3PL Returns: Definition, Benefits & Best Practices

Looking to update your returns practices? Here is everything you need to know about 3PL returns processing.
Apr 9
3PL Returns: Definition, Benefits & Best Practices

As a business owner, staying on top of your returns is often crucial to your overall success. After all, it can help to increase customer satisfaction rates while also improving your bottom line.

Conversely, companies that do not have a well-established returns policy in place will run into numerous problems by way of unhappy and disgruntled customers.  For example, it is likely that refunds will be processed slowly (if at all), further damaging customer relationships. In some cases, this could even lead to legal trouble.

However, as processing returns can be both time-consuming and complex, it is a task that often falls to the bottom of to-do lists, much to the chagrin of your customers.

Many retailers, particularly start-ups and SMEs, will utilise Third Party Logistics providers to get a quick handle on their returns. Turning to a 3PL can be cost-effective and time efficient. The 3PLs that white-label ZigZag’s returns solutions will have the ability to get you set-up with a seamless returns solution in a matter of days.

If you are unfamiliar with 3PL providers, do not worry. This guide will tell you everything you need to know about 3PL providers and how they can transform your returns practices and protocols for the better.

What is a 3PL Provider?

A 3PL provider is a third-party logistics company which offers a wide range of business support services to their clients.

For example, they tend to offer support when it comes to outsourced warehouse and stock management, order distribution and deliveries, and return policies, among other administrative tasks.

According to a recent study, approximately “86% of Fortune 500 companies use 3PLs for logistics and supply chain functions”, though they also provide many benefits for smaller businesses, too.  

After all, smaller businesses tend to have smaller teams, meaning they can benefit quite considerably from any form of outsourcing, especially when it comes to tasks that fall outside of their expertise.

What are 3PL Returns?

3PL returns simply refer to return processes that are initiated and managed by a third-party logistics provider, as opposed to an in-house team.

For example, these companies will process any return or exchange requests before arranging for the products to be collected or shipped to their warehouses. They often have access to a wide range of courier services or drop-off or pick-up locations to facilitate this, reducing the need for customers to go out of their way to return a product. It also makes it easier for businesses to track and stay on top of returns.

Once products have been delivered, 3PL returns providers can then help ensure the products have not been damaged in any way by the customer, restock products, and send over any necessary refunds. All of this work is carried out on behalf of the company without them needing to interject or offer assistance.

Not only does this take a lot of the pressure off the shoulders of business owners, but it also provides them with invaluable insight into their customers moving forward. After all, the data gathered by 3PL providers gives them insight into exactly why customers are returning items, which could bring to light issues that need rectifying in order to achieve long-term success.

What are the benefits of 3PL Returns?

Before discussing the benefits of 3PL returns more specifically, it's essential to understand why having a strong returns policy or system in place is so crucial.

This can:

  • Ensure all returns are handled appropriately and as quickly as possible.
  • Protect your business from legal trouble, ensuring that returns are processed within the correct time frame (14 days within the UK, per government regulations).
  • Help with damage reduction by working to repair your relationship with customers who were unhappy with their orders. This can encourage repeat spending and prevent further negative feedback.
  • Protect your own best interests by ensuring customers have legitimate reasons to send back their products. For example, you can dictate what items are (and are not) eligible for return ahead of time.

However, there are many benefits of allowing a 3PL provider to manage returns for your business.

Improved Customer Experience

Approximately “79% of shoppers are unwilling to purchase from a brand again if they were to suffer a poor returns experience". This figure alone makes it clear why it is crucial that returns are handled swiftly and efficiently.

Simply put, the sooner you are able to process refunds, the better, with a recent study finding that “nearly 39% of consumers who were disappointed with their returns experience said that the retailer took a long time to process their refund.”

While companies handling returns manually may have a genuine excuse for delays, the longer a customer waits to receive their money, the more distrustful they will become. This could harm your brand quite considerably, especially as they are also more likely to leave a negative review as a result of this.

