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In the UK, the scale and cost of retail returns in the e-commerce sector have become significant issues for retailers. In 2023, it was estimated that returns could cost UK e-commerce up to £7 billion annually. This substantial figure highlights the financial burden that returns place on retailers, particularly in the apparel sector, where return rates are exceptionally high.
The high return rates are driven primarily by the difficulty consumers face in assessing the fit and quality of products purchased online. For instance, the return rate for online apparel purchases is about 24%, which translates to significant processing costs and potential losses for retailers. The combined costs of shipping, handling, and restocking these returns can amount to 66% of the product's price. This economic impact is exacerbated by return fraud and the logistical complexities associated with reverse logistics.
The e-commerce landscape has changed dramatically in recent years. As online shopping becomes the norm, customers expect more from their favourite brands and retailers, especially when they are being charged.
Recently, retailers have even begun charging for returns. A number of high-profile UK, German, and American retailers have started passing on all (or some) of the returns cost to the shoppers.
Whilst this is a fantastic way to reduce returns and recoup their costs, it does mean you have to provide more for your customers. Retailers cannot expect to charge customers £5 for a return, only to make them do all the work getting it back, potentially driving 20 minutes to their nearest inconvenient, carrier-owed PUDO location.
In today's competitive market, offering multiple carriers and return methods isn't just a nice-to-have—it's a must-have.
To put it simply, a carrier is a company or individual responsible for transporting goods from one location to another. Carriers provide the essential service of moving items and returns through the supply chain, ensuring that products reach their destination safely and efficiently. This process can involve various modes of transportation, such as road, rail, sea, and air - for instance our recent partnership with Portless utilises air to get around sea limitations.
So, what types of carriers are we interested in for e-commerce returns, and which are the most important types for you to investigate as a potential start-up in retail, or an enterprise looking to cover even more of the world for your customers?
Let’s look at these four carrier types:
Postal operators, for the purposes of this discussion, are the national postal services, that are government run entities with often the biggest reach across their home country. They traditionally are the guaranteed way of delivering basic mail and parcels and only operate in their home country – although that isn’t always the case!
Key Benefits
Universal Coverage: Postal operators often provide extensive coverage, delivering to virtually every address in a country, including remote and rural areas. This universal service is beneficial for retailers who need to reach a wide customer base.
Cost-Effective for Small Parcels: The often have some of the most competitive rates in the country, as many of them are treated as a public service, and not a profit generator. Postal services generally offer lower rates for small packages and letters, making them a cost-effective option for retailers shipping smaller items – perhaps jewellery, light or small clothing, and some homeware.
Established Infrastructure: Postal operators typically have a well-established infrastructure, including local post offices and sorting facilities, which can enhance reliability and reduce transit times for certain shipments. The utilisation of centralised locations (both Royal Mail and USPS would use Post Offices) across the country provides shoppers with a close to equal chance of a convenient drop-off.
Disadvantages for retailers: They can be slightly more prone to strikes and, in some countries, will be considered the slightly slower delivery choice. This may result in returns getting back on the shelves past their lifecycle or after the season finishes (particularly with fast fashion) and the slow updates may frustrate customers. They can also be less flexible in regard to collection or drop-off times, which often finish earlier and are unavailable some days.
Carrier services offer transportation services to the general public under a license or authority provided by a regulatory body. They are obligated to provide services to anyone who needs transportation, provided there is space available, and the shipper is willing to pay the rate.
Key Benefits
Competitive Pricing: Carrier services often provide competitive pricing, particularly for larger shipments or regular volumes. Retailers can often negotiate better rates based on shipment volume and frequency.
Multiple Service Levels: Common carriers typically offer various service levels, from standard ground shipping to expedited and next-day delivery. This allows retailers to choose the best option based on cost, speed, and customer expectations.
Detailed Tracking and Customer Service: Many carriers provide comprehensive tracking systems and customer service, allowing retailers and customers to monitor returns closely and address any issues promptly. That means less “Where is my refund?” enquiries coming in your Customer Service Team.
