Proven Strategies to Cut Returns and Cut Costs

By Al Gerrie, CEO at ZigZag

Returns fees have been making headlines in the UK as retailers realise that free returns are becoming increasingly difficult to justify. eCommerce returns cost UK retailers over £20 billion in 2023 (ParcelHero, 2023), and this financial hit can weigh on retailers if their returns management strategies don’t allow stock to return to market, discourage fraud, or offer suitable alternatives to consumers.  

Our research shows that consumers are overwhelmingly (84%) checking retailers’ returns policies before making a purchase and over half of UK shoppers (47%) are self-described ‘regular returners’. Returns have evolved rapidly from a matter of logistics to a subject discussed in the boardroom, with returns volumes and rates both growing since 2023, as consumers feeling economic pressures become more particular in their online purchase decisions.

Here are some proven changes retailers can make to lower return rates and reduce their costs without abandoning the needs of their customers. 

Build a winning website 

Websites should be equipped with all the information consumers need to quickly and easily know what they can expect from products, what the returns policy is, and how they can make one if needed. 

We all know the disappointment of receiving an item that doesn’t match what we expected. Womenswear is particularly susceptible to inconsistent or inaccurate sizing, as 69% of women who shop online have returned an item that didn’t fit. Ensuring descriptions are detailed and including images are good first steps, but retailers now have an abundance of technology available to help. AI tools like Easysize and Sizewise tailor descriptions to issues that individual customers’ may have, and video content of the products guide them to more informed decisions. A third (32%) of consumers listed product descriptions as a key reason for sending items back, so there is no such thing as too much detail for fashion retailers overwhelmed with returns.

Feedback on products and processes should also be encouraged and proudly displayed – including some less positive reviews. There’s only so much you can communicate in a product description and newcomers to the website are less likely to make a return if they can see other customers’ honest thoughts on products. Visibility on this information is particularly important to shoppers aged 18-25 according to our own data, as 32% of them feel they’d have to return less if they could compare against more product reviews. 

Use data to the full

Retailers’ decision-making processes also heavily depend on data. Returns produce a goldmine of data that retailers can use to pre-empt issues and reduce volumes to manageable levels. 

Robust data collection shows retailers why people are returning and not just the volume, allowing for bespoke policies and an ability to predict issues that drive returns. Sizing, damage, and late arrivals were the key reasons for returns being processed last year in the UK, but retailers can only know this if their returns reporting is accurate. 

Serial returners are also much easier to combat with a robust data collection tool. Fraudulent returns practices are a growing problem. Wardrobing, where a customer wears an item for a single use with the intention of returning it straight away, costs UK retailers an estimated £1.5 billion each year alone. But a line needs to be drawn between regular and loyal customers who return for legitimate reasons and those taking advantage of lax returns policies. By using granular returns data to make policies more bespoke to each customer, retailers can ban serial returns abusers whilst protecting their VIP customers.

Make a more flexible policy

This data can also be used to adjust paid returns policies to different markets and individual contexts to decide which returns options to offer. Consumers that are unhappy with items don’t always need to return them, and depending on the scenario are often happy with convenient alternatives. Across the board, consumers are showing a preference for choice and flexibility when making a return, even if it means paying a small fee. 

Over Black Friday and Cyber Monday in 2023, 43% of returns we processed were paid despite the cost-of-living crisis. Consumers are willing to pay for the privilege, so long as their need for convenience is satisfied. 82% of shoppers would be encouraged to shop again with a retailer offering an easy returns policy. 

83% of UK consumers in our 2023 research would like to be able to exchange instead and 57% were happy with the idea of a gift card or store credit.

Create the ultimate returns experience

Returns management is a significant difference between retailers that can retain customers and cope with volatile consumer spending and those that struggle. The best way to discourage returns or offset their cost is to provide an exceptional returns experience and clear instructions that guide the consumer to the best outcome for each purchase. When returns do need to be made, the data they produce is invaluable for shaping future policies and keeping the interest of a loyal customer base. 

With thanks to Al Gerrie, CEO at ZigZag.global