The January Hangover: Peak Season Does Not End on Christmas Eve, and the Returns Plan Should Say So
Most peak-season plans we see are genuinely good on the way out. Cut-off dates are agreed with carriers, capacity is booked, the warehouse has its seasonal staff lined up, and someone has modelled how many orders Black Friday will produce. Then the plan more or less stops at the last delivery before Christmas. What comes after, which is a wave of returns that starts on Boxing Day and does not really settle until the end of January, is usually handled by whoever is around in the first week of the year, on whatever process was in place in October.
That gap is what this post is about. The data from the last cycle is fairly consistent about the size of the January returns wave, what it costs, and how retailers are responding, and most of it argues for making a returns plan part of the peak plan rather than an afterthought to it. The good news is that almost everything that matters can still be set up in September and October.
The wave is predictable, and it is getting bigger relative to sales
Start with the base rate. In its 2025 Retail Returns Landscape report, published in October 2025 with Happy Returns, the National Retail Federation reported that US retailers expected 15.8% of annual sales to be returned in 2025, about $849.9 billion, with online sales returned at a higher 19.3% and holiday sales at 17%. So for a business that sells mostly online, roughly one order in five is coming back, and the holiday quarter is not better than the average.
What happened over the 2025 holidays suggests the wave is now growing faster than the sales that create it. Narvar, which draws on post-purchase data covering nearly 200 million US consumers, reported in February 2026 that holiday order volume rose by roughly 6% year on year while return volume rose by roughly 11%, nearly twice as fast. Narvar's CEO, Anisa Kumar, described a return as "a customer's final filter" for their budget, with consumer confidence at its lowest point since 2014. Seel's 2025 State of Returns and Refunds report (December 2025, based on around 10 million transactions) found return activity runs about 16% higher in November and December than in other months.
The timing is also fairly predictable. Adobe Analytics, in its January 2026 holiday wrap-up, said that online returns for the 2025 season were down 1.2% overall, but that returns in the six days from 26 to 31 December were up 4.7%, and that one in every seven returns for the whole season happened in that window. In the UK, ZigZag reported in January 2026 that 29 December 2025 was the single biggest spike, up 16% in a day, with a smaller "back to the office" climb on the first Monday after New Year. So the shape is a sharp spike right after Christmas and then a long tail through January, and the tail is where most of the volume is, because many major retailers extended their holiday return windows into late January for 2025 purchases, as ConsumerAffairs reported in December 2025.
It is worth noticing that the people who price and forecast peak already define it this way. Deloitte's 2026–27 holiday forecast, published in September 2026, defines the season as November 2026 through January 2027, and expects US holiday e-commerce sales of $316.1 billion to $318.9 billion, up 7.5% to 8.4%. UPS's 2026 peak surcharges, as reported by Supply Chain Dive in August 2026, start on 27 September, peak from 22 November to 26 December, and stay in place until 16 January 2027. The carrier is telling you, in its rate card, that the return leg is part of peak.
What the wave costs, and why fees became normal
Returns are expensive at the best of times, and January is not the best of times. The NRF's 2025 report gives the two reasons retailers most often cite for charging return fees: increases in the cost of operations to process returns (40%) and increases in carrier shipping costs (40%), followed by economic uncertainty and tariff risk (33%). Both of the top two are worse in January, when reverse parcels are moving on peak-surcharged rates and the warehouse is receiving, grading and restocking at the same time as it handles the last of the outbound.
Fees have gone mainstream as a result. eMarketer, citing the NRF's 2025 data, reported that 72% of US retailers now charge for at least some returns, up from 66% a year earlier. In the UK, ZigZag found that 45% of retail returns made between Black Friday (28 November 2025) and 6 January 2026 were paid for by the shopper, and its 2025 benchmark with Retail Economics found that 42% of the 100 UK clothing and footwear retailers it studied charge for returns (excluding delivery fees), with only 24 offering fully free returns.
