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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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A strategic look at returns

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Al Gerrie, CEO, ZigZag Global examines why returns should not be an afterthought – especially when going global.

 

With the UK domestic market growth slowing and some bleak results on the high street, retailers need to provide new ways to deliver online revenue growth and increase profitability. To gain share in a competitive market it is now essential to provide memorable customer experiences that outshine the competition. International strategy has never been more important, but all too often retailers treat returns as an afterthought.

 

For some retailers – particularly in fashion – paying insufficient attention to returns volumes and their cost could send them to the wall as consumer spending has declined and return rates are now growing faster than ecommerce. The bedroom is the new fitting room.

 

Retailers are now beginning to apply intelligence and convenience (the same convenience that consumers already now typically receive when purchasing) to delineate the inbound volumes and costs from the outbound shipments and growth.

 

With both rising customer expectations and the complexity of international markets driving up the cost of returns retailers are, in many cases, eating in to already thin profit margins as they look to deliver growth. Generally, this is because there has been insufficient focus on the returns strategy, including the process, policies, customers return behaviour, local market conditions and cost (both actual and opportunity). By applying intelligence, drawn from sound process, good data and reporting, and allied to an excellent customer experience, return costs can come down and ultimately the total number of returns even reduced. By delivering a localised, friendly returns process with a simple user interface alongside a fair and visible policy that speeds up the customer refund retailers can actually build loyalty, re-engage the customer to enhance their experience of the brand.

 

Making it easier for customers to return items may seem counter intuitive but over a third of consumers are now deliberately buying with the intention of returning. Returns are not going away anytime soon. Bad returns experiences are costly, with customer service staff spending around 50% of all customer contact time managing returns and refund information requests. They also lead to poor reviews and ultimately lost customers.

 

According to MetaPack, over 76% of buyers check the returns policy before making a purchasing decision, meaning returns are now more important than price. Retailers should consider improving visibility of the return policy during the buying journey, customer return navigation, extending the return window (most returns are made in under 2 weeks but as distances grow a universal window of 30 days will typically capture most markets and few returners will fall outside 21 days), faster refunds (on receipt or within as few days of receipt as possible), provide choice of return method, communicate throughout, including tracking updates and for good returners, make it free where possible. ZigZag’s own research shows free returns create a 4% increase in returns but a 25% increase in sales.

 

DATA DRIVEN

 

Sounds easy, but how do you identify your loyal customers from your unprofitable serial returners? Will your outbound carrier have the ability to consolidate and the right economies of scale to handle each lane in reverse? Can consolidation happen at high frequency to get stock back on sale quickly? Do goods really need to come back at all, or could they be graded locally and shipped to the next buyer in that market, wholesaled, destroyed or donated to charity? If the item is no longer economically returnable to base, which market offers the best asset recovery for the return and how do you get it sold there? A label in a box simply doesn’t cut it, and this is precisely why Amazon stopped using returns labels over 4 years ago. Returns need to be dynamic to allow for the goods to be sent where the demand is for that item.

 

Retailers have a duty to provide a best in class customer experience. If you have a 30% returns rate, almost a third of your stock is off sale at any one time. With good planning it is not only possible to navigate all challenges but automate them to lower cost and even change the behaviour of the serial returners, once identified. Even to gain valuable insight into downstream product planning and forecasting based on which SKUs are toxic and why.

 

Typically the return is the lowest point of the customer journey and it needs to be handled carefully, to turn it into a positive event. Now is the time to take a deep dive in to how you handle both domestic and international returns and how your customer experiences them. Fix your returns and your customers will love you for it.

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