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Online Retailers Turning to AI and Data Analytics to Stem High Tide of Returns

Published on January 23, 2024

While the holiday shopping season is the most profitable time of the year for online retailers, there’s always one challenge this time of year: Online retailers wish they could manage better returns.

Recent statistics indicate that returns are a significant issue for e-commerce retailers, particularly during the holiday season. Consider a recent forecast from commercial real estate firm CBRE and reverse logistics provider Optoro that found 2023 holiday returns could reach $173 billion when the final tally is done, with $80 billion of those returns coming from online.

The online sales return rate from the holiday shopping season is known to spike to 30% of all sales.

What are Retailers Doing About It?

Retails revamp their returns strategies:

Online retailers have tried many return strategies to build consumer trust and loyalty. According to Jadah Hawkins, SVP, global market leader retail and e-commerce at customer experience services provider Alorica, many changes have been driven by technological advancements and evolving customer expectations. Hawkins explains that these include Enhanced customer-friendly policies that provide for more lenient return acceptance to attract and retain customers, such as longer return windows, easier return processes, and offering refunds in various forms, such as store credit or exchanges; Online returns and drop-off points that include prepaid shipping labels to offer customers more flexibility and convenience, and; Improved communication that provides for more proactive, clearer and transparent information about return options, expected timelines, and potential fees.

Finally, more sustainable options that provide eco-friendly alternatives for returned items, such as recycling, refurbishing, or donating returned products to minimize waste, Hawkins says.

According to the experts we reached, online retailers have taken several steps to manage better returns, including the use of AI and other strategies:

AI and data analysis: Retailers are looking through their data with machine learning to better prepare for their returns. For example, return policies for a single customer could be changed if they return a significant percentage of their purchases. For often returned items, shoppers can be notified of that fact before they purchase.

Return policies and processes: While some retailers have developed more consumer-friendly returns policies, others are starting to charge for returns, such as stocking fees or shortening the return window. Others are making it easier with pre-printed return labels and drop-off sites to manage logistics better.

Third-Party Services: Online retailers partner with third parties and reverse logistics companies to better run returns, including managing shipments, fulfillment, and processing and restocking returned products.

Return Management Apps: Online retailers continue to embrace returns management applications from such companies as Orderhive, ZapERP, Happy Returns, and others to help streamline the returns processes, provide customers with the status of their returns, and automatically update the retailer’s inventory management system. According to Industry Expert Research, the return management app market should grow roughly 28% annually through 2028.



Reposted from | Authored by George V. Hulme, Writer | Learn more about Alorica's Retail CX solutions here.  


Alorica Inc. (“Alorica”) is the holding company of various direct and indirect subsidiaries, including Systems & Services Technologies, Inc. (SST). Many of Alorica Inc.’s subsidiaries operate under the brand, Alorica, but all remain separate legal entities.