Returns have spiralled into a costly crisis, eroding margins, straining operations, and challenging sustainability goals.
According to a recent report, UK shoppers will send back items worth over £6.6 billion in 2024 – a habit driven by modern consumer expectations around convenience, speed, and free returns. While customer expectations remain a priority, the financial and logistical impact of meeting them can no longer be ignored. The average return costs UK retailers about £20 while producing almost five times more packaging waste than an in-shop purchase. This damages profit margins and sustainability goals while creating pressure across every single department.
So, how can retailers like you begin to tackle this growing issue? For long-term success, it’s essential to take a fresh and collaborative approach that considers the business as a whole. You should view returns not as an isolated problem – but rather as an interconnected issue with a broader opportunity for improvement.
Ahead of the busiest returns season of all (December – January), let’s explore how you can begin to solve your unique returns management issue.
Current state of returns management
Today, free returns are a fundamental customer expectation. But for retailers, they are an enormous financial, logistical, and environmental burden. What began as a way to attract customers and build loyalty has now changed basic shopping habits for good.
Shoppers now buy with returns in mind, with “serial returning” on the rise. This behaviour erodes profit margins, disrupts inventory, strains sustainability, and complicates forecasting. That’s why, as an industry, retail is fighting a growing battle against the volume of returns and the associated costs. Some retailers are starting to charge serial returners. Others are simply struggling on.
While returns are an industry-wide issue, each retailer faces their own unique challenge. Customer demographics, product types, and logistics setup all combine to create a distinct returns problem for each business.
In an attempt to ease returns management, many companies have turned to popular third-party solutions like ZigZag or Narvar. These tools do an excellent job of simplifying certain parts of the returns process – such as generating labels or tracking packages – but they often cannot address the full complexity that returns create across your business.
That’s because returns management can’t be addressed with single-department solutions or off-the-shelf products. It’s an interconnected business problem that no single entity truly owns – but one that affects everybody. As such, fixing it requires a collaborative approach involving insights and input from all parts of the business.
An ecosystem-based approach to retail returns
Effectively addressing returns in a profitable and sustainable way calls for an ecosystem-based approach, integrating external tools with custom in-house solutions to drive impactful retail digital transformation.
The foundation of this strategy is a simple step-by-step discovery process. Here are the key steps to guide you:
1. Identify your returns profile with a cross-departmental approach
Defining your unique returns management process is the first step towards solving the returns challenge. You should bring all parties together to understand how returns impact each part of your company. Remember – what fixes the issue for one department may make life harder for another.
A cross-departmental workshop will help you understand the specific challenges of each area of your business. This shared knowledge will then help prioritise actions that will have the greatest impact on returns rates and costs.
2. Re-evaluate every stage of the returns process
Armed with this knowledge, you can assess your returns management process as a whole. Factors like improving product recommendations, streamlining stock management, and refining aftersales processes may all help in optimising your unique returns process.
Whatever your unique solution, by addressing each part of the returns journey, you’ll be able to build a strategy that works for the entire business, and your customers.
3. Implement an ecosystem-based approach for long-term success
Finally, you can use your findings to design an ecosystem that supports your long-term success. This might not be a question of adding more software. Instead, you may create new data flows, technology, and process improvements that progress the entire returns journey.
This will help you build a system that is both sustainable and adaptable to future industry challenges.
Get started with our team
Managing retail returns is a growing challenge and addressing it isn’t easy. But there is a clear first step – to understand your company’s own unique returns setup. This requires input from across the organisation to understand how returns impact the business, making everybody part of the solution from day one.
An initial workshop is an excellent way to expose pain points and align your priorities. It involves working with experts to address unique challenges, bring stakeholders together, and make measurable improvements in profitability and sustainability. Using this information, you can build a tailored digital strategy that provides genuine, impactful business benefits.
Ready to take the first step in solving your returns management process? Reach out to me to learn more about our ecosystem innovation sprint service!
