Labor tensions between Amazon and its workforce have escalated in recent years as allegations of unsafe working conditions have been made public, along with a growing interest among employees to unionize and organize labor under a collective bargaining agreement to improve workplace safety and align compensation with current market rates. After Amazon allegedly failed to respond to a Teamsters request to “come to the table” by Dec 15, 2024. The Teamsters approved a strike and 7 out of 10 unionized facilities took to the picket line representing the “largest strike against Amazon in U.S. history,” targeting major delivery hubs in New York, Georgia, Illinois, and California.

Thirteen (13) months after sending an open letter to Amazon CEO Andy Jassy in June 2023 regarding investigations into the working conditions at the e-commerce giant’s facilities, (and a call for Amazon employees to come forward with stories), the Senate Health, Education, Labor, and Pensions (HELP) Committee led by Chair, Senator Bernie Sanders, of Vermont (I), published a report titled “PEAK SEASONS, PEAK INJURIES: Amazon Warehouses Are Especially Dangerous During Prime Day and the Holiday Season—and the Company Knows It”.

The report describes just how bad the rate of recordable injuries is (10 out of every 100 workers) and goes on to indicate that 10% is more than double the industry average injury rate over the last seven years. If all injuries reported by employees were considered, (not just the ones required to be submitted to OSHA), the injury rate is closer to 50%! It’s no wonder employees in many facilities have been wanting to unionize and negotiate better working conditions, despite Amazon’s well-publicized efforts to thwart unionization attempts.

Workplace Safety Concerns and Senate Allegations

Amazon faces sharp criticism from workers and drivers alike over its workplace safety practices. The HELP Committee’s investigation uncovered alarming data regarding the company’s warehouses. The report alleges that Amazon prioritized productivity over safety, creating a “uniquely dangerous” environment. Internal company studies, such as Project Elderwand and Project Soteria, identified that high rates of repetitive motions led to elevated injury risks. The latter study even showed that injury rates dropped when speed-based disciplinary measures were temporarily suspended during the pandemic (i.e. when allowed to work at a slower pace, risk for injury went down).

Despite these findings, Amazon reportedly rejected safety recommendations that would reduce productivity, alleging that the company manipulates injury data to obscure risks. Additionally, workers reported being discouraged from seeking external medical care, and some were terminated while on approved medical leave.

Amazon has dismissed these findings as outdated and selective examples unrepresentative of the whole. The company cites improvements in workplace safety and claims a 28% reduction in incident rates since 2019. However, these assertions have done little to deter criticism from lawmakers and labor organizers.

Amazon Workers Path to Unionization

Unionization efforts at Amazon gained meaningful momentum in 2022 when workers at the Staten Island, NY warehouse voted in favor of organizing labor. Then in June 2024, the Amazon Labor Union (ALU), which led the Staten Island push, successfully affiliated with the International Brotherhood of Teamsters (IBT), consolidating the movement and enabling more resources to further their goals. The new partnership also enabled the ALU to leverage the Teamsters’ extensive resources to target multiple facilities simultaneously. Today, the Teamsters represent approximately 10,000 Amazon workers and contractors across warehouses, delivery hubs, and air facilities.

Financial Context and Broader Implications

As the second-largest private employer in the United States, Amazon’s practices have far-reaching implications for workplace standards in the online retail and logistics sectors. Internationally, Amazon’s labor policies have also come under scrutiny. For example, German workers represented by the United Services Union announced strikes alongside the American workers to show support and solidarity.

Summary

The strikes last week represent a critical juncture in the ongoing labor struggle between Amazon and its workforce. While the coordinated pickets disrupted some fulfillment and warehousing operations, Amazon asserts that on-time delivery remains unaffected. Participation levels varied, with some sites seeing dozens of picketers while others reported normal activities. The Teamsters claim “thousands” of members are currently on strike and have vowed to expand their efforts, threatening to picket additional facilities if their demands continue to be ignored.

Meanwhile, legislative efforts, including Senator Sanders’ proposed Warehouse Worker Protection Act and Protecting America’s Workers Act, aim to address safety and accountability issues at companies like Amazon. If passed, these proposals would increase transparency around work quotas and impose stricter penalties for safety violations.

Amazon’s resistance to unionization reflects broader tensions in a digital economy where traditional labor protections often clash with new business models. And as organized labor continues to push back against one of the world’s most influential companies, the outcome of these unionization and labor strike efforts could reshape labor relations far beyond the e-commerce and logistics industries, potentially extending to manufacturing and other assembly line-like workflows.

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UPS SurePost is a hybrid delivery service that integrates UPS’s network with USPS’s extended final-mile reach and capabilities. It’s a partnership between two competitors playing to each of their strengths to achieve greater cost efficiency, and it’s set to undergo notable changes in 2025. In particular, the primary benefit of SurePost, the lower cost of getting packages into the hands of their intended recipients, will see a substantial rate hike and service modifications in 2025, marking a profound shift in what ecommerce shippers have come to expect from the service. Understanding these developments is crucial for merchants to adapt their operations and optimize margins next year.

Key Changes to UPS SurePost Rates in 2025

Starting January 13, 2025, packages weighing 1 to 9 pounds will see a 9.9% price increase, while those weighing 10 to 70 pounds will increase 5.9 to 7.1%. Additionally, surcharges for deliveries to less densely populated areas will increase dramatically. The Delivery Area Surcharge (DAS) will rise 61.8% to $6.15, and the Extended Delivery Area Surcharge will climb a whopping 69.4% to $8.30. These changes reflect the broader trend of rising costs of last-mile delivery services.

In addition to these changes, the U.S. Postal Service will discontinue the allowance of dual shipping labels starting January 1, 2025, as it looks to increase its network’s efficiency and gain more direct customers for USPS Ground Advantage Services, which has a faster delivery SLA than SurePost by ~2 days on average. This will limit UPS’s package routing flexibility which currently allows them to decide which agency will deliver the package to the doorstep much later in the sortation workflow. Now, shippers must use labels that indicate the responsible final mile delivery agent when the package is accepted for processing.

Comparisons Across National Carriers

UPS’s SurePost fee changes align with what we see in the broader shipping industry. USPS will increase rates for its Parcel Select service by an average of 9.2%, depending on where the package enters the postal network, while its Ground Advantage service will rise by 3.2% for commercial accounts. FedEx is implementing various surcharges and rate adjustments, including a new $1.50 inbound processing fee, expanded fuel surcharges to include address correction and dangerous goods, and implementing their own DAS price increases. So, although UPS’s SurePost increases are significant, they reflect all the national carriers’ efforts to address rising operational costs and align pricing with market demands.

