Why January Has Become a Critical Retail Month

The Second Peak Retailers Can’t Ignore

For decades, the retail calendar followed a predictable arc. Peak season built toward Christmas, then demand tapered off as January arrived.

In 2025, that pattern no longer holds.

For many retailers, the day after Christmas now signals the beginning of a second peak, one defined not by outbound orders, but by inbound returns. Merchandise that moved out at scale in November and December flows back in January, often at peak shipping rates and with far less margin to absorb the cost.

This shift places pressure on operations, fraud controls, and profitability at the same time, turning what was once a quieter period into a critical stress test.

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Returns Remain Enormous, Even as Rates Ease

Returns continue to represent one of retail’s largest operational burdens. National Retail Federation, in collaboration with Happy Returns, projects that U.S. retail returns will reach $849.9 billion in 2025, roughly 15.8 percent of total retail sales.

Online purchases account for a disproportionate share of that volume. The NRF estimates that 19.3 percent of eCommerce sales will be returned, reinforcing how digital growth compounds reverse-logistics costs.

While overall return rates are slightly lower than in 2024, the absolute dollar value remains close to a trillion-dollar problem. Increasingly, those costs sit directly on retailers’ balance sheets rather than being absorbed as a growth expense.

Holiday sales intensify the impact. The NRF expects U.S. holiday retail sales to surpass $1 trillion for the first time, with approximately 17 percent of holiday purchases returned. That implies roughly $170 billion in merchandise moving back through reverse supply chains just weeks after peak promotions end. UPS has identified the peak of returns as the Monday after New Year’s, which falls on January 5.

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Why 2025 Raised the Stakes

eCommerce continues to elevate baseline return costs. Adobe forecasts $253.4 billion in U.S. online holiday sales between November 1 and December 31, up 5.3 percent year over year. Even modest growth matters when each return incurs cost twice, once outbound and once inbound.

External pressures are adding to the strain. According to the NRF, retailers are managing returns amid tariff exposure and broader cost uncertainty. In the NRF and Happy Returns survey, merchants cited higher processing costs and carrier shipping fees as leading reasons for charging for returns, with economic uncertainty and tariff risk close behind.

Return abuse further compounds the challenge. The NRF estimates that 9 percent of all returns are fraudulent, prompting most surveyed retailers to deploy artificial intelligence tools to detect and prevent return fraud.

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January as a Reverse Peak

The cost of moving returned goods rises just as volume spikes. The United States Postal Service implemented temporary holiday pricing in early October that extends into mid-January, while UPS peak season demand surcharges also run into the new year.

For bulky items subject to oversize or additional handling fees, these surcharges can quickly turn a free return into a margin-negative transaction. January has effectively become a reverse peak, defined by higher costs and lower recovery value.

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Amazon’s Returns Model Signals the Shift

Amazon offers a glimpse of where returns strategy is heading. The company enables free, label-free returns with no box or tape required at thousands of locations, including Amazon stores, Whole Foods Market, Kohl’s, and Staples.

By consolidating returns at staffed drop-off points, Amazon reduces parcel shipping, accelerates item verification, and improves recovery economics. While few retailers can match that scale, the model highlights a broader shift away from individual doorstep returns toward controlled, lower-cost return nodes.

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Building a Returns-First Operating Model

Returns are no longer a customer service afterthought. They are an operating discipline.

Steering returns toward lower-cost channels such as buy online, return in store, staffed drop-offs, and label-free programs can help protect margins. Prioritizing exchanges or store credit over refunds can improve cash flow while meeting expectations for fast resolution.

The scale of post-holiday returns is not a temporary inconvenience. It reflects a structural shift in how retail operates, with January now serving as a recurring stress test. In 2026, the retailers that perform best will be those that integrate returns into logistics, payments, fraud, and merchandising strategy from the start.

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Payment Solutions with Kubera Payments

At Kubera Payments, we help retailers across North America move money securely and efficiently, whether in-store, online, or across complex return flows.

Our team works with merchants and partners to ensure payment infrastructure supports not only growth, but the operational realities that follow peak season.

To learn how to strengthen your payment and returns strategy, contact our team at sales@kuberapayments.com or 604-484-9278

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