Returns are the silent profit killer in e-commerce. While online shopping continues to grow, return rates are climbing just as fast, averaging 24.5% for most categories, and hitting nearly 40% in footwear. What makes customers happy – fast, free, and easy returns – is eating away at retailers’ margins. The problem peaks after the holidays. Paymentus reported a 28% year-over-year increase in post-holiday returns just two weeks after Christmas last year. Between shipping costs, fraud, abuse, and markdowns, retailers are drowning in “Retunuary.” The good news is that with the right mix of logistics strategies and customer service enhancements, you can reduce unnecessary returns and safeguard your bottom line before the holiday rush begins.

Customer Service Logistics & “Hacks” to Reduce Returns

Create a strategy for your returns before your holiday orders flood in, because once they do, your return costs are integrated into your profits. These extra weeks ahead of the holidays will give you the opportunity to test and iterate on the policy that works best for you and your customers. Here are several tips you can implement ahead of the holiday rush:

Hack #1: Introduce Friction (Intentionally) in the Returns Process

Consider this: not all returns should be ultra-easy. Even a small amount of friction in the returns process can deter abuse.

Recently, we advised a client to implement a tweak to their returns policy that made a big impact. Our client sells safety helmets, and due to the nature of the fit and short-term need for their product, they experienced an unusually high rate of returns as well as returns abuse, with damaged and used helmets being shipped back as “new.” Their super-simple free returns process was aiding the problem. Customers could return for any reason, free of charge, and have the item picked up from their front porch.

We advised them to begin by simply limiting carrier options to certain carriers, such as UPS and FedEx, that require the customer to drop their item off at a shipping location. They eliminated carriers, like USPS, that conveniently pick up packages right at your doorstep, adding an extra step to the process. This minor change made a major impact. They immediately saw their return rate shrink and their profits stabilize.

But not every fix requires adding friction; sometimes the opposite is true. Many sellers win customer trust by rethinking their shipping and returns model.

Hack #2: Moderate or Tier Free Shipping and Free Returns

Many customers expect free returns, but absorbing the full cost can be unsustainable. You don’t necessarily have to offer both free outbound and free inbound shipping (free returns).

Get creative with these compromises:

• Free returns only for orders above a threshold
• Free returns for exchange, but charge for a refund
• Discounted returns (you only charge your customer half of the shipping cost)
• Incentivize customers to keep the product instead of returning it by offering to refund a small discount if they keep the product
• Offer exchanges or a store credit before a full refund

Shipping policies aren’t the only lever you can adjust. For certain high-cost or bulky items, adding a fair and transparent restocking fee can also protect your margins.

Hack #3: Carefully Implement Restocking Fees

Speaking of restocking fees – these can effectively lower your return costs. They don’t have to apply to all sales, but can be considered for high-cost, oversized, or bulky items. Customers are more likely to see them as fair if they are presented transparently before purchase and include exceptions, such as for defective goods.

Even with fair policies in place, managing the actual return process can still eat up time and money if it’s handled manually. That’s where automation comes in. An RMA system helps you standardize and streamline returns while giving you better visibility into why they are happening in the first place.

Hack #4: Implement an Automated Return Merchandise Authorization (RMA) System

RMA systems use tracking numbers to manage and facilitate your returns and exchanges instead of requiring an email or managing email requests. Using an RMA system standardizes return data, and with that, you can enable conditional logic that will streamline your operations. For example, set your system to only allow returns for certain SKUs.

Automation helps you process returns more efficiently, but the real savings come from preventing unnecessary returns before they ever happen. That starts with learning from your customer service inquiries.

Hack #5: Prevent Returns with a Customer Service Log

Every time a customer asks a question, that’s a chance to prevent the next return. Keep a log of your customer service and return inquiries, and analyze the data for trends.

This data will help you see what points of confusion or dissatisfaction may lead to returns of your product. Once you’re aware of these issues, you can anticipate common objections and address them proactively. If you find, for example, your product is typically returned with the reason, “Item doesn’t fit,” add a size chart to your product description. Or take another step by adding 3D/AR previews and virtual fitting tools to ensure the product is just right before it’s purchased.

When you put these pieces together, policies, logistics tweaks, and proactive customer service, you build a system that reduces unnecessary returns while keeping customers informed and confident.

Don’t Wait for “Returnuary” to Start Reducing Returns

​Returns don’t have to drain your profits this holiday season. By putting smart guardrails in place now, whether it’s moderating free returns, adding small friction points, or learning from your customer service logs, you’ll not only reduce return costs but also improve customer trust. The key is acting before the holiday surge, not after. Choose one tactic to implement this week, test it, and refine it. A small step now can mean a major difference in your January balance sheet.