The catch is that fees have a cost of their own, and the data on that is also fairly clear. The same eMarketer piece reported that 47% of merchants who began charging return fees saw more customer complaints, 37% lost customers, and 34% saw average order value decline. On the consumer side, the NRF found that 82% of shoppers say free returns are a major factor in whether they buy, and that 71% are less likely to shop with a retailer again after a poor returns experience, up from 67% the year before. So the question for most brands is not really whether to charge, but how to charge in a way that feels fair and is applied consistently, which in practice means having the policy encoded somewhere rather than interpreted by whoever is answering the queue in the first week of January.
Fraud and abuse are part of the January picture
The other reason returns policy has been tightening is abuse. The NRF's 2025 report put the share of returns that are fraudulent at 9%. Appriss Retail's 2026 Total Retail Loss Benchmark report, published in February 2026 and drawing on around 250 million unique customer identifiers, put total US merchandise returned in 2025 at $706 billion and estimated that $100 billion of it, or 14.2%, was preventable loss from fraud and abuse. The two figures measure slightly different things, but they point the same way, and the holiday period, with its gift returns, extended windows and stretched teams, is where the pressure is highest.
The response has been technology more than blanket policy. The NRF reported that 85% of retailers are using AI in some form to prevent return fraud, while still planning to extend return windows over the holidays (37% said they would). That combination, longer windows but tighter screening, is probably the right instinct, because the NRF's own data shows how sensitive customers are to a bad return experience. It does mean that the return process needs to be able to treat a straightforward "wrong size" request differently from a suspicious one, which is again a question of rules and data rather than of headcount.
What operations should set up now
None of this is a reason to panic, but it is a reason to bring the returns plan forward into the same September and October window as the outbound plan. From what we see across the brands we work with, these are the pieces that are still easy to set up now and very hard to set up on 27 December.
Write the holiday policy down as rules, not as a paragraph. Decide the extended window (many retailers run it into late January), what is and is not returnable, what carries a fee and what does not, how gift returns are handled, and what gets approved automatically versus what needs a person. Then put those decisions into whatever system approves returns, so that the majority of January requests are approved on submission and the review queue only contains the exceptions. The NRF data says retailers plan to hire seasonal staff to handle returns (43% in 2025); the point of encoding the policy is that those people work the exceptions rather than the whole queue.
Book reverse capacity separately from forward capacity. The carrier that is cheapest and most reliable on the way out is often not the best choice on the way back, and in most markets the return leg is moving on peak-surcharged rates until mid-January. Agree reverse rates and pickup capacity with carriers now, decide where drop-off networks and lockers fit alongside home pickup, and make sure reverse parcels do not quietly compete with outbound parcels for the same allocation in the last week before Christmas.
Plan the receiving side, not just the label. The parcel arriving back at the warehouse is where cost is either recovered or lost. Have a receiving and grading process that records what actually came back, in what condition, against what was approved, and be clear about who releases the refund and on what trigger. Narvar's February 2026 report noted that boxless returns cut total processing costs by 15% to 20%, which is one example of a decision that is easy to take in October and impossible in January.
Communicate the return leg the way you communicate delivery. In January the "where is my refund" ticket takes the place of the "where is my order" ticket, and it is arguably more damaging because it lands after the customer has already been disappointed once. Tracking and proactive notifications on the reverse shipment, and a clear message when the refund is recorded, remove most of that volume before it reaches the support team.
Measure the wave while it is happening. Return reasons by product, the share of returns caused by late or failed delivery, refund liability sitting in pending requests, and the time from approval to refund are the numbers that tell you whether the plan is working. Seel's December 2025 report is a reminder that a meaningful share of holiday returns are caused by the delivery itself rather than by the product, which is a number worth knowing by the second week of January rather than in the March post-mortem.
