In this guest post, Al Gerrie, CEO at ZigZag discusses the retail’s peak season blind spot… and it’s returns. Al discusses the cost of ignoring returns planning, and how to benefit financially from finalising a returns strategy before peak!
When peak season drives up sales, few retailers are fully prepared for returns. Returns planning is commonly left for the second half of the year with the mountain of other priorities taking precedence. But with returns volumes growing by around 5-10% each year, the strain on teams is having a measurable short and long-term financial impact.
Leaving returns planning to the last minute is stressful for retailers, leaving their teams unprepared to deal with the influx of complaints during the busiest period of the year and leaving opportunities for customer acquisition by the wayside.
Retailers are missing out on opportunities to lift the burden from customer service teams, stress test their returns policies, and ensure satisfaction by delaying. Research we conducted earlier in the year quantifies the issue at hand.
The cost of waiting
Returns planning being left to the eleventh hour creates an operational nightmare when volumes start to ramp up. 81% of businesses agree that delayed returns planning puts unnecessary strain on customer service and operations, a pain felt by nearly all (97%) smaller retailers. A vast majority cite late or poor returns planning as the cause of missed revenue (86%) and unnecessary operational challenges (87%) during peak.
Delays (39%) are, as you might expect, the most common disruption. But poor planning is also driving up return rates for over a quarter (27%) of affected retailers as unclear, untested policies cause confusion for those taking advantage of peak season sales. Crafting a policy that works takes time and A/B testing is an effective route to the right solution. Carriers are often snatched by competitors if planning is left for Q4 as well. Customers value choice in returns and will abandon their basket if unsatisfied, so having multiple options in place before peak is crucial.
Peak becomes gridlock when return rates rise. Delayed planning causes avoidable pressure for 81% of customer service and operations teams, rising to 97% for smaller businesses with fewer employees to process the deluge of complaints. Solidifying strategies no later than Q2 saves the time and effort spent dealing with requests that most retailers fail to anticipate.
The returns gold mine
Late returns planning is no secret. An overwhelming 86% of retailers know they would benefit financially from finalising a returns strategy earlier in the year and 73% can’t find the time to prioritise planning before peak. Despite this, 43% are wrapping up strategies in Q3 or later.
Despite the financial upside, retailers’ time is short and returns are often left until last. The most common reason holding them back is the need for a clearer return on investment. As a result, very few are taking advantage of the money left on the table.
Testing returns policies during lower sales periods helps retailers manage returns volumes by seeing how segments of their customer base respond to incentives. Going into peak knowing if customers respond well to offers like exchanges or gift cards saves the sale while easing the strain on customer support. 71% of customers spend more than the gift card balance when making the next purchase after a return, so it can be a significant uplift to sales in the long-term if properly tested. 24% of retailers also introduced exchanges and saved additional sales as a result. With 49% of consumers saying they have abandoned a purchase due to a poor returns policy, a high quality, thoroughly prepared returns policy can be the difference between success and failure during peak.
Get Returns Ready
Earlier returns planning is essential for retailers that feel the pressure when peak season hits. Huge cost savings, new customers and more effective customer support open the doors to profit through returns, not a sunk cost. We commissioned this research to prove to retailers that if they feel they’re finalising their strategies too late, they should trust their instincts. Getting ahead with a comprehensive plan is the route to a more positive customer experience and the financial rewards that come with it.