Implications for E-commerce Merchants

All shipping rate hikes pose challenges for e-commerce businesses, particularly those with razor-thin margins that rely on lower-cost carrier services to operate profitably. In many cases, the increased shipping costs trickle down to the consumer through higher pricing because online retailers cannot shoulder the entire burden. We may eventually observe altered consumer spending behavior, forcing Sellers to find new opportunities to reduce costs and return the business to healthy and sustainable margins.

Strategic Adjustments for Merchants

Several strategies could be employed to help reduce shipping costs:

1. Shipping Cost Analysis and Carrier Negotiations: Conduct a detailed shipping cost analysis to identify order distribution across the product catalog and which SKUs, customers, regions, channels, etc., will contribute to increased cost. Use the data to adjust the carrier/service mix, matching delivery date promises with carrier/service SLAs and pricing. Identify opportunities to negotiate carrier contracts to reduce shipping costs in other areas, such as different package sizes, weights, variances, zones, and alternative delivery services, to minimize the impact of the new rate changes (or explore alternative carriers and services in particular, regional carriers that are trying to compete with the large national carriers to gain market share).


2. Shipping Optimization: Leverage technologies such as next-generation shipping label software for AI-assisted rate shipping, automatically creating optimal shipping labels and optimizing fulfillment across inventory locations (in and out of the ‘network’).


3. Free Shipping Adjustments: Retailers offering free shipping may either need to raise minimum order thresholds to balance customer expectations with the new financial realities or, as mentioned above, intelligently merge the new overall expected transportation cost into the complete product catalog pricing to minimize or offset the financial burden.


4. Packaging Optimization: Review packaging (boxes, mailers) and void fill (air cushions, paper) pricing and optimize for smaller packages and less void fill where possible. Also, shift to less expensive padded mailers. Use intelligent cartonization software to pack shipments efficiently to reduce carrier shipping costs and packaging waste. Negotiate with packaging suppliers and consider taking larger deliveries less frequently or pre-buying supplies to take advantage of volume/commitment discounts.

Summary

As carriers adjust to ever-rising costs by updating their fee structures and passing costs on to their customers, e-commerce brands and retailers must also determine how to manage the rising costs by cutting elsewhere or passing all or part of the costs further to their customers.

The last-mile delivery space is continuously evolving as new solutions are brought to market and innovations applied to existing technologies and services continue to mature. There are a dozen prominent regional carriers that could help reduce shipping costs for some percentage of shipments. Or, consider partnering with fulfillment experts to distribute the high-volume inventory and capture meaningful margin savings by shipping orders from warehouses closer to the customer.

In any case, one thing is clear…costs continue to rise year after year, and the solution isn’t one-dimensional. To stay competitive and grow a successful online commerce business, there needs to be a fundamental shift in how e-commerce order fulfillment and reverse logistics are managed.

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In the highly competitive world of e-commerce, delivering an exceptional customer experience is the key to fostering long-term loyalty. While much focus is placed on the initial purchase journey, the often-overlooked return process can make or break a customer’s relationship with a brand. While many ecommerce businesses view returns as a painful but necessary evil, forward-thinking retailers are discovering their untapped potential for building customer loyalty. In today’s competitive marketplace, a positive returns experience can transform one-time shoppers into lifelong brand advocates, driving sustained growth and profitability.

The challenge lies in meeting the lofty expectations set by industry giants. Shoppers today demand frictionless, convenient returns, with 76% of consumers considering free returns a crucial factor in their purchasing decisions. Brands that fail to deliver on this expectation risk severe consequences, as 89% of customers are less likely to buy from a retailer after a poor returns experience. Conversely, those who prioritize seamless returns can reap significant benefits, with 97% of shoppers saying they’d buy again from a brand that offers a positive returns process.

The evolution of e-commerce, (particularly in the fashion industry where some apparel brands experience return rates as high as 40%!), has dramatically shifted customer expectations around returns. Modern shoppers demand easy, quick, and convenient return processes. Indeed, they demand flexibility and transparency throughout the entire purchase lifecycle – which includes returns.

Create a Clear, Customer-Friendly Return Policy

Transparency is crucial when it comes to building trust and confidence. Make sure the return policy is prominently displayed, written in plain language, and covers all the key details upfront. Spell out exactly what’s eligible for return, the timeframe, any fees, and the available resolution options like refunds, exchanges, or store credit.

Different research studies report that between 60% and 80% of customers check the return policy before making a purchase. So a clear, easy-to-understand policy can be the difference between a lost sale and a prospective loyal customer. Setting reasonable expectations and making the process seamless will encourage shoppers to buy, knowing they can return items hassle-free. And remember, most online shoppers consider free returns a crucial factor in their purchasing decisions.

Offer Flexible Return Methods

Convenience is king, especially when it comes to returns, and especially for those that spend the most online (30 – 60-year-olds). For example, not all customers have easy access to packing materials or printers, so providing flexible return options – like including pre-paid labels with the purchase or offering boxless drop-off locations (aka ‘return bars’) – will ensure a seamless experience by meeting the customer where they are.

Generous policies play a crucial role in building trust and fostering long-term relationships. Extended returns windows, (even if only for unopened or unused items), signals to customers that their business is a top priority. By catering to different customer preferences, you’ll demonstrate your commitment to the relationship, increasing the chances they’ll shop with you again in the future. Empowering shoppers to make informed decisions up front has also been shown to encourage larger purchases, more frequent shopping, and increased recommendations.

Process Returns Quickly

Time is of the essence when it comes to returns. Efficient returns handling not only prevents customers from becoming frustrated and abandoning your brand, but more than half say they’d be willing to spend more if they knew their refund would be processed quickly. Streamlining the returns workflow through automation can drastically reduce wait times, building trust and loyalty in the process.

Incentivize Exchanges Over Refunds

While refunds are sometimes unavoidable, savvy retailers can leverage exchanges as a powerful tool for retaining revenue and strengthening customer bonds. By incentivizing exchanges through exclusive discounts, coupons, free shipping, or even offering the option to exchange for a more expensive item, companies can encourage shoppers to stay within their ecosystem, transforming potential lost sales into loyal, repeat customers. Nearly all respondents across research studies say they’ll buy again if the returns experience is easy.

