On second thought…
A retailer’s least favorite phrase. Every year retailers see sales undone as shoppers think twice and return purchases, particularly during the holiday season. November and December sales can make or break a retailer’s year, which means it’s critical for businesses to solve their return problem.
Retailers have been deployed a mixed strategy to handle this, to mixed results. Nearly nine in 10 retailers (88%) have revised their return policies to be stricter while many also enhanced product detail pages with better descriptions to limit returns. And while that may have helped manage some shopper expectations, the rate of returns still increased 28% in the 2024 holiday shopping season, topping some $132 billion worth of orders.
Of course, while the holiday season is a particularly busy time for retailers in terms of dealing with returns, there’s a need for this process to be as smooth and efficient every week of the year. Like puppies, returns aren’t just for Christmas…
So, with insights from 1.5 billion global shoppers across 67 countries and last year’s lessons, I’m sharing how retailers can deploy a digital workforce of AI agents and other AI-powered tools to preserve their margins, deliver incredible customer service and help brands win the holiday season.
Here are three ways retailers can avoid returning their profits in 2025.
(1) Order management: Use returns data and AI agents to improve product pages
Return insights and analytics – understanding why a product is being returned in the first place – is key to helping retailers optimize their product listing pages and descriptions for the future. By analyzing real-time returns data, retailers gain a comprehensive understanding of customer behavior, as well as trends such as underperforming products, potential fulfillment issues, or instances where products fail to meet shopper expectations.
AI agents can take those insights and surface actionable recommendations that boost product performance, help get slow inventory off the shelves, and increase conversions. For example, one item may continually get returned because the size or color description isn’t accurate. Generative AI agents like Agentforce Merchant Agent can take note of this trend and recommend that a retailer provide more detailed and precise information about fit, look and size. This can help reduce what’s known as “bracketing,” where customers purchase multiple sizes or colors to find the right one, and then return the unwanted items.
(2) Reward VIP customers with personalization
One of the oldest marketing strategies, audience segmentation isn’t going anywhere anytime soon, but AI can offer the tactic some new tricks.
Using a CRM, return analytics and dashboards, retailers can identify a subset of high-spenders and low-returners – a retailer’s dream customer. Insights from these tools could help a retailer segment customers who spent a certain amount and also rarely return items and offer them special discounts or incentives to buy specific items.
By strategically increasing revenue from the most loyal, low-return customers, businesses can offset the costs associated with customers who frequently return items or engage in practices like bracketing (buying multiple sizes to ensure a good fit.
AI tools like Agentforce Commerce Agents can then help retailers scale personalized interactions to keep these high-value customers engaged. AI agents, informed by a customer’s entire history and experience with a brand, can reward these shoppers through personalizing experiences at scale. For example, beyond simply offering discounts and auto-generated promotions, an AI agent engaging a customer with a question about a product could proactively thank them for being a “Gold Member” or share alerts like, “By the way, your other order is on the road and will arrive by 5 p.m. on Friday” to show the brand is aware of what’s going on.
Communication is key in serving customers, especially when they’re reaching out for help.
(3) Take advantage of in-store interactions
Regardless of where a shopper makes their purchase – online or in-person – they’re not shy about walking into a brick-and-mortar store to resolve an issue with the order. Over half of shoppers (53%) visited a store to return a product in 2023 – up 13% since 2021.
While online shopping may be a preference for many consumers, retailers are investing in offering in-store experiences. In 2023, 64% of retailers offered in-store returns for online purchases, and 58% offered the option to Buy Online, Pick up In-Store (BOPIS).
Retailers should get creative to make the most of these in-store visits. For example, using AI, retailers could automatically trigger a text or email to a customer offering a discount for same-day in-store purchases as soon as they initiate an in-store return.
Combining this promo tactic with Buy Online Return, In-Store (BORIS), could incentivize exchanges over refunds or offset returns with new purchases. This could also lead to customers opting for a different product or size within the store instead of simply returning the item and receiving their money back.
AI agents can help brands deliver one continuous customer experience rather than disconnected interactions from online to customer service call centers to brick-and-mortar locations. AI agents are dot-connectors — they can ensure human workers have all the insights of an individual customer’s journey across platforms and physical stores to deliver personalized experiences regardless of where it happens.