Where Carriyo fits
Returns are a regular focus for us, and we have written before about why they matter for retention and about how the returns module in Carriyo works, so we will keep this short. The reason returns sit inside the same platform as orders, shipping and tracking is exactly the January problem: a return request needs the original order and delivery behind it, the reverse shipment needs the same carrier rules and capacity logic as the outbound one, and the customer needs the same tracking and notifications on the way back. Approval rules, reverse carrier routing and return-leg notifications are all things that can be configured now and left to run through peak. On Friday we will go through the current returns capabilities in more detail.
If you are working through your peak plan and want a second opinion on the returns side of it, get in touch with our team at carriyo.com/contact. We are happy to walk through what the last few peaks have taught us.
Carriyo is The Intelligent Commerce Platform, from checkout to doorstep.
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Sources
1. National Retail Federation & Happy Returns. "Consumers Expected to Return Nearly $850 Billion in Merchandise in 2025" (2025 Retail Returns Landscape), 15 October 2025. https://nrf.com/media-center/press-releases/consumers-expected-to-return-nearly-850-billion-in-merchandise-in-2025 2. Narvar. "Narvar Finds January Returns Climb Nearly Twice as Fast as Holiday Sales, Marking a More Cautious Consumer Entering 2026" (PR Newswire), 5 February 2026. https://www.prnewswire.com/news-releases/narvar-finds-january-returns-climb-nearly-twice-as-fast-as-holiday-sales-marking-a-more-cautious-consumer-entering-2026-302680350.html 3. Seel. "2025 State of Returns and Refunds Report", 11 December 2025. https://www.seel.com/blog/2025-state-of-returns-refunds 4. Adobe. "Adobe: Holiday Shopping Season Drove a Record $257.8 Billion Online with Consumers Embracing Generative AI Tools", 7 January 2026. https://news.adobe.com/news/2026/01/adobe-holiday-shopping-season 5. ZigZag Global, as reported by Retail Rewired. "45% of Peak returns were paid, as shoppers' acceptance of returns fees rise, says ZigZag", 16 January 2026. https://retailrewired.co.uk/2026/01/16/45-of-peak-returns-were-paid-as-shoppers-acceptance-of-returns-fees-rise-says-zigzag/ 6. ZigZag Global & Retail Economics. "ZigZag UK Returns Benchmark 2025". https://www.retaileconomics.co.uk/retail-insights/thought-leadership-reports/zigzag-uk-returns-benchmark-2025 7. Deloitte, as reported by MarketScale. "Holiday e-commerce will reach up to $319 billion this season, Deloitte forecasts", 18 September 2026. https://www.marketscale.com/industries/retail/holiday-e-commerce-will-reach-up-to-319-billion-this-season-deloitte-forecasts 8. Supply Chain Dive. "UPS preps higher holiday surcharges for 2026", 27 August 2026. https://www.supplychaindive.com/news/ups-preps-higher-holiday-surcharges-for-2026/828936/ 9. eMarketer. "Online returns are down 2.5% this holiday season" (citing NRF/Happy Returns and Adobe Analytics), 17 December 2025. https://www.emarketer.com/content/holiday-returns-2025-decline-retailer-strategies-consumer-impact 10. Appriss Retail. "The 2026 Total Retail Loss Benchmark Report", as reported by Retail Customer Experience, 24 February 2026. https://www.retailcustomerexperience.com/news/retailers-loss-from-returns-shrink-in-2025-hit-796b/ 11. Carriyo. "Returns Are the New Retention Battleground" (Carriyo blog, June 2026). https://carriyo.com/blog/returns-new-retention-battleground-2026-06-23/ 12. Carriyo. "Returns, Done Right: Inside Carriyo's Returns and Reverse Logistics" (Carriyo blog, June 2026). https://carriyo.com/blog/returns-done-right-inside-carriyos-2026-06-30/ 13. ConsumerAffairs. "The 2025 holiday returns playbook: Here's what's new and how to protect your refund", 22 December 2025. https://www.consumeraffairs.com/news/the-2025-holiday-returns-playbook-heres-what-new-and-how-to-protect-your-refund-122225.html