Automate the Returns Process

Implementing an automated returns management system is perhaps the most impactful step brands can take to improve the customer experience and drive loyalty. By streamlining the returns workflow through self-service portals, eligibility rules, and seamless integrations, you can resolve requests quickly and accurately – freeing up time to focus on higher-value tasks.

Automation not only enhances efficiency but also demonstrates your commitment to customer convenience, a key factor in building trust and fostering long-term relationships. When returns are simple and frictionless, customers are more likely to continue shopping with a brand.

Collect Customer Feedback

Regularly gathering data and feedback on returns and the returns process is crucial for continual improvement and reducing the cost of returns. Track key metrics like return rates, reasons for returns, along with customer satisfaction scores, to identify trends and pinpoint areas for optimization. This data-driven approach allows you to address pain points, fix underlying issues (which lowers cost), and tailor the returns experience to the customers’ evolving needs. By continuously improving the process based on their input, customers will see that their satisfaction is a top priority.

Building a VIP Loyalty Program Around Returns

If returns are just too expensive in categories with razor thin margins, consider offering a loyalty program that caters specifically to the needs of high-value customers. By offering VIPs enhanced returns benefits such as free return shipping, expedited processing, or extended return windows, brands can demonstrate their commitment to their satisfaction, deepening their loyalty and encouraging them to shop more frequently, a point which is frequently confirmed by respondents in research studies.

Summary

The returns process is a critical touchpoint that can either strengthen or undermine customer loyalty. By prioritizing transparency, flexibility, speed, and automation, you can transform this often-overlooked aspect of the customer journey into a strategic advantage that keeps shoppers coming back.
Just look at the success stories. It’s not hard to find companies that reduced their return rate from 15% to 4% or converted 30% of returns into exchanges. When the returns experience is seamless, customers are more likely to remain loyal, make repeat purchases, and even become brand advocates. It’s no secret that loyal customers are incredibly valuable.

So, don’t let returns be an afterthought. Embrace them as an opportunity to build trust, boost satisfaction, and cultivate a base of devoted, lifelong customers. They may be expensive in some cases, but they’re a part of doing business. And by investing in the returns process with a clear policy and convenient options presented to the customer, it becomes a differentiator, and brands will position themselves as industry leaders in customer satisfaction, which encourages loyalty and attracts new business.

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Knowledge workers have their work cut out for them. The advent of Artificial Intelligence (AI) Agents represents a revolutionary leap in technological innovation and will transform how business operates across every sector. They are highly specialized applications built from a foundation of Large Language Models (LLM) and Natural Language Processing (NLP) capabilities, (think ChatGPT or Llama by Meta AI), but instead of just returning an answer from a huge database of content built from webpages in the public domain, they can understand private, proprietary data and then “act” on the initial result to complete a workflow or achieve an outcome.

“Act” is the key word. AI Agents take autonomous action on the user’s behalf to complete the task or achieve the desired outcome. So, knowledge workers will either need to learn to harness the power of AI to 10X their output (or the output from the tools at their disposal), or AI agents will take over those jobs at a fraction of the cost. Being able to understand how these new tools work and marshal them in the right direction will be critical to gaining an early edge in the retail market and then staying there.

Ecommerce Order and Inventory Management Systems are already starting to incorporate AI agents to evolve these SaaS platforms into back-office powerhouses (unlike anything that has come before) that will do a better job, do it faster, and achieve lower overall costs for the business. Examples include:

1. Best-in-Class Demand Forecasting
   Predict demand with remarkable accuracy. Merchants have historically used unsophisticated data analysis tools and methods that led to unreliable forecasts, but typically some kind of guesses were better than no guesses at all. But modern Inventory Management Systems (IMS’s) using AI agents can analyze many millions of historical sales data points, current inventory on hand, and real-time market trends and supply chain issues to make intelligent forecasts to avoid stockouts and tying up capital in overstock.
   


2. Automatic [Humanless] Procurement
   AI agents can automatically create Purchase Orders with vendors at precisely the right time based on current inventory on hand using demand forecasts that include vendor lead times and transit times that consider real-time ocean freight availability, holidays such as Chinese New Year, weather conditions, port strikes, etc.
   


3. Optimize Fulfillment Costs
   Modern AI-enabled shipping software takes the thinking out of shipping label creation by removing the human and creating the optimal shipping label in the smallest packaging (box, mailer) that will deliver the order safely and on time, every time. It tells the warehouse staff which packaging the label was created for and tracks the packaging quantity on hand with reorder points. AI-assisted Order Management Systems (OMS’s) can monitor weather conditions and assign orders to fulfillment centers that are more likely to deliver them on time. See how much you can save.
   


4. Eliminate Returns and Reclaim Revenue Faster
   It’s critical to manage returns effectively (especially for the highest return rate categories such as women’s apparel), and frequent shoppers/returners typically represent the customers with highest lifetime value. So it’s important to take care of them. If an exchange or store credit is declined by the customer and a return is the only option, groundbreaking new returns technologies such as the Cahoot Peer-to-Peer Returns Solution are already eliminating returns altogether by enabling the return to be graded, approved, and quickly shipped by the customer. But NOT back to the warehouse… the shipping label delivers the item directly to the next customer, saving merchants significant money and time. AI detects the product’s condition by picture and automatically lists acceptable items at an open box discounted price, all without human oversight.
   


5. Dynamic Pricing Strategies
   AI agents can monitor competitor pricing and compare it with unique and repeat page views, sell-through rates, and unit quantity available to make real-time pricing adjustments that convert the sale while maximizing profitability and remaining competitive. Add a real-time discount incentive if an item is added to the cart. And, these personalized interactions not only drive sales, but also foster loyalty.

Summary

Agentic AI is here, and the transformative power of the technology extends way beyond mere automation rules and logic trees. Some people are worried about how this new technology will replace jobs, and they should be. But it can’t take over all higher-level jobs. At least in the near-term, people are still needed to build and direct the agents to work on the problems that will improve business outcomes.
It’s an extremely exciting time in history, and particularly for the ecommerce industry. As ecommerce businesses embrace these advancements and the powerful tools that emerge, (such as the Order and Inventory Management agents described above that can dig deep into the data and deliver precise forecasting, intelligent automation, and lower operational costs), they will not only streamline their operations but also build the agility needed to thrive in an increasingly complex and competitive industry.

