Why should you stop putting returns labels in the box and switch to an online portal ahead of Brexit?
eCommerce is booming. Online orders have increased by an astounding 49% since the start of lockdown. Naturally returns have risen too and forced themselves to the top of the list of fashion brands’ biggest problems. However, some retailers are still using old business methods when it comes to returns despite the level of innovation in this area. Some retailers still require customers to fill in a returns label included in the outbound parcel or, worse still, only accept in-store returns. This outdated returns process is about to become an even bigger issue for retailers worldwide.
Over a third of retailers are not ready for Brexit. Tens of thousands of businesses are still relying on further transition period extensions rather than putting concrete measures in place to trade in a post-Brexit world. For behind-the-times retailers not using an online returns portal, a complex returns-shaped problem awaits for them in 2021.
It’s time to consider managing your returns through an online portal. Our returns experts explain why…
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 returned goods back. As eCommerce began to gain popularity, retailers were often 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 parcel, 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. Some retailer’s took a laissez faire attitude to returns, and just let the customer take care of and pay for their return’s route back.
This technology is over 20 years old. Things have moved on. And Brexit will force retailers to digitise their returns.
Here are just some of the reasons why retailers worldwide are adopting an online returns portal:
No mysterious packages arriving at your warehouse
Using a label in the box, retailers never know what is being returned until it has arrived at the warehouse and the data is manually 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 in advance. They know who is returning, what is coming back, when they will be returned, why they are being returned, and where they will arrive.
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.
Once a label is filled in and sent off, that’s it. No confirmation, no communication, and often no tracking. A customer may not hear about the status of their return or refund for a while. Which can be as much as 20 days later for some label-in-the-box retailers. With an online portal, customers are kept informed throughout the whole process via email or SMS. 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 “in the know”. This reduces the amount of refund enquiries. ZigZag’s online platform reduced customer service enquiries by 40% for one of its leading UK-based fashion brands. Launching a labelless solution, this retailer has drastically cut paper waste and customer service staffing costs whilst improving the customer experience.
Get stuff done. Faster.
An online portal can also reduce warehouse processing times by up to 50%. Greater visibility as to what is returned allows warehouses to know what’s inside the box without having to cut it open. Items can be grouped together by their contents and 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, which further cuts costs. For customers, faster warehouse processing times means faster refunds. Everyone loves a speedy refund. This will improve customer satisfaction and get loyal customers back on your site shopping again!
Say goodbye to out-of-stock signs
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).
An online portal can use predictive analytics to move goods to local marketplaces where they have a better 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 processing and moving goods to new marketplaces could be the difference between being resold or being donated/recycled.
Online returns portals save sales by keeping customers on your website, rather than filling out a paper form. Once on the website, customers are likely to browse and shop once again. Additionally, a dynamic exchanges solution (like the one offered by ZigZag) can ensure customers simply swap out products for different ones rather than just returning and losing the sale completely. One leading apparel retailer believes that upwards of £25 million worth of goods are returned for just colour and size issues. A problem easily solved through Live Exchanges.
Knowledge is power
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 an online portal, such as the sizing guides in 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. Fortunately the fashion data collected is unlikely to be harvested and used to swing an election.
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.
Think of the environment!
As a proud member of the Ellen MacArthur Foundation, sustainability drives our business. 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 return rates over 50%, most rates are still around 20-25% which still 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.
An online portal will become customary for getting through customs
How will your returned goods pass through UK customs? A Customs Procedure Code will determine if you need to pay duty or VAT on your returned products and Returned Goods Relief (RGR) is a common customs procedure code for claiming relief from those costs. An online portal will aid your customs declarations process and goods clearance by generating an information-accurate returns label for your customer. This will ensure goods aren’t eternally stuck at customs, getting them back on shelves faster for resale.
An online portal will prevent customers from becoming frustrated. Who wants to be filling in lengthy and confusing customs declarations just to return a product? Forcing customers to do more in the return process will lead to more mistakes, more delays, slower refunds, and ultimately unhappy customers.
Retailer Next estimates it will spend around £150,000 on extra administrative costs related to filling out declarations forms. An online returns portal helps automate and digitise the returns process to drive down the costs associated with returns, and will free your customer service team of customs related enquiries from disgruntled customers.
Retailers still using a primitive label-in-the-box solution probably need to re-evaluate their returns experience now!