The future is personal
10 years on from setting up ZigZag Global, Post & Parcel speaks to CEO Al Gerrie about using AI to help retailers make smarter return decisions, and his hopes for creating a uniform way to calculate parcel emissions.
When you first founded ZigZag, did you imagine returns would look the way they do today?
The future of returns has played out more or less as we expected. When we started Zigzag, people were using a label in a box to return items—they weren’t using a returns portal. I knew the future had to be digital. Retailers needed more data. They wanted to understand why returns were happening in the first place, how to reduce them, and what was inside each returned package. They also wanted insights into how customers were choosing to send items back and when those returns would arrive.
What did the return process look like back then?
Retailers used to receive dozens of returns every day, but they had no idea who they were from or why they were being returned. We proposed a fundamental change to the system: returns needed to go digital.
How did ZigZag innovate the returns process?
We created a returns portal to facilitate the transition from paper-based returns to a paperless system. We also introduced one of the first iterations of label- free returns, where customers scanned a barcode instead of printing a label. Back then, it was barcodes—now, it’s QR codes.
What did you predict about the future of returns?
We predicted that customers wanted choice, so they didn’t just want one returns option. With a label in the box, you are only offering one option. We predicted customers wanted a choice between different carriers. They also wanted a choice of time—so, could I drop the return at a 24-hour supermarket where I can park easily rather than having to go to the high street during the day and queue? And am I willing to pay a bit extra for that?”
The original business plan for ZigZag actually still holds water today in terms of the solutions we were coming up with, bearing in mind what has happened over the last 10 years.
What has taken longer to play out than you hoped for in the industry?
One aspect is around the idea of resale. The original concept of ZigZag was to have a return solution in every single market so that your customer could return from anywhere in the world. You wouldn’t necessarily have to return the parcel back to the retailer—you could resend the parcel to the next customer who bought the item. That part of it took longer to convince the industry of.
Why were retailers not convinced?
Retailers were happy with the idea of digital transformation but wanted everything sent back to them. There was less of a market for second hand clothing and its usefulness for sustainability hadn’t been considered in depth. However this is now changing and the market has caught up. So we weren’t wrong it just happened later than we predicted.
How vital is AI in optimising ZigZag’s return processes?
So, we are already using AI in our carrier integration, but we see much more capability for AI around analytics. What I mean by that is personalised return journeys that use real-time data to enable a retailer to make an intelligent decision on what to do with that customer’s return.
Is AI already being used in this way?
At the moment, we are segmenting customers by looking at their returns history. For example, we refund people before they return items if they have a history of being trustworthy returners. On the other hand, if they have been fraudulent returners in the past—returning empty boxes, for instance—we will wait for the items to be returned before issuing a refund. We plan to use AI to enable us to make these decisions on the fly.
Will AI be able to track previous purchases and returns across different companies?
Currently, there are some legalities around sharing that information across different retailers, but certainly, it could be a powerful tool for retailers.
Why is providing flexible return options so important for retailers?
Customers want choice and convenience, and they are willing to pay extra for it. They want a few things—a faster refund, the right item if they bought the wrong size or colour, and a seamless experience. Making that process easy rather than difficult and slow increases the likelihood of them shopping with the retailer again. Our job is to make that process as easy as possible for the customer while helping retailers retain revenue.
How do you help retailers retain their revenue?
Rather than just saying, ‘Here’s your money back,’ we offer exchanges or incentives like a percentage off their next order to encourage repeat purchases. Our aim is to drive the next purchase quickly. The old way is to send the item back, wait for the retailer to refund the customer, and hope the customer shops again.
With AI, we can say: ‘Can we offer you this replacement item? It can be with you tomorrow because we trust you.’ That’s where the platforms and the industry are going to move over the next few years—it has to be. Those sticking to the “label in a box” approach will be behind the curve and will lose out on business.
How can retailers compete with companies like Temu, which give automatic refunds regardless of customer behaviour?
