NEW DATA: Discounts Can Help Merchants Reduce Holiday Returns

The holiday season offered a much-needed windfall for some retailers. Many merchants were struggling to stay afloat since March 2020 when the pandemic began and welcomed any boost that holiday sales could provide.

The trouble is that many of their holiday gains could be at risk. Two out of three consumers who made purchases during the 2020 holiday season say they have already returned or are planning to return at least one of those purchases, potentially taking a bite out of retailers’ holiday revenues.

The risk of returns is especially high considering that the recent holiday shopping season was the most digital shopping season on record. Eight in 10 holiday shoppers bought at least one of their seasonal purchases online, and half of them completed all of their holiday purchases without ever setting foot inside a physical store. This reliance on digital shopping increases the chances that consumers, unsatisfied with shipping issues and order mistakes, might feel compelled to return their purchases.

What can retailers do to mitigate the risk of returns and safeguard their online sales?

Online Ordering’s Return Round Trip: Do Discounts Change Consumers’ Minds About Returning Holiday Purchases? offers an inside look at the factors that drive holiday shoppers’ decision to return or not to return. PYMNTS surveyed a census-balanced panel of 2,268 U.S. consumers to learn how they shopped for their purchases during the 2020 holiday shopping season, how many of them have already returned or are planning to return their purchases and what might convince them to keep their items.

Our research shows that although some consumers may be on the verge of returning their purchases, they might give it a second thought if they were offered discounts. The higher the discount, the more likely they are to keep items they might have otherwise returned. A discount as low as just 5 percent would be enough to entice 39 percent of holiday shoppers to keep items that arrived late, in fact, and offering discounts of 30 percent would be enough to entice 51 percent of all holiday shoppers to keep their purchases.

It is not enough for retailers to provide discounts to prevent returns, however. It is also critical that they offer the payment and delivery options that can help attract new customers and earn the trust of returning customers. The single most common feature that shoppers want from their eTailers is free shipping, even if it means not knowing when their items would be delivered. Eighty-four percent of all consumers say they would consider shopping with eTailers that offered free shipping, compared to 57 percent who would like to receive guaranteed shipping dates, for a price.

Delivery options and discounts are just two of the many factors that play a part in consumers’ decisions of where to shop online and whether they should return their purchases, however. The Online Ordering’s Return Round Trip brief provides a detailed profile on what drives eCommerce shoppers to make their purchasing, delivery and return decisions.

To learn more about how returns could affect the post-2020 holiday shopping season, download the brief.