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The rise of e-commerce has revolutionized the retail landscape, offering unparalleled convenience and putting an unlimited selection of products at consumers’ fingertips. However, this boom has also led to a significant increase in return rates, posing challenges for retailers. This trend has significant operational and financial implications for online retailers. High return rates burden e-commerce operations, increasing processing and restocking costs. Understanding the reasons behind this trend and identifying who is most likely to return online orders is crucial for developing effective strategies to mitigate returns.

E-commerce return rates have been steadily rising, often reaching 20-30% across the industry. This can be attributed to several key factors. The inability to physically inspect products before purchase makes it more likely that items will not meet customer expectations. Product sizing, quality, and functionality are common pain points leading to returns. Inaccurate product descriptions, poor-quality imagery, and lack of detailed sizing information often result in receiving items that don’t meet customer expectations. Additionally, “wardrobing” – the practice of wearing an item and then returning it – and the similar practice of “bracketing” – where customers intentionally order multiple variations of a single product with the plan to return all but one – have become increasingly common, driven by the convenience of e-commerce.

Certain product categories are more susceptible to high return rates. Apparel, for instance, can see return rates as high as 40% or more as customers struggle to find the right fit without trying items on. Other segments like luxury goods, beauty, and electronics also tend to have elevated return volumes. Ultimately, the anonymity of online shopping compared to in-person experiences contributes significantly to the e-commerce return epidemic.

Fraudulent returns are another growing challenge, with many merchants reporting incidents of thieves taking advantage of lax policies that are meant to encourage customer loyalty by endeavoring to achieve customer satisfaction. This dynamic has forced retailers to implement stricter measures to validate legitimacy and protect profit margins. Meanwhile, consumer expectations around generous, hassle-free return policies remain high, creating a delicate balance for merchants to manage.

The sheer popularity and ease of online shopping have led to a significant increase in the frequency of e-commerce returns. The 20-30% ecommerce return rate is at least double the rate observed in brick-and-mortar stores. This issue is leaving companies across industries grappling with the financial impact of unsustainable return rates.

Besides dissatisfaction with product quality, appearance, functionality, or sizing or fit issues, some other key factors driving the high e-commerce return rates include customers receiving the wrong or damaged product(s), as well as changing one’s mind about the purchase, and buyer’s remorse.

E-commerce returns are costly for retailers, ranging from 20-65% of the original item value in most cases when accounting for shipping, restocking, and potential loss in value, which doesn’t include the initial fulfillment cost of picking, packing, and delivery. Pure economic waste costs the industry hundreds of billions of dollars in profits each year. Industry estimates suggest cutting returns in half could boost profits by 25%. Effectively managing returns is thus essential for e-commerce profitability and sustainability and a well-designed returns program with a customer-friendly policy, streamlined process, and responsive communication can enhance customer satisfaction and loyalty leading to higher lifetime value and lower financial loss due to returns.

Improving product descriptions, providing size guidance and high-quality visuals, and leveraging AI to offer virtual try-on tools as well as identify “serial returners” before orders are shipped, are some of the strategies companies are adopting to reduce return rates. The effort is worth the investment because effectively managing e-commerce returns is not just to improve the bottom line, but also to build a positive brand reputation, foster customer loyalty, and drive repeat business.

Integrating e-commerce returns management with sustainable commerce practices, like product refurbishment, donation, and resale programs, can also help minimize waste and environmental impact. As consumers become more conscious of sustainability, retailers that demonstrate responsible reverse logistics can enhance their brand reputation.

Customers shopping online are more prone to making impulse purchases, which coupled with the convenient and lenient return policies offered by many e-commerce brands, can inadvertently encourage higher return rates.

Frequent returns can also damage brand reputation and erode customer trust, leading to higher cart abandonment. Businesses must strike a balance between intentionally attracting high-value customers with customer-centric returns policies and limiting sales, and thus growth, by being too restrictive in this area.

Demographics

Several research studies have been published on the demographics associated with high e-commerce return rates, and the groups returning items most often tend to be:

• Higher-Income Households: These shoppers are more likely to return items, possibly because they shop for fun or take chances on products they haven’t fully researched.
• Wealthier Countries: Countries with higher economic strength, like the U.S., U.K., and Germany, have higher return rates. This is partly due to more lenient return policies and higher disposable incomes.
• Frequent Shoppers: Enthusiastic shoppers who are excited to explore new products tend to return items more frequently.
• Apparel Shoppers: Customers buying apparel have one of the highest return rates because they can’t try on clothing before purchasing online.

These insights suggest that understanding the demographics and behaviors of a brand’s customers can help retailers implement strategies specific to their business to reduce return rates.

Summary

Changes in consumer behavior, such as the preference for easy returns and free return shipping, are driving higher return rates, which has significant operational and financial implications for online retailers, forcing them to tackle the problem head-on as it can no longer take a back seat.

A multi-pronged approach focused on enhancing the customer experience, optimizing reverse logistics, and leveraging data-driven insights can transform this liability into a competitive advantage. Offering incentives like extended return windows, store credits, or free exchanges instead of refunds can encourage customers to retain their purchases and prevent revenue erosion.

By getting returns right with clear returns policies, demographic-tailored solutions that don’t compromise business objectives, and proactive customer support, retailers can build customer loyalty, improve profitability, and contribute to more sustainable commerce. If done well, customers will buy again. Done poorly, and they will never look back.

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The era of free ecommerce returns is undergoing increasing scrutiny as many retailers reassess and adjust their return policies as they face mounting financial pressures, environmental concerns, and changing consumer behaviors. Once a hallmark of customer convenience, free and unlimited returns became the cornerstone upon which customer trust and loyalty was earned and purchases derisked. Now, these retailers are part of a growing trend where about 40% of retailers are now charging return fees, up from 31% in 2022, according to Narvar research. This shift could redefine the industry, marking a pivotal moment in the relationship between online shoppers and retailers.

The Financial Burden of Returns

Returns have become one of the most challenging financial burdens in e-commerce. Projections for 2024 suggest U.S. retailers will endure losses exceeding $100 billion annually due to returns, contributing to an estimated $890 billion global economic impact. Processing returns often incurs costs surpassing 30% of the product’s original price, encompassing transportation, restocking, and operational expenses. Seasonal and rapidly obsolescent items, as well as items damaged in transit, further exacerbate these losses and erode profitability, compounding the financial strain.