The reality is most retailers can’t operate that way sustainably and in the long-term it won’t be sustainable for Temu. Their method is really incentivising bad behaviour—if I order something under $10 from Temu and say I’m going to return it, they tell me to keep it. It’s better to take that decision out of the customer’s hands and monitor personalisation by looking at their keep rate. The odd refund is okay, but if the keep rate is low, then retailers need to charge for returns.
The retailers who are doing it well don’t have the money that Temu has. So having the data and systems in place to personalise things for customers is where the market is moving.
How does this system benefit both consumers and retailers?
We are trying to make sure that good returns behaviour is not penalised. We are also trying to encourage retailers to be proactive and to check in with customers when they have received their parcel to check they are happy with their purchase and if not to ensure they return it sooner rather than later before the item depreciates.
Do parcel lockers improve customer satisfaction when used for returns?
arcel lockers are here to stay and I’m really in favour of them as they reduce the amount of journeys logistics companies need to make. Lockers have come a long way in the last few years in terms of customer experience – users can now have a label-free returns journey by simply using a QR code to access a locker.
How can parcel lockers be even better for returns?
The speed of refunds remains key. It’s important to ensure that lockers are emptied regularly so customers can continue using them and keep the cycle going. The biggest disappointment for a customer is arriving at a locker only to find it full. Locker providers could do more to make real-time locker availability visible to customers. If we could notify customers when a locker becomes available, it would make the process more efficient and reduce wasted trips.
Are paid returns deterring customers?
For the majority of the retailers we have been working for, paid returns have been a major part of their strategy over the last couple of years. ZigZag enables the introduction of paid returns for over 60% of the retailers on our platforms. Initially, new returns fees caused ripples because it was seen as a negative customer experience, but that changed quickly. Consumers understand better now that behaviours like serial returning, deliberately using the bedroom as a changing room, costs retailers dearly.
What we’ve seen since then is that retailers are now charging slightly more for paid returns – it started at £1.99, and now many charge on average from £3.99 up to £5 for collection in the UK.
Do you think paid returns are benefiting the logistics industry?
We’ve seen that retailers that have switched to paid returns are now better able to control their costs. We even have one or two larger merchants that make a profit on returns.
Do paid returns drive customers back into physical stores?
Yes, and we see that as a really positive thing. One of the challenges we had with the clothing brand New Look, for example, was that they wanted more footfall in their stores, so they simply made store returns free while other options were paid. And then customers have the choice. But it’s still not free to go to a store—unless you live next door to a drop-off centre, you have to take time out of your day. It is a trade-off but the choice is in the hands of the customer.
How well do you think the industry is addressing the issue of sustainable returns?
We’ve advocated for the adoption of QR codes and removing all paperwork from the box, sending all return details digitally. This also avoids the likelihood of errors when filling in forms manually—such as illegible writing or language barriers—as well as being more sustainable it saves everyone a lot of time.
What improvements are still needed in sustainable returns?
The biggest gap today is emissions calculation. There’s no uniform way for all carriers to calculate parcel emissions. So it would be great if governments could get together and come up with a standard way for all carriers to report emissions.
What makes ZigZag unique in terms of your attitude to returns?
We have a white-label solution that can be used by any carrier under their own brand. For example, DHL has been working with us for seven years and does this. Carriers are not software companies—they are brilliant at moving parcels. We can bring our retail experience and our software experience to the consumer without the carrier having to explore that.
What has been your biggest achievement at ZigZag over the last 10 years?
It’s a tough one, as there are lots of things we are proud of. Being able to service all enterprises is a major achievement. We work with large companies like Puma and Zara down to small eBay sellers, doing millions of returns, and we are able to remain relevant to all aspects of the market.
I think the truly global aspect of what we’ve brought to the market is unique. We were the first company to say, “We are going to make this an entirely global solution.” I was told it was impossible, so we had to get the industry to change its mind on what was possible and we have proved it over the last 10 years.
