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2024 has emerged as a year of significant transformation and growth in e-commerce. The UK continues to lead with one of the most advanced e-commerce markets in Europe, reflecting a broader global trend.
According to Forbes, by the end of this year, the e-commerce industry is expected to generate an impressive £5.4 trillion globally. This represents a substantial 9.8% increase in sales, positioning online commerce as a powerhouse in the global economy.
As we consider the full scope of e-commerce, it’s crucial to acknowledge the complexities of returns. They represent a significant consideration for retailers and consumers alike. Afterall, it’s natural to expect an increase in returns inline with the e-commerce market growth.
https://www.zigzag.global/blogs/what-is-return-material-authorisation-software
However, with challenges come opportunities for innovation. The following sections will delve into emerging trends in e-commerce returns, offering insights on how businesses can adapt and compete in this ever-changing landscape.
Retailers are increasingly recognising the importance of a seamless return process and are offering online exchanges to enhance customer satisfaction, using platforms like ZigZag to do so.
Live Exchanges software allows consumers to immediately swap products at the point of return for different sizes, colours, or similar items from the retailer’s live catalogue. The replacement can even be sent on first scan if the customer is a known and trusted shopper, to mitigate any possible frustration.
This proactive approach would not only meet your consumers’ expectations, with 82% desiring an easy online exchange option, but also addresses a significant pain point in e-commerce: size-related returns.
These account for 77% of lost returns revenue, a challenge that can be mitigated through efficient exchange systems. Live Exchanges is therefore proving to be a real lifesaver for womenswear retailers. Brands in this sector like to expect return rates above the norm at 40%-50%+, with some German womenswear brands reaching highs of 70%, as consumers battle ever-changing size guides and fits from retailer to retailer.
ZigZag’s platform facilitates these exchanges, making it convenient for customers to find suitable replacements and for retailers to retain sales and enhance customer loyalty.
Fast refunds are a key aspect of customer satisfaction in e-commerce. After a ‘free return’, which isn’t always monetary feasible to offer, consumers demand a fast refund as a priority for classing a retailer’s returns policy as ‘good’.
Retailers, in collaboration with returns software like ZigZag, are enhancing this experience by offering refunds as a gift cards or as store credit.
This not only expedites the refund process but also provides financial incentives for customers to remain within the retailer’s ecosystem. There’s a lot less reason for a customer to shop around and open up a new tab with a competitor whilst waiting for the return and refund to be processed.
But it doesn’t just encourage loyalty. They become higher value customers. Statistics show that 71% of customers spend more than the gift card value on future purchases, and it’s not just by a small margin. The average value of the next purchase a customer makes once receiving the gift card is 144%. Showing shoppers would rather overspend but use the full gift card / store credit value, than leave a little bit on and forget about it.
ZigZag’s involvement streamlines this process, making it an attractive option for both retailers and consumers. And with 57% of UK consumers open to accepting store credit over cash refunds, there’s no reason not to offer it.
The rental market in e-commerce is an emerging trend where consumers can rent products instead of purchasing them outright.
This model is particularly popular for items that are used infrequently or for special occasions, such as designer apparel, electronics, or outdoor equipment.
20% of US and 14% of UK consumers admit to having bought items to wear for an or event (wardrobing) or to use on social media (staging) and then returned them for a full refund. These two types of returns fraud can be combatted in a number of ways but entering the rental market can be a particularly effective tool. Consumers are far less likely to risk going through the returns process or risk being labelled a serial returner and blacklisted through bracketing and staging if an affordable and simple rental offer was available.
While it’s still a relatively small segment of the market, it’s growing as consumers become more conscious of sustainable consumption and cost-effectiveness.
Companies like Rent the Runway and Le Tote have gained popularity by offering such rental services, providing consumers with flexibility and a wider range of choices without the commitment of a full purchase.
The second-hand market, also known as ReCommerce or resale, is experiencing a surge as consumers increasingly seek lucrative and environmentally friendly shopping options.
Platforms like eBay, Poshmark, and ThredUp are leading players in this space, offering a wide range of pre-owned items from clothing to electronics.
Consumers are drawn to ReCommerce for the opportunity to save money on purchases and earn from selling their items.
Additionally, buying second-hand contributes to reducing waste and the carbon footprint associated with manufacturing new products, aligning with a growing consumer interest in sustainability. A win for the frugal and the eco-conscious.
So for brands that often suffer goods being returned as damaged (be it through questionable shoppers, reckless logistics partners, insufficient quality checks, or just poor luck) they can turn to a recycling partner before reselling as second-hand. For fast fashion retailers, where products can have product life cycles as short as 4-6 weeks, that need to shift out of season stock, why not list through a marketplace.
By entering the flourishing recommerce market space, brands can retain much of the margin that would have otherwise been lost to landfill. It also gives shoppers, particularly younger generations, a cheaper chance to full in love with your brand.
For example, AI-powered chatbots provide:
With visual search tools customers can now upload images and find similar products. AI is also used for inventory management, predicting trends, and optimising pricing strategies.