Established Reliability: Common carriers usually have a strong reputation for reliability and on-time delivery, which can enhance customer satisfaction and reduce the risk of delays.
Disadvantages for retailers: Carriers might not have the same level of reach as postal operators, especially in rural or less densely populated regions, potentially limiting their effectiveness for retailers with a broad customer base. They can be more expensive for small or lightweight shipments compared to postal services, in addition to having less competitive pricing for start-ups with less volume to shout about. Carriers also have less workforce to lean on during peak season, so are slightly more likely to be overwhelmed by large spikes in volume. Royal Mail for example has more than 30 times the workforce of FedEx in the UK, but worldwide it has about three times less.
3PL (Third-Party Logistics) refers to a service provider that offers outsourced logistics and supply chain management services to businesses. A 3PL company handles various aspects of logistics operations, including transportation, warehousing, inventory management, order fulfillment, and distribution.
Key Benefits
Comprehensive Logistics Solutions: 3PLs offer a wide range of services beyond transportation, including warehousing, inventory management, order fulfillment, and reverse logistics. This can provide a one-stop solution for retailers looking to outsource their logistics needs.
Scalability and Flexibility: 3PLs are highly scalable, making it easier for retailers to adjust to changes in demand, whether seasonal spikes or rapid growth. They can also offer flexible solutions tailored to specific business needs.
Advanced Technology and Expertise: 3PLs often use advanced logistics technology, such as warehouse management systems (WMS) and transportation management systems (TMS), to optimise operations and improve efficiency. This expertise can be especially valuable for retailers looking to enhance their supply chain capabilities.
Disadvantages for retailers: Naturally there are also a few disadvantages to using a 3PL. They can have initial higher costs, which is to be expected if they are handling more of the logistics process than a common carrier. Retailers will also have less control over operations and will end up with a slight dependency on the 3PL to perform.
Return methods are how the consumer actually begins the returns process after visiting the online portal. Are they heading to locker, using a QR code in a convenience store, bringing an unpackaged item straight back into the retailer’s store etc.
Often the carrier type or specific brand of carrier isn’t as important to the customer as it is to the retailer. What’s more important is the return methods available.
For example, it doesn’t matter that its Amazon or Inpost, but they have two locker types near them, and they like to use one on the way to work to make their return. Or they are willing to pay for a home collection, and don’t care what branding is on the truck that pulls into their driveway.
Here are the types of returns methods:
In 2023, 58% of consumers said they preferred to return an online purchase through a Post Office in the UK.
The sentiment that the Post Office is the most reliable way of getting your goods delivered or returned has emerged fairly strongly in the UK since the pandemic.
The Post Office perhaps gains much of its trust from Royal Mail and its prevalence in UK return policies. The UK giant was unsurprisingly the most popular choice of carrier for UK retailers in 2024. It was advertised by 45% of the 130 retailers recently researched by ZigZag in their upcoming Return Secrets Exposed report.
Home collection has become increasingly popular amongst consumers that have shifted towards a more WFH life since the pandemic. The convenient returns option is rarely offered for free by retailers, however with home collection the UK’s second favourite option, and its adoption growing by 77% in 2023/24 peak season, that isn’t stopping them going for it!
This is actually the most popular option for consumers in France. 58% of shoppers head down to a local convenience store to drop-off their return.
In the UK we have continued to see more and more shoppers head to convenience stores to drop-off their return. In London, a convenience store is often your best bet if you want a printerless or sometimes even package-less return!
Through a returns portal like ZigZag, customers can often interact with a locator map to see all the nearest Parcel Shops in their area. This type of convenience and user friendliness allows Customer Service Team lines to remain clear and customers happy.
Returning to the retailer’s store is the preferred option for US shoppers, and whilst the favourite return method for UK shoppers is still via the Post Office, return to store is quickly catching up.
65% of customers would head to the retailer’s store for a free refund, rather than pay online. So, if your business is considering recouping the cost of online returns by charging for them, a free return to store option could soften the news for your customers.