The rapid growth of ecommerce through the pandemic has intensified this issue, but now that the online shopping rate is returning to the mean, the returns rate hasn’t followed suit. Categories such as apparel and electronics are particularly affected where sizing issues and unmet expectations drive higher returns.

The Environmental Impact

Beyond financial implications, the environmental impact of returns is staggering. In the United States alone, returned goods generate an estimated 9.5 billion pounds of landfill waste annually and contribute 24 million metric tons of carbon dioxide emissions. Many returned items cannot be resold as new, often ending up in liquidation channels or being discarded entirely. This unsustainable cycle is prompting retailers to factor eco-friendly considerations into their return strategies.

Evolving Returns Policies

To mitigate these challenges, retailers are tightening return policies. Strategies include shorter return windows, fees for mail-in returns, and restocking charges. Leading brands like American Eagle, DSW, and H&M are at the forefront of these changes, signaling a departure from lenient practices of the past (see a larger list of retailers charging e-commerce return fees in December 2025, which is by no means exhaustive, at the bottom of this article). Even Amazon started charging $1 for certain return types.
Some retailers are also exploring innovative solutions to mitigate return rates. Technologies like augmented reality (AR) and virtual try-on tools aim to improve purchasing accuracy, reducing the likelihood of returns. Enhanced product descriptions, interactive sizing guides, and AI-driven recommendations are further helping customers make more informed choices.

Another emerging trend is the adoption of “returnless refunds,” where customers are allowed to keep items that are not economically viable to process as returns. While this reduces logistical costs, it raises questions about waste and sustainability, as well as abuse by bad actors, highlighting the need for balanced approaches. But there are very real instances where the “Keep It” approach makes sense. Low-cost/low-margin items, for example. Or, when there are sanitary concerns and items cannot be resold; such as food, undergarments, and pillows.

Avoid Policies That Are Too Strict

Many online stores are simultaneously making their return rules stricter to stave off returns fraud. They might ask for proof of purchase, shorten the return window, or create tough return conditions. While this sounds like a good way to prevent financial losses, it often backfires.

Customers really care about how easy it is to return things. If a store makes returns too difficult, many shoppers will simply stop buying from that store. These practices may be intended to deter wardrobing and bracketing that lead to returns without question, but they frequently alienate customers by failing to account for shopping histories and past loyalty. Plus, people get frustrated when returns are complicated, take too long, or seem unfair. Even customers who used to love a brand might walk away if they have a bad return experience. And inconsistent policy enforcement undermines trust and deters repeat purchases, even among previously loyal customers.

The good news is that stores can protect themselves from fraud without pushing customers away. The best approach is to use smart technology to understand different types of customers, monitor patterns, etc. Some shoppers return items more often than others, but that doesn’t mean they’re trying to cheat the system. By creating flexible return policies that treat loyal customers well, stores can actually make more money in the long run. The key is finding a middle ground. When stores get this right, customers feel valued and are more likely to maintain brand affinity.

Aligning Customer Expectations and Merchant Realities

While consumers remain attached to the convenience of free returns, their expectations are gradually adapting to new retail realities. Surveys reveal that flexibility and transparency are more valued than free returns. Clear communication about return policies, quick refund processing, and multiple return options are becoming critical components of the post-purchase experience, and ultimately, customer satisfaction. And when return fees are employed, the key is to make them reasonable; perhaps introduce them slowly and increase them over a long period of time.

Retailers are also leveraging behavioral insights to enhance return strategies. The “refund effect”, where customers receiving swift refunds are more likely to make additional purchases, is a key consideration. By optimizing refund processes such as offering incentives for exchanges, or offering gift cards that have a slightly higher value than the original purchase to keep the item, rather than return it, retailers can retain customer loyalty while mitigating costs.

A Balanced Approach

The future of ecommerce returns lies in finding equilibrium between consumer convenience and economic sustainability. Retailers are expected to continue refining policies, potentially introducing tiered return structures where loyal customers or higher-value purchases receive more lenient terms. Technologies that predict return likelihood based on purchase history or provide real-time feedback during the buying process may further reduce return rates.

Environmental sustainability will also play a more prominent role in shaping returns strategies. Partnerships with recommerce platforms, investments in circular economy initiatives, and improvements in reverse logistics can help align business objectives with environmental responsibility.

A Sustainable Path Forward

The e-commerce return ecosystem is not collapsing but evolving toward greater efficiency and balance. Retailers are navigating a delicate path, aiming to uphold customer satisfaction while safeguarding profitability and addressing ecological concerns. The era of unrestricted, free returns is giving way to a more nuanced model that prioritizes thoughtful consumption and sustainable practices.
As this transformation unfolds, the key to success will lie in innovation, transparency, and adaptability. By embracing these principles, retailers can forge stronger connections with consumers while fostering a more sustainable and economically viable future for e-commerce.

Table 1. Returns Fees Charged by Well-Known Retailers in December 2024.

Retailer/Brand	Returns Fee
Abercrombie & Fitch	All customers: $7.00
American Eagle Outfitters	All customers: $5:00: (excluding specific categories)
boohoo	All customers: $6:00
Dillard’s	All customers: $9.95
DSW	Non-Members: $8.50; Gold or Elite members: Free
H&M	Non-Members: $5.99; H&M Members: $2.99
JCPenney	All customers: $8.00
J.Crew	All customers: $7.50
Kohl’s	All customers: Kohl’s does not pay return shipping costs
Macy’s	Non-Members: $9.99; Star Reward Members: Free
Oh Polly	All customers: From $2.99 for store credit to $9.99
PrettyLittleThing	All customers: $7.00
REI Co-op	All customers: $7.99
Saks Fifth Avenue	All customers: $9.95
T.J. Maxx	All customers: $11.99
Urban Outfitters	All customers: $5
Zara	All customers: $4.95

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The holiday shopping season accounts for approximately 30% of annual retail e-commerce revenue, which represents enormous potential. Success during this crucial period demands meticulous preparation and strategic execution across multiple operational areas. To capitalize fully, businesses must avoid critical e-commerce mistakes in website performance, marketing, inventory, fulfillment, and overall strategic planning.

