Every peak season has a second act. Retailers surveyed by NRF and Happy Returns expected roughly 17% of last season’s holiday purchases to be returned, about $170 billion in merchandise, PYMNTS reported in January. UPS marked the busiest returns day of that season as the Monday after New Year’s. Across the whole of 2025, NRF and Happy Returns projected $849.9 billion in returns, with 19.3% of online sales coming back.
Holiday returns behave differently from returns the rest of the year. They arrive in a concentrated wave, many of them come from people who did not place the order, and they land on the same warehouses and 3PLs that have just finished the busiest shipping weeks of the year. Most of the decisions that determine how that wave goes, from the return window to where returned stock is processed, are made before the first gift is unwrapped.
Extended return windows move the wave
Many retailers extend their return windows for holiday purchases, so that a gift bought in November can still be returned in January. Amazon’s policy last season, as Newsweek reported, let most items bought between November 1 and December 31, 2025 be returned through January 31, 2026.
An extended window is a customer experience decision with operational consequences. It pushes a large share of returns into January, when sales are slower and inventory planning for the new year is under way. It means revenue booked in December stays exposed to refunds for weeks. And it determines how long returned stock spends in the reverse supply chain before it can be sold again.
Brands should set their holiday window on purpose: which purchase dates it covers, the final return date, any categories excluded, and whether it applies equally across their own storefront, marketplaces and retail partners. Then the order record needs to know which policy applies to each order, so the right rules fire when a return request arrives.
Free returns, paid returns and the policy decision
The return window is one policy decision. Who pays for the return is another. Shoppers care about it: in the NRF and Happy Returns research, 82% of consumers said free returns are an important consideration when shopping online. At the same time, retailers have been adding fees for some returns, citing processing costs, carrier costs and economic uncertainty, according to PYMNTS.
There is no single right answer, and many brands land on a mix: free returns for exchanges or store credit, a fee for refunds by mail, free returns in store or at drop-off points. Whatever the mix, it has to be applied consistently across channels and recorded against each order, because a policy that the storefront, the returns platform and customer service each interpret differently is one that customers will test in January.
Gift returns are a different kind of return
A large share of holiday returns are gifts, and gifts break the usual assumptions. The person returning the item is not the person who bought it. They may not know the order number, the price paid or the email address on the order. They may want an exchange or store credit, while the buyer may not want to be refunded or even notified.
Handling gift returns well depends on the order record. A gift receipt or gift order number has to lead back to the original order, the price paid, any discounts and the payment method, without exposing the buyer’s details to the recipient. The return platform, the storefront and the order operations layer all need to agree on which order a gift return belongs to, or the refund goes to the wrong place and the inventory is credited to the wrong location.
Returns that arrive before the return request does
Some holiday returns arrive with no return authorization at all. Customers send items back to the address on the packing slip, drop them at a store, or ship them to whichever warehouse is on an old label. Returns arrive at locations that never shipped the item, and sometimes before anyone has started a return in the system.
These are the returns that turn into write-offs and angry customers if they cannot be matched to an order. The operation needs a way to receive an unexpected return, look up the original order from whatever identifier is on the package, and route the refund and the inventory correctly. That only works if every location can see the same order history.
Exchanges and store credit before refunds
Not every holiday return has to become a refund. Gift recipients often want a different size or color, and they may not have access to the original payment method at all. Offering an exchange or store credit first keeps the revenue, and it gives the recipient a reason to come back to the brand.
Exchanges add operational steps of their own. The replacement item has to be available, reserved and shipped, ideally before the returned item has even arrived. That means the order operations layer needs to create the exchange order, link it to the original order and the return, and allocate inventory for it like any other order. When those links are missing, exchanges turn into duplicate orders, double refunds or customers waiting weeks for a replacement.
Marketplace and retail partner returns
Holiday orders placed on marketplaces and through retail partners come back through their own processes. Marketplace returns follow the marketplace’s policy and timelines, and retailer returns may arrive at a brand’s warehouse in bulk weeks after the customer returned the item to a store.
Brands selling across several channels need a single view of all of it: which returns were initiated where, which ones have been received, which have been refunded and by whom, and what inventory has come back. Without that view, January becomes an exercise in reconciling refunds and inventory across separate systems by hand.
Tell customers the policy where they will look
Most holiday return problems begin with a customer who did not know the policy. The extended window, the final return date, exclusions and how gift returns work should appear at checkout, on the order confirmation, on a gift receipt and in the box. Consistent policy information across channels also cuts down on support contacts in January, when teams are smallest.
Getting returned inventory back on sale
The value of a returned item drops every day it sits unprocessed. In January, many brands are running clearance and new-season launches, and returned stock that is already in a warehouse but not yet graded and restocked cannot be sold.
The key measure is the time from when a return is scanned by the carrier to when the item is back in sellable inventory. Shortening it depends on knowing returns are coming, so receiving teams can staff for them; grading items quickly into resellable, refurbish or dispose; and updating inventory as soon as an item is restocked, so every sales channel can sell it.
Where returns are processed matters too. Routing returns to the location where the item is most likely to sell again, or where the brand has return processing capacity, can shorten the path back to sellable inventory.
Plan capacity for January now
The warehouses and 3PLs that ship peak orders usually process the returns too, and the returns wave arrives just as seasonal staff are leaving. Brands should agree on returns capacity with their fulfillment partners before peak: expected volumes by week in January, how quickly returns will be received and graded, and what happens if volume runs above plan.
Fraud is part of the plan as well. NRF and Happy Returns found that 9% of returns in 2025 were fraudulent. Clear policies, consistent enforcement across channels, and the ability to check a return against the original order and its shipment history make the most common abuses harder.
A January timeline to plan around
Holiday returns follow a predictable rhythm. The first returns trickle in during December, mostly from early-season purchases and items that arrived damaged or wrong. Volume climbs sharply in the first week of January, after the holidays end and gift recipients start sending things back; last season, UPS marked the Monday after New Year’s as its busiest returns day. Returns stay elevated through the middle of the month, then taper toward the final return date, with a last bump just before the deadline for retailers that use an extended window.
Each phase needs something different. In December, the priority is fast exchanges for gifts that need to arrive before the holidays. In early January, it is receiving capacity and refund speed. By late January, it is restocking, reconciliation with marketplaces and partners, and closing out the season’s numbers.
Measure the wave as it arrives
A few metrics show whether the returns plan is working: return rate by channel and category, so brands can see which products and channels drive the wave; days from carrier scan to restock; refund cycle time, from the return being received to the customer being refunded; and the share of returns converted to exchanges or store credit. Reviewed weekly through January, they show where to add capacity and which policies to adjust for next year.
Where Pipe17 fits
Pipe17 is the Order Operations Platform. It connects sales channels, fulfillment and back-office systems, and orchestrates every order from checkout to delivery and back. For holiday returns, that means every return can be tied to its original order, whichever channel it was sold on and wherever it arrives, and returns platforms, warehouses, 3PLs and the ERP work from the same order history. Restocked items flow back into available inventory for every channel, so returned stock can sell again as soon as it is ready. Brands using returns platforms such as Loop can connect them through Pipe17’s Loop integration, so the returns experience and the operation behind it share the same data.
The takeaway
Holiday returns are part of peak season, and they peak in January. Set the holiday return window deliberately, make sure gift returns and unexpected returns can be matched to their original orders, agree on returns capacity with fulfillment partners now, and measure the time it takes to get returned items back on sale. Brands that plan the second act before the first one starts will spend less of January cleaning up after December.
