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What Is Returns Management?

In 2022, the eCommerce return rate was above 16%. For companies that do all of their business online and provide customers with free returns, the rates might be substantially higher. If one out of every five things you ship is returned, managing outbound logistics becomes an enormous and expensive operational problem. However, by knowing what is returns management, you may limit the damage to your company.

What Is Returns Management?

In retail and eCommerce, returns management is the procedure by which an item is returned by a customer and then processed back into stock. By efficiently managing returned products, you can significantly reduce losses by restocking the warehouse with undamaged returned items for resale.

Returns management extends past the point of delivery but is not used for every order. The functions of customer service, logistics, and stock control all come into play during the returns management process.

What Is Returns Management Another Term For?

Returns management is sometimes also called reverse logistics. When compared with a traditional supply chain process, reverse logistics is the polar opposite. The items are sent from the consumer back to the retailer or producer. eCommerce and retail returns, as well as components destined for refurbishment and remanufacturing, can fall under this category. You can either sell the items again or dispose of them.

What Is the Objective of Return Management?

The goal of returns management is to reduce the likelihood of returns while simultaneously ensuring that the returns process runs smoothly. A successful returns management plan will find ways to minimize costs without sacrificing efficiency, which will please both the company and the customer.

Why You Should Have a Returns Management Strategy

Increase the Likelihood of Purchases

Your returns policy should be a core tenet of your returns management strategy. Customers are more likely to buy from you if they can easily find and understand your returns policy on your website. Customers are more likely to be satisfied after reading about the company’s return policy. Customers are more likely to buy from you if they are assured of a simple return policy in case their purchase isn’t what they expected.

Boost Customer Satisfaction and Experience

The way you handle returns can have a significant impact on how satisfied a customer is with your business. Customers may be dissuaded from making future purchases if they are forced to wait a lengthy period for a refund or if it is unclear whether or not a return has been completed. Making returns easy to do and quick to process will increase customer satisfaction. Optimal return management can lead to satisfied customers who keep coming back.

Clarify Returns Policies & Procedures 

Once your returns policy is determined, you will know which returns are acceptable and which you cannot accept. It’s possible, for instance, that you’ll only accept returns if they’re made within a specified time frame, or if the product hasn’t been opened or used in any way.

It’s normal practice for customers to take advantage of a return policy that doesn’t cost them anything. There is a significant amount of ‘wardrobing’ on eCommerce sites, which is defined as the act of buying an item for a single occasion to return it once the event has passed. Having a solid returns policy in place will assist prevent wardrobing and other unnecessary returns.

Plan for Peak or Holiday Seasons

Peak seasons may vary depending on your business, but the holiday season is often busy for all retailers. Online stores need to start getting ready for the holiday shopping season at least two to three months in advance. Our most recent preparation guide details all you need to know to conquer that peak period. It’s crucial to strike a balance between being flexible with returns that fall inside your policy and being firm with those that don’t.

Reduce the Number of Returns

Prevention is also a crucial part of your returns management procedure. Helping clients make educated purchases and providing secure packaging are just two methods to cut down on return requests. More information will be provided later in this post.

Improve the Turnaround Time

During the returns procedure, you don’t want your things to sit idle for too long. Not only will it take more time to issue the appropriate refund, but every day that an item is removed from stock is a day that it cannot be sold to a new consumer.

You can increase your company’s profits with the help of a strong returns management strategy that speeds up the returns process while reducing the stress and aggravation it causes for all parties involved.

Best Practices for eCommerce Returns Policy

ecommerce returns policy best practices - AMS Fulfillment

The term “eCommerce returns policy” refers to the guidelines that stores provide for taking back or exchanging items bought online. It details the types of items that can be returned, the reasons for doing so, and the time range within which returns will be accepted. Refund and support contact details are also typically included in this policy.

Make it Easily Accessible

Make sure that your return policy is easy to find on your site. You should make your eCommerce return policy easy to access on both the desktop and mobile versions of your site by including prominent links to it. Customers are more likely to buy from you again if they can easily locate and understand your return policy, outlining when and how they can return an item.

