Navigating the Post-Holiday Season: Gift Returns, Customer Debt, & Gift Cards [on-demand webinar]

The holiday season doesn’t end on Christmas Day—or even at the end of December. The ripple effects of the holidays can be felt well into the New Year.

Some of those effects are negative, such as gift returns and holiday-accumulated consumer debt. And some of them are positive, such as increased gift card balances.

Let’s talk about ways to reduce the negative impacts and boost the positive impacts through smart marketing and other strategies.

For year-round advice on getting ready for the holidays, check out our Holiday Marketing Quarterly guides.

Gift Returns

Returns of unwanted, wrong-sized, and damaged presents have always been part of the messy aftermath of the holidays. However, this issue has become increasingly out of control due to ecommerce sales, which now represent more than 14% of all retail sales and are likely to continue growing in the years ahead.

The reason this is a mounting problem is that online orders are returned at much higher rates than purchases made in stores. While the return rate for in-store purchases is 5%-10%, the return rate for online orders is 15%-40%, says Happy Returns.

So as ecommerce sales grow, the cost of returns does, too. And the costs are substantial. Between transportation costs and markdowns, it costs on average 66% of the price of a $50 item for retailers to process a return, according to Optoro.

To help reduce both online returns and the costs associated with those returns, we recommend a variety of strategies that span operations and marketing:

• Offer augmented reality, so shoppers can see, for example, how apparel or makeup looks on them or how furniture or art will look in their home
• Collect and display social fit feedback on your site, so shopping can hear from past purchasers whether a shirt, for instance, is true to size, runs small, or runs large.
• Recognize and respond to “bracketing,” where shoppers put multiple sizes of a garment in their cart, for instance, referring them to tools that can help them choose the right item
• Recognize and try to discourage “showrooming,” where shoppers by expensive products to use briefly and then return them, such as buying a huge TV to watch the Super Bowl on or a fancy dress to wear to a wedding
• Identify customers who return items at high rates and try to target them with promotions and messaging that reduce returns 
• Adopt a “no returns” policy on clearance items
• Offer shoppers an additional discount if they waive the right to return the product (unless it’s defective or damaged in shipping)
• Tell consumers who try to return inexpensive items to keep them to avoid a further loss on return shipping feeds, especially those customers who rarely return things
• Incentivize and promote low-cost return channels, such as stores

Reducing returns even a little can be seriously beneficial to retailers’ bottom lines.

Consumer Debt

While consumers have always experienced financial holiday hangovers, where they tend to overextend themselves, it’s different now for a couple of reasons.

First, after consumers paid down debt early in the pandemic, they’re now packing it back on. In fact, credit card balances grew 18.5% year over year in the fourth quarter of last year to a record $930.6 billion, according to TransUnion.

And second, that rise in credit card debt is in addition to soaring use of Buy Now Pay Later (BNPL) services from Affirm, Afterpay, Klarna, and others. Financing by the top 5 BNPL firms surged 1,092% to $24.2 billion from 2019 to 2021, according to the Consumer Financial Protection Bureau. Because of that growth, BNPL is now more popular than paying by check, according to a CNBC/Momentive Small Business Survey. And on Black Friday, 10.2% of purchases were made with BNPL, according to PYMNTS.

Use of BNPL is particularly high among younger consumers, who find these services much more attractive than credit cards because they charge little to no interest and have predictable payments. So, if your audience skews young, you may see even higher usage of BNPL.

For retailers and ecommerce brands, the opportunities are to better understand:

• Your audience’s price sensitivities and payment preferences so you can thoughtfully manage your messaging to various segments
• The buying patterns of customers who use BNPL, especially the likelihood of repeat buying during BNPL repayment windows at different debt levels
• The effect of BNPL on revenue recognition and reporting

Also, if you’re not currently offering BNPL, you should consider it, especially if Millennials and Gen Z are a focus for your brand.

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Gift Cards

Because of their flexibility, gift cards remain incredibly popular gifts. By some measures, they are the most popular gift.

While holiday debt in the form of credit card and BNPL payments can sap customer spending in the first quarter, gift cards offer a counterbalance. That’s because about 65% of gift cards are redeemed within 180 days, according to InMarket.

Because the revenue from gift cards can’t be formally recognized until card values are redeemed, brands have a lot of incentives to spur their customers to redeem them. Here are some opportunities to consider:

• Be aware of gift card sales and redemption levels so you have a sense of when the gift card redemption opportunity is above average
• Pay extra attention to sales and marketing campaign performance during the week after Christmas, when gift card redemption levels are high
• Explicitly suggest in your post-holiday marketing and ad campaigns that people redeem their gift cards
• Ask your digital marketing subscribers if they received a gift card during the holidays via progressive profiling and then message them appropriately in subsequent marketing campaigns
• Offer incentives when customers pay with a gift card, particularly after post-holiday sales are over

Make sure your marketing strategies for the first quarter include gift card redemption.

For more marketing messaging themes to consider, check out our Content Calendar Assistant.

More Holiday Trends

For a discussion of those trends, as well as others from the 2022 holiday season, watch this on-demand webinar, featuring members of Oracle Digital Experience Agency’s Analytic & Strategic Services team.

We hope you enjoyed our “2022 Email Marketing Holiday Season in Review” webinar. Some of our other on-demand webinars include:

• Loyalty: KPIs that Go Beyond the Transaction 
• Content Planning: Advice from Oracle’s Global Digital Marketing Agency
• How to Transform Your Customer Experience with a CDP
• Priorities for a Mail Privacy Protection World
• Modular Email Architecture: The Next-Generation Template

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For help overcoming your challenges or seizing your opportunities, talk to your Oracle account manager, visit us online, or email us at OracleAgency_US@Oracle.com.

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