Edition 110, September 2020

Why Should You Stop Putting Returns Labels in the Box and Switch to an Online Portal?

By Al Gerrie, ZigZag Global

Whether it is robotics, artificial intelligence, cloud computing, big data, or IoT, technology advancements are often the catalyst for ushering in new business processes that further an industry. 

Returns rates in the UK can be over 50% for some retailers selling online, rising to as high as 70% in Germany for women’s fashion retailers. Rising return rates and volumes are quickly becoming one of retail’s biggest headaches. However, some retailers are still using old business methods when it comes to returns despite innovation in this area. An alarming number still require customers to fill in a returns label included in the outbound parcel or, worse still, only accept in-store returns.

So, unless you are receiving this article through a fax machine, it is perhaps time to consider managing your returns through an online portal.

What is a label in the box and why is it used?

Including a returns label was once the cheapest and most reliable way for retailers to get returning goods back, and also the most convenient method for customers. As eCommerce began to gain popularity, retailers were more focused on creating a unique online shopping experience and building their brand. Returns were more of an afterthought. 

By including a returns slip in the outbound box, retailers could easily outline what information was required, ensure the cheapest mail route was being used (if they advertised free returns), and didn’t force customers to print off their own. 

Things have changed since then.

Here are just some of the reasons why retailers worldwide are adopting an online returns portal.

Provides greater visibility

By managing your returns through a label provided in the box, retailers never know what is returning until it arrives at the warehouse and is processed by employees. With consumers having up to 14 days to notify retailers of their intent to return, or 30 days if the goods are faulty, retailers can be kept in the dark for a while. An online portal allows retailers to receive all the information at once. They can know which goods are returning, when they will return, why they are being returned, and which warehouse they will be arriving at.

Having this sort of information available sooner allows for retailers to better manage their production levels. If they know an item is returning due to size issues, they know it’s likely to be undamaged and ready for resale quickly at a certain location. Ultimately, more visibility allows for better, quicker decision making. 

Cuts Warehouse Processing Times

“An online portal can also reduce warehouse processing times by up to 50%”. The greater visibility as to what is returning (as mentioned above) allows warehouses to know what is inside the box without having to cut it open. Items can be grouped together by their contents and its expected condition in order to streamline the grading process. Additionally, warehouse managers will know ahead of time when there is an influx of returns coming, allowing for better worker scheduling, and thus cutting costs. Faster warehouse processing times can speed up the refunding process, improving customer satisfaction.

Keeps customers informed

Once a label is filled in and sent off, that is it. No confirmation, no communication. A customer may not hear about the status of their return or refund for a while. With an online portal, customers are kept informed throughout the whole process. Returns can be tracked on their journey back; warehouses then can process the return faster and provide instant refunds. 

One of the most common customer service enquiries is “Where’s my refund?”. However, as customers can be notified on key return journey milestones and refunds are faster than label in the box methods, customers are kept up to date. Therefore, this decreases the quantity of refund enquiries; for example, ZigZag’s online platform reduced customer service enquiries by 40% for one of its leading UK-based fashion brands, drastically cutting staffing costs whilst improving the customer experience. 

Saves sales that would have been lost

A study from Intermec (now Honeywell) found that 52% of distribution centre managers don’t have the understanding or resources available to know where to send returned items next. In turn, this leads to a 50% loss in value of return items as they could have been sold in secondary markets (UPS). 

ZigZag’s online portal, for instance, uses predictive analytics to move goods to local marketplaces where they have a good chance of being resold. For fast fashion clothing, which can be “out of season” within four to six weeks, the speed of the portal in grading and moving goods to new marketplaces could be the difference between being resold or being donated/recycled. 

Another way an online returns portal saves sales is by the very process of redirecting people back to your website, rather than filling out a paper form. Once on the website, customers are likely to browse and shop once again.

Unlocks the power of dynamic exchanges

With more and more consumers opting to shop from the convenience of their own home, the bedroom has become the new fitting room, in which consumers will change their mind on colours, realise the fit isn’t quite right, or decide on a different style altogether. One of ZigZag’s renowned British fashion brand clients believes that upwards of £25 million worth of its goods are returned for just colour and size issues, a problem that can be easily negated through a dynamic exchanges platform. An exchanges solution works allowing customers to exchange any item in their basket they wish to return with another from the retailer’s live catalogue of in-stock items.

48% of online shoppers have deliberately over-purchased multiple variations of the same product with the intention to return those that do not match expectations. A seamless and user-friendly exchanges solution will slowly change this behaviour, once again cutting unnecessary costs. Whilst not all returns management solutions offer this feature, it is an important new innovation that can transfer your returns experience and drastically improve a retailer’s bottom line.

Provides more accurate data

Lew Platt, former CEO of Hewlett-Packard, famously said “If only HP knew what HP knows, we’d be three times more productive.” Retailers still using label returns are unlikely to be accurately recording data obtained from labels, at scale, and then analysing the results to guide future business decisions. This is something achieved instantaneously through a returns portal. Trends can be discovered by returns portals, such as the sizing guides of certain countries being unreliable or websites not correctly depicting clothing colours. The portal can also identify fraudulent or serial returners as well as highlight VIP customers that should be treated with instant refunds or free delivery promotions.

Issues such as illegible handwriting, incorrect order numbers or product codes, incomplete sections, or even completely missing labels are also foregone for retailers using an online portal. 

Environmentally friendly 

Since one of ZigZag’s biggest retailers started using our paperless returns solution, they have stopped including returns labels in their outbound parcels. This has resulted in over 35 million labels from being needlessly wasted. Whilst some retailers will experience returns rates over 50%, many rates are still around 20-25%, which translates to a lot of unused paper labels across the retail sector.

ZigZag’s online platform also cuts carbon emissions by as much as 60% as it can plan more energy-efficient routes back to retailers. The potential for saving air miles is huge for international portal-using retailers as goods can be either consolidated in-country or resold to local customers through marketplaces.

eCommerce sales are expected to surpass the sales of brick-and-mortar stores within the next few years, accelerated by changing consumer habits resulting from months under lockdown. Purchases made in store normally result in return rates of around 5-10%, but with as rising eCommerce sales continue to boom, naturally returns volumes will rise too. It has already been a tough time for retailers during the pandemic with store closures, furloughs, reduced footfalls since lockdown eased, rising logistics costs, and stagnant sales. Switching to a returns management solution will cut the waste, friction, and costs of the returns process and improve customer satisfaction and loyalty.

Al Gerrie
Al Gerrie has over 20 years retail, logistics and ecommerce experience as a consultant to major brands and is former Head of Multichannel at OFFICE, Mountain Warehouse and WeArePentagon. Al was a very early pioneer in the mobile shopping space, launching one of the first PayPal mobile shopping experiences as early as 2007 (pre smartphone). He is an expert in international delivery and returns, technical integrations, as well as building ecommerce fulfilment and warehousing solutions with 3rd Party logistics providers. He is Founder and CEO of an innovative returns solution, ZigZag Global – a fully managed returns SaaS platform that provides retailers with a returns portal for consumers to return goods online, connecting a global network of over 200 warehouses, 450 courier services and multiple international marketplaces. ZigZag whitelabels the solution to 9 international carriers and postal providers.