As a result, sales can rise. In addition to saving time and money, establishing clear expectations regarding returns before purchase would help limit the number of calls that come in to your customer service team.

Have Clear Timeframes

Many of your consumers probably weren’t prepared to use your eCommerce return policy because they hadn’t planned on returning an item. Avoid using overly complicated legalese, and set a timeframe for returns to encourage prompt action from customers. Don’t bury the deadline in small font; instead, make it obvious in boldface across multiple locations on your returns page.

Your clients will have a much easier time navigating the returns procedure if you have a transparent eCommerce returns policy that specifies the time frame in which an item can be returned. If they are aware of your return date in advance, they are less likely to blame you for a failed return.  

Having a set time limit for returns allows you to book the profit for sales that occurred before the return deadline without worrying about having to issue a refund, which can help with revenue forecasting. The quicker you receive a returned item, the better chance you have of reselling it.

Be Familiar With Tax Return Regulations

It’s not only smart business to have a return policy in place for online store purchases; it’s the law. You are required by federal law in the United States to accept returns of defective goods. In addition, shoppers have three days to return $25+ purchases if they change their minds.

Return policies may be subject to additional state regulations. You can avoid public shame and the appearance of shadiness by staying abreast of the ever-changing legal requirements for eCommerce returns.

Demonstrate Customer Service Throughout the Returns Process

While it’s understandable to feel disheartened and frustrated while dealing with returns, you should never let it show to your consumers. If you can put yourself in the customer’s shoes, you may be able to change their wrath into thankfulness.

Your clients’ cooperation in processing returns is much appreciated. Your upbeat demeanor and excellent service to consumers will go a long way toward converting returns into new sales and gaining their loyalty.

What are the 3 Pillars of the Returns Management Process?

returns management process - AMS Fulfillment

An efficient returns management program coordinates the flow of returned goods with the supply of product data and the demand for consumables that can be repaired or reclaimed as raw materials. Speed, transparency, and command are the backbone of any effective returns management procedure:

1. Speed

The rate of value recovery can be improved by speedily processing returned shipments. Return material authorization (RMA) generation and processing decisions can be automated for streamlined returns management.

The following are three tools that can be used to expedite the returns process:

  1. Workflow automation. Decisions about how to handle a customer return are influenced by a wide variety of factors, including the item’s value and components, the scope of any necessary repairs, the origin of the return, and any applicable customer service contracts. Workflow automation leads to consistent, fast, and repeatable processes and routing.
  2. Classifications and labeling. Workflow automation checks RMAs, prints labels, and creates shipping paperwork. There will be less waiting around for packages that have been properly labeled with all the necessary documentation and carrier-compliant labels already attached.
  3. Consumer information. Permissions and profile management are simplified. Similarities between user groups include commonalities in geography, payment policies, service agreements, and product return policies.

2. Transparency

To increase transparency and predictability, data collection needs to begin as soon as possible, preferably even before the return is delivered to the receiving dock. The three most efficient and simple methods of increasing exposure are:

  1. Online portals. Authorized users can access these online resources 24/7, regardless of their location or time zone. Consistent and accurate data can be shared across a wide range of production facilities, departments, and external service providers by integrating online portals with product data and financial applications.
  2. Integration with carriers. By associating RMAs with tracking numbers provided by shipping companies, customers can monitor the progress of their packages via online tracking portals and instantaneous email alerts.
  3. Barcode labeling system. The receiving dock and repair depot will have the necessary manpower and tools to process returns if they have accurate information on the incoming shipment’s parts, condition, quantity, and dates.

3. Control

It is a typical difficulty in supply chain management to synchronize material movements, especially for returns. Manufacturers need to pay attention to receiving and reconciling, as well as alerting parties to any upcoming quality issues. Accounting reconciliation allows for company-wide oversight and management.

