What Is Return to Vendor? Definition and Best Practices

As the name suggests, return to vendor entails a customer returning goods to the vendor. Typical reasons for returning goods include the customer changing their mind, or the items damaged or not as described.

Following assessment by the vendor's returns facility, customers are often sent a solution to either:

• Repair the goods
• Replace the item
• Accept store credit
• Receive a refund

The return process is a delicate chain of events that influences a brand's reputation. As such, it’s beneficial for vendors to offer clear and fair return solutions to customers in line with the law.

To dig deeper into the subject of returns, below we look at why the return-to-vendor chain is crucial to understand and improve.

Why are Returns Important?

Returns are important because they offer customers solutions for products that aren't fit for purpose. Moreover, the return solutions companies offer influence buying decisions.

Vendors and consumers want the same thing from the return process: a seamless, cost-effective, eco-conscious operation. The returned goods are sent to the correct location quickly, so vendors can fix the product to resell.

A poll published by the Post Office reveals that following Christmas, £232 million worth of gifts were returned in the UK. The Times reported that each return costs vendors £20, amounting to £7 billion per year in lost processing returns, and with growing wardrobing trends, this figures are only increasing.

With ZigZag, returns to vendors are speedy, simplified, and financially savvy, with a sophisticated online portal for consumers and retailers to log and track returns on mobile, tablet, and desktop.

Refining the Returns Process

Moreover, data collected via the portal enables companies to improve their return systems over time.

For instance, if a specific product is being repeatedly returned to the vendor, there could, for example, be an issue with a batch of goods that needs to be removed from inventory temporarily for a quality check, or adjustments to the size guides on the website might be necessary.

This is one example where data collected via an online returns portal allows companies to spot and solve problems early on.

With ZigZag operating on an international level, the next section walks you through statistics demonstrating the importance of a thorough return policy and an efficient return process.

Returns Worldwide: Stats and Facts

Return policies and processes influence customers' buying decisions, and here are the stats to prove it.

Customers Check the Returns Policy: In the UK, 84% of consumers will review the returns policy before purchasing a product. In France, it’s 83%; in the US, 85%; and in Germany, 87% of customers will check before buying.

Inadequate Returns Policy Deters Buyers: Over half of consumers, 53% in the UK, 51% in France, 53% in Germany, and 55% in the US, wouldn't buy items because of a business’s poor returns policy.

The return process influences consumer purchases: A poor return process causes 79% of customers in the UK to boycott a business. Similar stats are recorded in Germany at 76%, the US at 68%, and France at 82%.

To conclude, creating a clear and fair return policy is vital to retaining customers. Mastering the returns process to ensure customers are happy with the experience when logging an item for a refund.

Why Should Companies Collect Returns?

For smaller items, where the cost of returning them outweighs the product's value, it can make financial sense to let a customer donate or keep the product. This cuts out the cost and carbon footprint of returning an item, making it ideal for eco-conscious companies and customers.

However, customers may exploit this loophole in the system to keep products they have no intention of returning. Relying on the integrity of all customers to initiate returns for genuine reasons is an issue to consider when creating or refining a return system.

To assist, employing ZigZag software to track returns and keep a record of consumers who request returns regularly can help companies spot who might be abusing the system and put a stop to it.

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What Happens to Returns?

With ZigZag software, companies' return systems are personalised and simplified to reflect the company's vision and consumer requirements. To gauge how ZigZag’s cutting-edge returns portal helps businesses organise, fix, and distribute returns in an efficient, cost-effective, and eco-friendly way, see below.

Easy Returns: Customers log their order number and post/zip code on the business’s personalised portal. Then select the items and reason for return.

Here, businesses can save money by offering Refund to Store Credit or a Gift Card to customers. Alternatively, they can offer customers an exchange.

If a customer still wants to return the product, delivery options are set by the retailer. Retailers with a customer-centric returns policy will offer multiple carrier options including, various drop-off locations from convenience stores to parcel shops and the Post Office, in-store when available, lockers, and home collection. The latter is often a premium option at an added expense to the customer.

For instance, ZigZag offers a convenient in-store return kiosk in stores like New Look to simplify and speed up returns for customers and retailers.

Customers receive a label to print off and attach to their parcel at home, or a QR code they can scan directly from their phone. The kiosk collects data regarding the return to ensure it's sent to the right location to be stored and resold, donated, or recycled.