Website Performance and User Experience

The backbone of holiday sales lies in seamless website functionality. Shoppers expect pages to load within milli-seconds, and delays can drive potential customers to competitors. To optimize performance, businesses must conduct thorough load testing to prepare for traffic surges, ensuring infrastructure stability. Streamlining the checkout process by simplifying forms, enabling guest checkouts, and optimizing mobile experiences is crucial. Enhancing trust by prominently displaying security badges and providing competitive shipping options, such as 2-day delivery, can reduce cart abandonment. All development updates should be concluded by early to mid-November to allow for stability testing, ensuring the site operates flawlessly as peak demand ramps up over the Black Friday/Cyber Monday weekend and through the end of the year.

Craft a Comprehensive Marketing Strategy

A successful holiday campaign starts long before the season peaks, not just during BF/CM. Effective marketing strategies should begin early, launching email campaigns months ahead to build anticipation and engage shoppers. Leveraging exclusive offers through pre-sale codes, early deal announcements, and limited-time discounts fosters loyalty. Expanding social media outreach with shareable promotions and influencer collaborations amplifies brand visibility organically. Overreliance on major shopping days like BF/CM can lead to unnecessary operational strain. Staggering promotions throughout the season, however, captures both early planners and last-minute buyers while spreading out the workload.

Avoid Stockouts and Overstock

Inventory mismanagement is one of the most detrimental holiday mistakes. Both stockouts and excess inventory pose financial and reputational risks. Retailers should analyze historical data to forecast demand accurately and use real-time tracking systems to monitor stock levels across all sales channels. Early communication with suppliers ensures adequate inventory procurement and avoids last-minute (expensive) shortages.

Streamlining Fulfillment Processes

Fulfillment challenges often peak during the holiday season due to increased order volumes. Early preparation is essential to mitigating risks such as late shipping that leads to late deliveries and fulfillment defects. Establishing fulfillment partnerships and distributing inventory well before October ensures adequate capacity and rapid scalability. Multicarrier shipping solutions can optimize shipping costs and delivery timelines by comparing real-time rates across carriers and services.

Pricing and Product Presentation

Holiday shoppers demand clear, compelling product details and competitive pricing. Dynamic pricing tools allow businesses to adjust prices based on market trends and competitor activity while maintaining profit margins. Product listings must use high-quality images, multi-angle photography, and detailed descriptions that convey value and utility. Accuracy in these areas prevents abandoned carts and unnecessary returns.

Leveraging Technology for Operational Efficiency

The integration of advanced technologies transforms holiday operations enabling scalability and precision. Warehouse Management Systems streamline and optimize the movement of goods within a warehouse, ensuring efficient and cost-effective management of inventory by tracking its location, quantity, and movement throughout the receiving, storage, picking, packing, and shipping workflows, ultimately enabling overall warehouse productivity and fulfillment accuracy. Inventory and Order Management Systems are the central nervous system of your omnichannel retail operations, providing visibility and control of orders, inventory, customers, products, and more. Analytics platforms provide real-time insights into traffic, sales, and operational performance. Regular maintenance of automation systems and software minimizes downtime, ensuring uninterrupted operations.

Communication and Customer Support

Transparent communication builds trust any time of the year, but getting to trust quickly during the holiday rush increases the chances that customers buy from the well-prepared brands. Clearly displaying shipping cutoff dates and/or date-certain delivery dates, as well as making return policies easy to find and clear, using simple language, effectively manages customer expectations and increases conversion. Post-purchase, providing real-time updates about shipping delays, stock issues, or delivery changes reassures customers and demonstrates brand accountability and commitment to the customer relationship. Expanding support channels with chatbots, live agents, and comprehensive FAQs ensures customers have access to assistance when needed, and how they like to engage.

Summary

To thrive during the holiday season, retailers must adopt proactive measures. Monitoring competitor advertising, promotions, and pricing allows businesses to adapt dynamically. Ensuring seamless experiences across channels (webstores, marketplaces, apps), social media, and physical stores through omnichannel integration, including normalized product data using current high-resolution images and descriptions, encourages a delightful customer journey.

Time should be spent on building brand awareness and trust long before fourth quarter. Time should be spent analyzing data, procuring sufficient inventory, and finalizing marketing strategies. Software systems should be soak tested (especially if any parts of the tech stack are new) and fulfillment partner relationships established prior to the October start to the season. Seasonal staff need to be hired and trained to address the increased fulfillment and customer service demand.

The holiday season presents an exciting growth opportunity for ecommerce businesses. Not just a higher volume of one-time transactions, but the opportunity to create long-term relationships with loyal customers that may bear fruit for many years to come.

Related Blog Posts

The peak holiday season is the most critical time of the year for e-commerce businesses, characterized by intense order volumes, high consumer expectations, and operational complexities. In particular, e-commerce sellers that fully outsource their fulfillment operations require different preparations that retailers and brands that own their fulfillment workflows don’t have to consider. A proactive approach focused on forecasting and planning for logistics needs, customer service demand, and supportive technologies is essential for navigating this high-stakes period effectively.

2024 Important Dates

The holiday peak season typically spans from October to December, encompassing key shopping events like Black Friday (November 29th), Small Business Saturday (November 30th), and Cyber Monday (December 2nd). With Thanksgiving falling on November 28th this year (which is the latest it can fall relative to Christmas), the 2024 holiday shopping season is the shortest that it can possibly be for shoppers who don’t start browsing or buying until November 29th.

Daily shipment volumes can increase by 1,000% or more in ‘normal’ years, placing significant strain on fulfillment operations. However, some will see even higher spikes in demand this year due to the unusually late Thanksgiving Day. So the shipping deadlines below will feel tighter this year as carrier network capacity is constrained to fewer days. Consequently, e-commerce retailers will want to be more conservative with their delivery promises to customers needing to receive their orders before holiday events.

Carrier Published Shipping Deadlines to Ensure Delivery on or Before Christmas Eve

Carrier / Service	Contiguous U.S. (lower 48 states)	Alaska, Hawaii, International, Military
USPS Ground Advantage	December 18	usps.com/holiday/holiday-shipping-dates.htm
USPS Priority Mail	December 19
USPS Priority Mail Express	December 21
UPS 3 Day Select	December 19	ups.com/ctc
UPS 2nd Day Air	December 20
UPS Next Day Air	December 23
FedEx Ground Economy	December 13	fedex.com/en-us/holiday/last-days-to-ship.html
FedEx Express Saver	December 19
FedEx 2Day & 2Day AM	December 20
FedEx SameDay	December 24

Strategic Demand Analysis, Forecasting, and Marketing Execution

Accurate forecasting is the foundation of successful holiday operations. Analyzing historical sales data to identify trends, understanding seasonal consumer behavior, and mapping inventory needs help prevent both stockouts and overstock situations. Collaborating with suppliers well in advance to secure production and delivery schedules is critical. Factoring in extended lead times for manufacturing and transportation ensures inventory is positioned where it is most needed.