However, 3PL providers have everything in place to both simplify and speed up the process, keeping your customers happy and encouraging them to buy something from your store in the future.

On a similar note, having a clearly defined returns policy and system in place could also help with customer attrition. This is because a staggering “84% of people will read through an online store’s return policy before buying from them”. When the policy is well constructed and fair, they are more likely to hit the checkout button. This could also improve their initial perception of your brand, as it demonstrates your commitment to keeping your customers happy.

Cost Saving

According to a recent study, “returns cost businesses about 66% of the original item’s price.” When you consider the fact that approximately 25-30% of products are returned, this can amount to a significant loss of revenue.

However, a 3PL provider can help businesses to cut down on these costs in various different ways.

For example, 3PL providers can automate these processes or complete them at a much quicker rate than your in-house team. This frees up time in your employee's schedule to dedicate to other essential tasks, considerably improving workplace productivity rates.

Furthermore, they can also encourage customers to exchange items instead of returning them, meaning that there is no need to initiate refunds. Alternatively, they could encourage customers to accept store credit or vouchers as opposed to monetary refunds, which again encourage repeat custom.

Reduced Overheads

Working with 3PL providers for both distribution and return services is also an effective way for business owners to reduce overheads.

After all, it eliminates or dramatically reduces the need for return management centres or warehouses - as all returns are managed by the provider.

As such, this can be an excellent way for business owners to save money. This is particularly important when you consider the fact that 80% of small business closures are attributed to poor financial management and a lack of funds.

Increased efficiency

Companies specialising in 3PL management for e-commerce can speed up the entire returns process. After all, having a team dedicated to managing your returns means that things run more efficiently, especially when the right tools and software are utilised.    

This works to the benefit of both the customers and the business as a whole. Companies can keep customers in good favour while also being able to restock products so that they can be resold.

How can the ZigZag Platform Help?

ZigZag can do everything a 3PL returns provider offer, we just go a step further.

Choice is vital for customers. Whether that means having multiple sizes or colours of an item, or varying styles and items of different prices. Customers want that same level of choice flexibility when it comes to their carrier options. As we have covered, going with a 3PL provider for your returns is a fantastic approach if you are a small business looking to get on top of your returns, but you can do more.

46% of consumers demand multiple carrier options and return methods, whether that’s locker drop-offs, in-store kiosks, home collections, or others. Some customers may only be reachable by a certain carrier due to the remoteness of their location. This logistical flexibility is rarity when relying on a single 3PL for your returns, but a given benefit when utilising ZigZag.

ZigZag has access to over 1,500 carrier services and over 500,000 drop-off points, returning parcels is easier than ever. Through the ZigZag platform, the returns process can be completed in less than sixty seconds.

By simplifying the process on behalf of the customer, ZigZag can aid businesses in reducing the frustrations that are typically attributed to the returns process. This can help to curtail negative reviews and may even play a pivotal role in customer retention.

Furthermore, ZigZag can also provide business owners with invaluable insight into customer behaviours. After all, the data gathered throughout the returns process can highlight any mistakes they may be making in product development or manufacturing, especially if the same motivations are cited again and again in relation to returning. Business owners can, therefore, use this data to action meaningful changes that help prevent future returns and boost their income.

Finally, we can also help you take a step in the right direction in regard to sustainability. This is because we are able to initiate paperless returns. Given that customers are more likely to support brands with strong environmental policies in place. It also means that all returns are digested and trackable.

Not only can ZigZag be built into your own website or e-commerce platform, but we also offer returns through Shopify, Magento, BigCommerce, and many more.

If you'd like to find out more about our services, please do not hesitate to reach out today. A member of our team would be happy to answer any questions you may have, or to set up a free product demonstration.

If you are a 3PL, carrier service, or postal operator, and are interested in joining ZigZag’s extensive logistics network as either a partner or white-label client then you can read more about what we offer here.

We look forward to hearing from you!