Warehouse Alerts: After a return is logged on the company's personalised portal, the retailer is notified of the order, item, and reason for the return. This allows the warehouse team to prepare for the next batch of returns, helping them better manage workforces during the peaks and troughs.

Product Assessment: At this stage, the returned goods are evaluated and graded based on their condition. This allows the retailer to decide what to do with the returned item. Retailers will often have set discounts (if at all) or actions that apply to condition of the return.

Reason for Return: After grading, the product's condition is cross-checked against the reason the customer returned it. An online portal would have collected these return reasons far more accurately than the out-dated label-in-the-box method of returns. However, it’s always worth checking the customer has been honest and accurate so serial return abusers and fraudsters can be identified and smarter data collected for future decision making.

Repair/Clean Product: If the item is defective or damaged, it may be sent to a third party, such as ACS Clothing, to be cleaned and repaired before reselling.

Website inventory update: With the returned product assessed, cleaned, and ready to resell, the retailer updates the website inventory. An online portal can cut warehouse processing times by 50%, allowing goods to be listed on the site faster. For fast fashion or soon to be out-of-season items, time is of the essence, and faster returns means a better chance of the item being resold.

When the above return process is complete, the product will move on to its next location to be resold. Find out more below.

Where do Returned Products go?

When a returned product is waiting to be resold, it's stored at one of the following facilities:

Warehouse: The warehouse may be a business, a logistics partner, or one of ZigZags' warehouses. It’s common to store products here that take longer to sell or are out of season. Did you know that ZigZag has a German warehouse that is responsible for consolidating European returners for many of our internationally selling retailers.

Distribution Centre (DC): Popular with fast fashion retailers, distribution centres are typically for grading, fixing, and storing clothing to resell.

Return to Store: Given the option, customers can return items to the store. Depending on the product and retailer, store clerks may put the item back on the shelf to sell.

However, if a returned item is unavailable in the store, they may discount the product to resell it or send it back to the warehouse or distribution centre to process the return properly. You may even notice in some stores they have discounted racks of odd pieces; this may often be comprised of returns that are sold only online or in other stores. Through ZigZag’s InterStore solution that moves goods across a retailer’s store, warehouse, and DC network, fragmentation is mentioned.

Online Returns Portal vs. Label-in-the-Box

Products with a label-in-the-box can be problematic for vendors to manage and categorise without the help of a portal.

There's little to no data for both customers and vendors to establish, for instance, the reason for the return, when the product is likely to be returned, and the return solution for the customer.

In this case, a return portal is the preferred option for vendors because:

• Retailers can collect and interpret data on who is returning a product and the reason.
• The warehouse is made aware of the return once it’s logged by the customer. Allowing warehouse management to prepare and schedule enough staff to handle the volume of returns.
• A portal offers customers and retailers visibility and updates on the returns process. Keeping both in the know gives customers confidence in a brand's return system. And companies have peace of mind that returns are being handled properly.
• Label-in-the-box returns mean the onus is on the customer to fill in the form supplied correctly (often leading to the wrong information being added, such as no reason for return).
• International returns are best organised through the ZigZags returns portal because it provides international delivery solutions and creates HS codes per product to ensure the correct taxes and duties are applied.

The benefit of an online portal vs. a label-in-the-box return option is also the sustainability factor, covered below.

Features that help customer returns to vendor

When it comes to customers returning items to a vendor, the process can be complicated, especially for online purchases, but retailers and vendors have implemented various features to simplify and improve the customer experience. These features help to make returns smoother, quicker, and more customer-friendly, ultimately leading to higher satisfaction and brand loyalty. Here are some key features that assist customers in returning items to vendors:

1. Easy Return Portal

• Self-Service Online Returns: Vendors often have dedicated return portals on their websites or mobile apps where customers can initiate returns. These portals allow customers to select the item they want to return, indicate the reason for return, and print shipping labels or get instructions.
• Step-by-Step Guidance: These portals guide customers through the return process, making it as simple as selecting the item, providing a reason for the return, and printing the return label.

2. Flexible Return Policies

• Extended Return Windows: To make returns more convenient for customers, some vendors offer extended return periods (e.g., 30, 60, or even 90 days) to ensure customers have ample time to return products.
• No-Hassle Returns: Some companies offer “no-questions-asked” returns, where customers can return items without providing a detailed reason. This helps build customer trust and satisfaction.
• Free Returns: Many retailers offer free returns, either for all items or under certain conditions (e.g., on items over a certain price or during specific promotional periods).