Taking the time to carefully plan promotions, new listings for bundle and/or kit SKUs, multi-packs, etc. can all help to increase revenue opportunities.

Optimizing Fulfillment and Logistics

Meeting increased demand during the holiday season requires a well-structured fulfillment strategy. Distributing inventory across multiple warehouses using fully outsourced fulfillment partners such as Cahoot can significantly reduce shipping costs and transit times and increase on-time delivery performance. Fulfillment partners offer advanced tools and infrastructure to rapidly scale operations while delivering exceptional customer experiences for the brand.

Make sure to review third-party receiving deadlines and blackout dates and plan to have inventory inbounded and fulfillment-ready long before it needs to be. Communicate emergency contact info, volume forecasts, (especially if any big spikes are expected from special promotions or sales such as Good Morning America Deals & Steals), and most importantly, make sure providers have enough stock on hand (including a buffer) to ship all orders on time, including any specialty items such as inserts or branded packaging materials.

Leveraging Technology

Make sure third-party fulfillment partners can successfully deliver quick and efficient pick/pack operations with minimal fulfillment defects. Retailers need to make sure to manage inventory and listing visibility across channels and marketplaces, and communicate with customers in real-time about order status and tracking. Automated returns systems simplify post-purchase processes (which can also be outsourced), and enhance customer satisfaction and the likelihood of repeat purchases and increased lifetime customer value.

Elevating the Customer Experience

Providing an exceptional customer experience is a competitive differentiator during the holiday rush, especially post-holiday when customer-initiated return requests will peak. Transparent communication about shipping deadlines and potential delays fosters trust. Branded tracking pages that include upsell and cross-sell ideas, as well as other promotional and/or discount offerings can help encourage repeat purchases and increase customer lifetime value. Offering Delivery Date Promises using tools such as Fenix Commerce or ShipperHQ or Order Management systems like Pulse Commerce where the customer can place an order knowing the estimated delivery date helps increase conversion. Offering real-time order tracking and flexible shipping options reduces cart abandonment. Lastly, personalized packaging, branded unboxing experiences, and thoughtful details like gift notes or sample products can leave a lasting impression.

Preparing Customer Support Teams

The holiday season places heightened demands on customer service infrastructure. Expanding support teams and equipping them with training tailored to holiday-specific scenarios enables quicker, more accurate resolution of customer inquiries, and helps retain revenue when employees are trained to offer exchanges or gift cards rather than refunds for return requests. Comprehensive self-help FAQs and automated chat solutions provide additional support layers, ensuring seamless communication using the customer’s desired method of outreach.

Managing Returns Effectively

Returns are always a headache. But with returns rates during the holiday season approaching 30%, investing in an efficient returns process is a critical component of the overall peak season strategy. Clear, easily accessible return policies reduce customer frustration and cart abandonment. Advanced systems for processing returns and restocking inventory minimize revenue losses and improve operational efficiency.

Contingency Planning for Unforeseen Challenges

Even with thorough preparation, unexpected challenges such as extreme weather or carrier delays can arise. Working with fulfillment partners that offer distributed inventory options ensures continued operations during local disruptions. Active management of marketplace shipping templates associated with listings based on regional disruptions can prevent the over-promising of delivery commitments that customers rely on for a great experience.

Ensuring Scalability and Sustainability

Scalable solutions are essential to handle the dramatic increase in holiday orders. Fulfillment partners that employ scan verification and next-generation shipping software minimize fulfillment defects leading to higher overall margins and happier customers. Sustainable practices, including eco-friendly packaging options and carbon-neutral shipping methods, appeal to environmentally conscious consumers while aligning with long-term business goals and increasing brand reputation.

Converting Challenges into Strategic Wins

Peak season preparation should begin months in advance. Early steps include finalizing demand forecasts, optimizing inventory positioning, and testing technical solutions for peak performance. Maintaining clear communication with all stakeholders and monitoring performance metrics ensures a smooth operation.

The holiday season presents a unique opportunity to build customer trust that leads to lasting relationships. By focusing on strategic planning, leveraging technology, and prioritizing the customer experience, businesses can transform the challenges of peak season into a powerful growth opportunity. The most successful organizations approach this period with adaptability, innovation, and a commitment to delivering excellence.

Offer 1-day and 2-day shipping at ground rates or less.

Related Blog Posts

The peak holiday season is the most critical time of the year for e-commerce businesses, characterized by intense order volumes, high consumer expectations, and operational complexities. A proactive approach focused on forecasting and planning for logistics needs, customer service demand, and supportive technologies is essential for navigating this high-stakes period effectively.

2024 Important Dates

The holiday peak season typically spans from October to December, encompassing key shopping events like Black Friday (November 29th), Small Business Saturday (November 30th), and Cyber Monday (December 2nd). With Thanksgiving falling on November 28th this year, (which is the latest it can fall relative to Christmas), the 2024 holiday shopping season is the shortest that it can possibly be for shoppers that don’t start browsing or buying until November 29th.

In ‘normal’ years, daily shipment volumes can increase by up to 1,000% or more, placing significant strain on fulfillment operations. But some will see even higher spikes in demand this year due to the unusually late Thanksgiving Day. So the shipping deadlines below will feel tighter this year as carrier network capacity is constrained to fewer days, and thus, ecommerce retailers will want to be more conservative with their delivery promises to customers needing to receive their orders before holiday events.

