. Depending on the source, growth stands near 6% for each quarter, and according to Retail Dive, e-commerce will surpass $1 trillion by the year's end. That is more than a 20% growth rate, and with growth comes risk—risk for returns and greater demands on the workforce. In turn, that amounts to inevitable problems, and shippers need to know what to do about them.

Why Peak Season and Returns Go Hand-in-Hand

While data remained elusive in recent years, UPS found a unique fact in 2018. That year, UPS processed a record-setting volume of 1.5 million returns before the Christmas holiday, reported Tom Ryan of RetailWire. This was unexpected because the usual peak for returns occurs in January of each year. However, this historic oddity would seem to have a greater chance of recurrence as uncertainty over the economy, record-setting holiday deals, and consumer behaviors shift. In other words, 2022 has created the perfect scenario for a pre-Christmas peak within the reverse logistics supply chain. But that was well before the massive surge in e-commerce due to the pandemic and before customer buying habits shifted more toward any digital-sided transaction. Buy online, pick up in-store fulfillment is a blending of both, but even this creates a new risk.

How the 2022 Peak Results in an Even HIGHER Risk

It stands to reason that peak season results in a higher risk of returns. Any increase in volume moved will inherently lead to a corresponding increase in the number of returns. However, online-based purchases, whether shipped to a residence, business, or even a pick-up locker, automatically come with a three-fold increase in the risk of return. That alone is enough to keep shippers up at night in anticipation of what's forecasted to be the biggest shipping season on record. Remember that other things in the news have contributed to this risk, albeit factors that would seem unrelated.

Amazon Prime Day just celebrated its biggest sales in history. Other prominent retailers ran "Christmas in July" sales, and in some cases, retailers with excess inventory caused by the fall 2021 container backlog have started promoting "Black Friday in July" sales. Those events were relatively isolated, depending on the locations and demands. However, as the peak season approaches, retailer promotions, buyer's remorse, and a generalized risk of greater OS&D due to the increased volumes processed by carriers will inevitably correspond with an increase in reverse logistics demand. So in those cases, what are shippers to do?

How Shippers Can Reduce Risk With Actionable Data

The answer to better reverse logistics management during peak shipping seasons, especially the holiday peak, rests with data. But data is a tricky subject. It's immense, confusing, challenging, and downright impossible to manage manually. Meanwhile, the pressure to get more freight through the network means that shippers are more likely to let errors go undetected. That's a significant problem that can amount to tens of thousands of dollars in waste. However, the trick is finding a way to work smarter, not harder. Intelligent Audit has created the tools to do just that and help shippers. It comes down to these steps:

1. Track everything to know your usual costs and identify the unexpected small changes.
2. Know your inbound costs, including the costs associated with sending faulty products back to manufacturers or other retailers.
3. Measure the performance of your carriers to track OTIF, customer experiences, invoicing discrepancies, and more.
4. Process returns for restocking or reshipping quickly, categorizing the reason for returns.
5. Share data regarding the cause for returns, which may help define if it's truly an unavoidable return or has a root cause with the carrier.
6. Adjust promotions going forward to understand your true profitability and whether those deals and steals are helping or hurting your brand.
7. Stay strategic with the right partners using machine learning and other software to find and fix problems before they become headaches.

Get on the Right Track With Intelligent Audit

Managing the reverse logistics process will stay complex year after year, but tracking the data and facts around returns or errors shouldn't be a shippers' nightmare. It should be turnkey, accessible, and widely scalable. That comes from choosing the right software solutions to add value without breaking the bank. Partnering with Intelligent Audit can help your company turn the above steps into action and avoid the risks that come with this and future peak seasons. Connect with an Intelligent Audit expert in freight returns data tracking to get started today.