Another innovative use is virtual fitting rooms, where AI helps customers visualise how clothing items would look on them without physically trying them on. An easy way to reduce returns as the customer can get a better idea of what size or fit the product will have, without having to buy multiple sizes and inevitably send some back (a returns abuse known as bracketing).
These applications of AI not only improve customer engagement but also streamline operations and increase efficiency. Here are a few examples.
If you want to learn more about the top industry trends with AI and machine learning, you can explore our recent blog with Tim Garstin, ZigZag’s Director of Strategy & Insights.
Social commerce is the integration of e-commerce directly into social media platforms, allowing users to make purchases without leaving the app.
This trend capitalises on the vast user base of social networks and the convenience of mobile shopping. The metaverse adds a new dimension to this, offering immersive virtual shopping experiences. For example, IKEA has ventured into the metaverse by creating a virtual store in Roblox, even paying employees to manage this digital space.
This innovative approach merges retail with entertainment, potentially reaching new audiences and redefining online shopping.
However, the shiny new toy that is social commerce still needs an effective and intuitive returns process. 66% of shoppers are cautious after returning products bought on social media networks. It is vital that brands are ideally able to process order numbers of goods bought through social channels in the same manor one would have had they bought directly through the retailer’s website, or at least the same excellence service (SimplicityDX’s Social Commerce Returns Survey).
Same-day delivery offers significant benefits to customer experience by providing instant gratification and convenience.
Retailers like Amazon and Argos have set high standards with their same-day delivery options, enhancing customer loyalty and competitive edge.
However, this service comes with higher operational costs due to the need for efficient logistics and can have a negative environmental impact due to increased transportation emissions.
Despite these drawbacks, 47% of UK consumers are willing to pay a premium for quick home collection services, indicating a strong demand for speed and convenience, even for returns. ZigZag recently partnered with Relay to get goods directly from the retailer to a consumer's home cheaply and quickly.
Companies like Uber and Deliveroo are capitalising on this trend by using the gig economy to facilitate fast deliveries and collections.
So if your customers are willing to pay for it (even at a small mark up) and you can easily offer a quick home collection service through a returns partner like ZigZag, why not reap the benefits of happier and more loyal customers?
A UK shopper processing their return through a home collection
Product videos and augmented reality (AR) significantly enhance the online shopping experience by providing customers with a more interactive and informative view of products.
For example, ASOS uses product videos to show clothing on models from various angles, giving customers a better sense of fit and style. IKEA’s AR app allows customers to visualise furniture in their own space before buying, reducing the likelihood of returns due to size or style mismatches.
These technologies help bridge the gap between online and in-store shopping, leading to more confident purchasing decisions, less bracketing, and ultimately fewer returns.
You can explore 10 other ways to reduce returns and their cost through ZigZag’s Founder & CEO Al Gerrie, who put together an informative blog with some fantastic practical advice for retailers.
Buy Now, Pay Later (BNPL) is a payment option that allows customers to purchase items immediately and pay for them over time through instalments.
This service has become increasingly popular in e-commerce as it offers flexibility and can boost sales by making products more accessible.
Companies like Afterpay, Klarna, and Affirm are well-known BNPL providers that partner with retailers to offer this service.
BNPL can increase average order values and conversion rates by reducing the upfront financial burden on customers.
However, returns can be tricky. It is imperative that your returns policy is clear and concise with information on what your customers can expect when going through a refund process on a product purchased through a company like Klarna. Make it clear to customers if refunds will go to them or the lender service, and whether refunds are issued after the payment terms are complete.
By keeping customers informed, retailers can reduce the costs associated with increased customer service enquiries and limit friction felt by their customers.
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Voice search has become an integral part of e-commerce, with virtual assistants like Amazon’s Alexa, Google Assistant, and Apple’s Siri enabling users to shop hands-free.
For example, users can ask Alexa to reorder items from Amazon or use Google Assistant to search for products on various online platforms.
This trend has grown significantly since 2014, with improvements in AI and natural language processing making voice search more accurate and convenient for shopping.
That means your returns process needs to be just as simple. As customers get used to the simplicity of voice search, there’s no limits to their expectations for the overall customer experience. By utilising a company like ZigZag, with a streamlined process that doesn’t over-complicated the returns process for the sake of it, shoppers will view your brand with more rose-tinted glasses.
11. Phygital products
One of the most interesting and latest eCommerce trends is the growing presence of phygital products.
Phygital commerce takes the omnichannel eCommerce trend to the next level and blurs the line between physical and online shopping. Some examples include
These phygital products can help you reduce returns upfront. By providing a more wholistic experience that bridges the gap between digital and physical, these technologies can help customers better understand your products without having to order and return them.
In conclusion, the e-commerce landscape in 2024 is characterised by innovative solutions to enhance customer satisfaction and streamline operations.
From live exchanges facilitated by platforms like ZigZag to the integration of AI and the metaverse in retail, businesses are adapting to meet evolving consumer demands.
The rise of social commerce, same-day delivery, and the gig economy reflect a shift towards immediacy and convenience.
As retailers navigate these trends, services like ZigZag play a crucial role in optimising the returns process, thereby maintaining customer loyalty and ensuring a competitive edge in the dynamic digital marketplace.
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