3. Return Pick-Up Services

• Home Pick-Up: For larger items or items that are difficult to return, some vendors offer home pick-up services. This means the company will arrange for a courier to come to the customer’s home to pick up the return at no additional cost.
• Return From Store: Customers may also have the option to return items at physical store locations, which can be convenient if the vendor has a brick-and-mortar presence.

4. Refund or Exchange Options

• Instant Refunds: Some vendors provide instant or fast-track refunds, where the customer is refunded the cost of the item as soon as the return is processed, or sometimes even before the item is physically received.
• Exchange for Same or Different Product: Vendors often offer customers the option to exchange returned items for a different size, color, or product rather than issuing a refund.
• Store Credit: In lieu of a refund, some vendors offer customers store credit or gift cards, allowing them to use the return value for future purchases. This is often incentivised with bonuses (e.g., a 10% extra store credit on returns).

5. Clear Return Instructions and Guidelines

• Product Return Instructions: Customers are provided with easy-to-understand instructions on how to return items. This may include packaging guidelines, how to use return labels, and where to send the returned products.
• Return Reason Codes: During the return process, vendors typically offer customers a list of reasons for the return (e.g., "Item damaged," "Changed mind," "Wrong size"), making it easier for the customer to choose the most relevant option.

6. Return Tracking and Notifications

• Return Status Tracking: Once a return is initiated, customers can track the progress of their return, from shipping to receiving at the warehouse, to the final refund or exchange. This transparency helps build trust with the customer.
• Email/Text Notifications: Customers receive updates throughout the return process, such as when the return is received, when the refund is processed, or when the exchange is on its way.

7. AI and Chatbots for Return Assistance

• AI Support for Returns: Many retailers use AI-powered chatbots that assist customers in real-time during the return process, answering questions, providing return options, or even automating the return initiation.
• Return Process Automation: AI can automatically fill out return forms for customers based on their order history, making it quicker and easier for the customer to initiate a return.

Key Regulations

Regulations governing customer returns vary depending on the country, region, and specific industry, but there are several key consumer protection laws and guidelines that shape how returns must be handled. These regulations aim to protect both the consumer’s rights and the business's operations, ensuring a fair and transparent process for returns.

Consumer Rights Directive (2011/83/EU): The EU enforces a 14-day "cooling-off period" for online purchases, allowing customers to return goods within 14 days of receipt for any reason, without having to provide a justification.

• Exceptions: This cooling-off period does not apply to certain types of goods, including perishable items, personalised products, or sealed goods that have been opened.
• Return Shipping: The customer may be responsible for return shipping costs, unless the seller has agreed to cover them.
• Refunds: Businesses must refund customers within 14 days after receiving the returned goods or evidence of the return (e.g., proof of postage).

Other key regulations and guidelines that apply to customer returns:

• Right to Return for Faulty Products: Customers can return defective or misrepresented items, with the right to a remedy (repair, refund, or replacement).
• Clear Disclosure of Return Policies: Retailers must clearly display return policies, including any time limits or restocking fees, both in-store and online.
• Returns for gifts: In many jurisdictions, returns for gifts are treated similarly to standard returns, but customers may need to provide proof of purchase or order information to return a gift. However, some companies offer special “gift return” policies allowing returns without receipts, or offer exchange options or store credit instead of refunds.
• Restocking Fees and Return Conditions: Retailers may be allowed to charge restocking fees for returns, but this depends on the jurisdiction and the terms of sale. In some countries, restocking fees must be disclosed upfront as part of the return policy for instance in the US.

Sustainable Returns System

With more consumers adopting a sustainable lifestyle, people are selecting businesses that support their ethical vision.

To reduce a return system's carbon footprint, here are a few ways ZigZag supports eco-conscious businesses.

• The online portal offers paperless returns
• Environmentally friendly return options, like lockers or electric vehicles, reduce emissions
• Encourage businesses to consider donating goods where the cost of return exceeds the value of the item, and avoiding landfill at all costs
• An efficient returns process with ZigZag's returns portal means less time, manpower, and resources used to labour over organising and allocating returns
• ZigZag collaborates with warehouses and distribution centres globally to offer location-specific storage facilities for returns

With ZigZag, there’s plenty companies can do to achieve eco-friendly status.

With modern consumerism, returning goods is as common as buying them. In conclusion, it’s a business's responsibility to facilitate a customer's return to remain competitive in the industry and environmentally conscious.

As such, striking a balance is key, and ZigZag helps businesses do just that.

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