Mastering post-holiday returns: A guide for Canadian SMBs

Post-holiday returns can feel overwhelming. For many Canadian businesses, January can mean an increase in returns as customers attempt to exchange or obtain refunds for unwanted gifts. But they don’t have to be a headache or a drain on revenue. When you handle them well, you build trust and keep customers coming back. The key is preparation. Clear policies, trained staff, and strong processes turn returns from a cost into an opportunity. 

Returns increase significantly after the holiday season, especially during early January when parcel volumes peak. Canada Post has reported ongoing pressure on delivery networks during this period, which can lead to delays and customer dissatisfaction. At the same time, Canadian retailers are facing rising return abuse and fraud, according to the Canadian Anti-Fraud Centre and the Retail Council of Canada. These trends make it critical to strengthen verification and intake processes.

Here are some practical steps to manage returns and use them to strengthen customer loyalty.

Set clear return policies

Your return policy should be simple, transparent, and easy for customers to find. It should clearly state time limits, item condition requirements, and whether refunds or exchanges are offered. Place links to the policy on product pages, at checkout, and in the order confirmation emails. Update the policy before the holiday season to reflect any changes such as restocking fees or shortened return windows and ensure compliance with Canadian consumer protection standards.

Double check every return

Every returned item should be inspected thoroughly before approving a refund or exchange. Staff should verify SKUs, serial numbers, barcodes, and packaging to confirm that the correct product has been returned. Photograph the condition of the item during intake and store these records in your system. Always require proof of purchase and match it to the returned item. These steps help prevent losses from fraudulent returns, which are increasingly common in Canada.

Watch for return fraud

Return fraud is a growing concern for Canadian retailers, with tactics such as wardrobing, item swapping, and empty box claims becoming more frequent. Industry reports indicate that fraudulent or abusive returns account for a significant share of losses. To reduce risk, use technology to flag suspicious patterns, limit returns without receipts, and require original packaging for high-risk categories. Avoid issuing instant refunds for high-risk items until they have been inspected, especially if the returns are for an online store that receives returns via mailed or couriered packages.

Train your team

Your staff should be trained to follow a clear intake checklist for all returns. Provide scripts for common scenarios and establish a process for escalating suspicious cases. Share fraud alerts and best practices from Canadian sources such as the Retail Council of Canada and the Canadian Anti-Fraud Centre. Well-trained employees can prevent errors and protect your business from losses.

Use technology to track returns

Implement systems that tag each return with a reason code and associated cost. Monitor product-level return rates and update product descriptions to address issues such as sizing or colour discrepancies. Consider offering box-free or label-free return options in-store to enhance customer convenience, while maintaining strict verification at the counter.

Offer alternatives to refunds

Unless an item is defective, businesses in Canada can enforce return policies that only offer store credit or item exchange. As a business, you don’t have to lose the sale; you just need to clearly identify your policy. If you notice return trends based on sizing, consider offering size swaps or providing fit guidance for apparel to customers when they shop online. For minor issues, consider repair or replacement parts to save the sale and maintain customer loyalty.

Communicate proactively

Send customers sizing charts, care instructions, and accurate product photos before shipping. Follow up with setup guides or usage tips after delivery. Proactive communication reduces avoidable returns and improves customer satisfaction.

Plan for cash flow impact

Returns can create financial strain, especially in January and February. Forecast return volumes and set aside funds to cover refunds, restocking, and transportation costs. Move aging returns through secondary channels quickly to recover value and maintain liquidity.

Work with reliable carriers

Late or damaged deliveries often lead to returns. Partner with carriers that meet deadlines and monitor their performance closely during peak season. Stay informed about Canada Post and other delivery service updates that may affect parcel flows and staffing levels.

Turn returns into opportunities

Follow up with customers after a return to request feedback and offer a discount on a future purchase. Suggest alternative products or invite them to try an exchange. A positive return experience can turn a dissatisfied customer into a loyal one.

The right approach makes all the difference

Managing post-holiday returns is not only about minimizing losses; it is also about building trust and maintaining customer loyalty. A clear policy, thorough checks, and proactive communication turn a stressful process into a positive experience. When you plan ahead and train your team, you protect your margins and show customers you value their time and money. Returns will always be part of retail, but how you handle them can set your business apart and create repeat buyers for the year ahead.

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Sources

Canada Post Annual Report 2024

Canada Post Financial Picture 2024

Retail Council of Canada Fraud Threats

Micro land Blog on Online Returns Fraud in Canada

UPS Canada Consumer Returns Trends