Retailers with a selection of stores can have them show up on an interactive map as drop-off options, much like how the portal showcases Post Offices or lockers in your local area. Pop-ups with information on the store’s address, opening times, and accessibility can be added to improve the customer experience.
Lockers are another easy way to make a return. All you need is a QR code, and you can head down to a local locker, often near train stations, large supermarkets, or in town centres. They are completely self-serve and a used by around a quarter of shoppers for their returns now.
There was a 68% increase in use of lockers in peak season 23/24 compared to same period the year before.
Whether it’s a postal operator, 3PL, or carrier service, any business can see its workforce go on strike. Royal Mail had a number of short strikes across 2022, GXO Logistics were on strike in May this year, La Poste in France were on strike at times in 2024, and certain warehouses and ports have sporadically gone on strike for a number of carriers in the last year.
It’s not just strikes, but sickness and shortages too. COVID spikes impacted carriers at different times from 2020 to 2022. One workforce would be out from Carrier Service A but back before Carrier Service B had a similar outbreak.
By using multiple carrier providers ensures your customers are likely to be able to return through a service still in action. This means less calls to your Customer Service Team from frustrated customers just looking to start the returns process.
Now you’d obvious expect carriers from the same nation to be dealing with the same weather. And that is largely true. But they might handle it differently. Floods may bother fleets of Carrier Service A as they have a main depot near the chaos, whilst Carrier Service B may be completely unaffected and able to take other routes.
Home collection might be completely out of action or too expensive and unfeasible in snowstorms. Rather than push through blindly, incurring missed deliveries and surge prices, retailers could offer up lockers or local drop-offs that remain open as an alternative.
Simply not having a carrier option or return method they are used to could cause a customer to call up your Customer Service Team. Retailers would of course prefer to have a monopoly of their market, but the likelihood is, in the world of open e-commerce, they have many competitors with different return policies and features.
Some customers may have loved the simplicity of having their return collected from home and now expect the same from every retailer. Read the blog on reducing WISMO and WISMR enquiries here.
During peak seasons like Black Friday or Christmas, a single carrier may become overwhelmed, leading to delays and dissatisfied customers. By diversifying carrier options, retailers can distribute the shipping load, ensuring more reliable and timely deliveries.
Multiple carriers often mean competitive pricing. Retailers can compare rates and choose the most cost-effective option for each order, reducing overall shipping costs. Similarly, offering various return methods can mitigate return-related expenses. For instance, encouraging customers to return products to a physical store can eliminate return shipping costs and present an opportunity for additional sales when the customer visits the store.
Consumers want choice. No two shoppers have the same demands, nor do they even have consistent demands week to week. It can change on whether they are commuting that week or working from home or have the kids with them etc.
Some have no access to lockers in their area, others may have Post Office hours that are shut before they get off work, and some have only one option in their remote country home
They want to see the carrier services they are familiar with at a quick glance or they might go and shop elsewhere. In our recent research, as much as 20% of retailers don’t even advertise the carriers they use in the returns process, an oversight that can and will cost sales.
The post-purchase experience—shipping, delivery, and returns—plays a crucial role in shaping customer perceptions and loyalty. A seamless and flexible experience can leave a lasting positive impression, encouraging repeat purchases and brand advocacy. In contrast, a negative experience, such as delayed shipping or a complicated return process, can lead to customer frustration and harm the brand's reputation.
By offering multiple carriers and return methods, retailers show that they value their customers' time and preferences. This customer-centric approach fosters trust and loyalty, as shoppers feel confident that their needs will be met promptly and efficiently.
In the rapidly evolving world of e-commerce, retailers must go the extra mile to meet customer expectations and remain competitive. Offering multiple carriers and return methods is a strategic move that enhances customer satisfaction, reduces operational risks, and builds a more resilient and adaptable business model.
By prioritising flexibility in their shipping and return policies, retailers can not only improve their bottom line but also cultivate lasting relationships with their customers. In the end, it's about delivering convenience, choice, and peace of mind—values that every customer appreciates.
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