Carrier Published Shipping Deadlines to Ensure Delivery on or Before Christmas Eve

Carrier / Service	Contiguous U.S. (lower 48 states)	Alaska, Hawaii, International, Military
USPS Ground Advantage	December 18	usps.com/holiday/holiday-shipping-dates.htm
USPS Priority Mail	December 19
USPS Priority Mail Express	December 21
UPS 3 Day Select	December 19	ups.com/ctc
UPS 2nd Day Air	December 20
UPS Next Day Air	December 23
FedEx Ground Economy	December 13	fedex.com/en-us/holiday/last-days-to-ship.html
FedEx Express Saver	December 19
FedEx 2Day & 2Day AM	December 20
FedEx SameDay	December 24

Strategic Demand Analysis, Forecasting, and Marketing Execution

Accurate forecasting is the foundation of successful holiday operations. Analyzing historical sales data to identify trends, understanding seasonal consumer behavior, and mapping inventory needs helps prevent both stockouts and overstock situations. Collaborating with suppliers well in advance to secure production and delivery schedules is critical. Factoring in extended lead times for manufacturing and transportation ensures inventory is positioned where it is most needed.

Taking the time to carefully plan promotions, new listings for bundle and/or kit SKUs, multi-packs, etc. can all help to increase revenue opportunities.

Optimizing Fulfillment and Logistics

Meeting increased demand during the holiday season requires a well-structured fulfillment strategy. Distributing inventory across multiple warehouses using outsourced fulfillment partners such as Cahoot can augment existing operational capacity and reduce transit times, lower transportation costs, and increase delivery reliability. Third-party partners offer advanced tools and infrastructure to rapidly increase scalability while simultaneously enabling the positioning of products closer to high-demand areas, ensuring faster delivery and better customer experiences. Additionally, diversifying shipping carriers mitigates risks associated with carrier delays or capacity shortages.

Make sure to review third party receiving deadlines and blackout dates and plan to have inventory inbounded and fulfillment ready long before it needs to be. Communicate emergency contact info, volume forecasts, (especially if any big spikes are expected from special promotions or sales such as Good Morning America Deals & Steals), and most importantly, make sure providers have enough buffer stock on hand to ship all orders on time, including any specialty items such as inserts or branded packaging materials.

Leveraging Technology

Leveraging technology is key to maintaining efficiency during peak periods and earning customer trust that can lead to loyalty and future orders. Enterprise Order Management Systems like Shopify, Pulse Commerce, and BigCommerce enable quick and efficient pick/pack operations, practically eliminate fulfillment defects, manage inventory and listing visibility across channels and marketplaces, and communicate with customers real-time about order status and tracking. Automated returns systems simplify post-purchase processes, enhancing customer satisfaction and operational efficiency.

Elevating the Customer Experience

Providing an exceptional customer experience is a competitive differentiator during the holiday rush, especially post-holiday when customer-initiated return requests will peak. Transparent communication about shipping deadlines and potential delays fosters trust. Branded tracking pages that include upsell and cross-sell ideas, as well as other promotional and/or discount offerings can help encourage repeat purchases and increase customer lifetime value. Offering Delivery Date Promises using tools such as Fenix Commerce or ShipperHQ or Order Management systems already mentioned like Pulse commerce, where the customer can place an order knowing the estimated delivery date helps increase conversion. Plus, offering real-time order tracking and flexible shipping options reduces cart abandonment. Lastly, personalized packaging, branded unboxing experiences, and thoughtful details like gift notes or sample products can leave a lasting impression.

Deliver Packages Safely the First Time

Win loyalty and increase the likelihood of future orders by taking the time to prepare for safe and accurate delivery the first time. A bad experience during a time-sensitive situation can push the customer away. So make sure to include enough dunnage (void fill) to prevent damage in transit. Ship with the proper hazmat designation so orders are not returned to sender (and this also ensures that carrier accounts are kept in good standing). Create international shipments for validated addresses using the correct HTS Code, goods description, and compliance according to each destination country’s regulatory requirements. Most importantly, get organized and make sure to hand over packages to the correct carriers. Margins go out the window if orders have to be double-shipped to arrive on time OR customers return orders because they were delivered late, not to mention the reputation risk for the brand.

Preparing Customer Support Teams

The holiday season places heightened demands on customer service infrastructure. Expanding support teams and equipping them with training tailored to holiday-specific scenarios enables quicker, more accurate resolution of customer inquiries, and helps retain revenue when employees are trained to offer exchanges or gift cards rather than refunds for return requests. Comprehensive knowledge bases and automated chat solutions provide additional support layers, ensuring seamless communication.

Managing Customer Returns Effectively

Returns rates during the holiday season can approach 30%, making an efficient returns process a critical component of overall strategy. Clear, easily accessible return policies reduce customer frustration. Advanced systems for processing returns and restocking inventory minimize revenue losses and improve operational efficiency.

Contingency Planning for Unforeseen Challenges

Even with thorough preparation, unexpected challenges such as extreme weather or carrier delays can arise. Flexible contingency plans, including diversified carrier options and alternative fulfillment strategies, (such as partnering with a solution provider that supports distributed ecommerce fulfillment service as discussed above), ensure continued operations during local disruptions. Active management of marketplace shipping templates associated with listings prevent the over-promising of delivery commitments that customers rely on for a great experience.

Prepare hardware such as shipping label printers by cleaning printer heads to avoid blurry barcodes that will be returned to sender or otherwise delay delivery. Stock plenty of label paper, thermal transfer ribbon and the like. Consider procuring backup printers, barcode scanners, and packing slip pouches for international customs documents.

Ensuring Scalability and Sustainability

Scalable solutions are essential to handle the dramatic increase in holiday orders. Investments in automation, such as robotic picking systems or conveyor technologies, improve efficiency and accuracy. Implementing simple scan verification and next generation multi-carrier shipping software into the fulfillment workflow achieve a similar result without the large capital expense. Sustainable practices, including eco-friendly packaging options and carbon-neutral shipping methods appeal to environmentally conscious consumers while aligning with long-term business goals and increased brand reputation.

Converting Challenges into Strategic Wins

Peak season preparation should begin months in advance. Early steps include finalizing demand forecasts, optimizing inventory positioning, and testing technical solutions for peak performance. Training teams and conducting trial runs of fulfillment processes help identify and address potential issues before order volumes surge. Maintaining clear communication with all stakeholders and monitoring performance metrics ensure a smooth operation.

The holiday season presents a unique opportunity to demonstrate operational excellence and build lasting customer relationships. By focusing on strategic planning, leveraging technology, and prioritizing the customer experience, businesses can transform the challenges of peak season into a powerful growth opportunity. The most successful organizations approach this period with adaptability, innovation, and a commitment to delivering excellence.

Offer 1-day and 2-day shipping at ground rates or less.

Related Blog Posts