The process of returns management should incorporate the following three control touchpoints:

  1. Compliance with regulations and laws. Regulations governing compliance have an impact on every step of the reverse logistics process. Shippers must adhere to not only federal law but also state law and industry-specific laws, such as food and medication safety laws. Workflows not only help the process go faster, but they also include safeguards that reduce the company’s legal responsibility.
  2. Reconciliation. Through the use of labels and corporate data integration, RMA data is brought into harmony with shipment, value, and accounting information. By integrating financial systems with exception-based reporting, we can keep our customers happy on the outside and our books in order on the inside by quickly resolving shipment variances and issuing precise credits. The potential and value of the raw materials for resale are established through integration with product engineering.
  3. Quality control. Teams can better investigate the sources of returns with timely feedback. Quality control problems are uncovered via product engineering. Warehouses verify the correctness of outgoing shipments. Risks and returns in the financial world can be measured. The company-wide quality mindset is enhanced via automated metrics and communication across teams.

 

The faster and more efficiently returned items are processed, the more money can be made from repairing and reselling the item or its raw materials, and the less money will be lost on holding scrapped components or paying waste management fees. Reconciliation can be completed more quickly with the use of software solutions that provide user profiles and workflows that specify supply chain partners and processes, labeling and documentation that monitor the material, and online portals and exception-based reporting.

5 Steps in the Returns Management Process

returns management process steps - AMS Fulfillment

If an order falls within the guidelines you listed in your returns policy, then five main steps will occur in the returns management process:

Step One: First, the consumer receives the item, has second thoughts, and asks for a refund. When a buyer decides they don’t like what they bought, that triggers the returns procedure. Perhaps it arrived broken, or perhaps it wasn’t the right size or color when it came to clothing.

Step Two: The customer submits a request for a refund, exchange, or return to the firm that originally shipped the item. The company (or 3PL) determines if the request complies with the returns policy. The return, exchange, or refund is subject to the discretion of the company. According to your company’s return policy, your support team or designated gatekeepers will determine if the customer is qualified.

Step Three: The customer sends the item back to the warehouse, distribution center, or other method of return. Companies that handle returns in-house often face difficulties optimizing delivery and collection routes in response to sudden spikes in demand.

If a company uses a 3PL and that 3PL covers product returns, the company will likely issue digital prepaid shipping return labels.

Step Four: The product is returned to the warehouse or sorting facility for a final inspection. The merchandise is sent back to a central distribution center or sorting facility. The product is categorized, filed, and quality checked. Sometimes, the consumer does not state a reason for the return. Was it harmed in transit both ways (delivering and returning)? Was it defective upon initially arriving at the warehouse? An auditor will examine all of the returned products after they have been sorted, hoping to find answers to these questions so the item can be processed accordingly.

Step Five: If the product is still in good shape, it will be restocked on the warehouse shelves, counted as part of the inventory, and offered for sale to another customer in the future. Otherwise, it may be destroyed or thrown away. Whatever happens, depends on the company’s policy for returned inventory as well as the item’s condition.

How the Right Returns Management Strategy Can Improve Your Processes

Four main components of returns management can shed light on your returns and inform your returns management strategy. Keeping tabs on these areas will have a significant effect on your business’s bottom line, product inventory, and other metrics. Keeping track of returns also reduces the likelihood that the problem that caused the return will happen again:

  1. Volume: Are you getting a lot of returns of the same item? Is this occurring frequently? If you answered yes to either of these questions, the issue is likely more widespread than a handful of malfunctioning products. A recall or significant changes to production procedures may be in order. A 3PL can help you keep track of returns and identify which shipment they came from in a report.
  2. Percentage of Sales: How much of your revenue do returned items account for? How many of these items can be recycled back into your supply chain using your current returns management system? What can be done to lessen the impact on profits? In most cases, 3PLs will have the resources and infrastructure necessary to repackage previously returned items for shipment.
  3. Condition of Products upon Return: Is there a particular step in the process where the product fails? Is it possible to identify common causes of product returns? For this reason, quality assurance (QA) is crucial. The goal is to identify the source of the problem and implement solutions to prevent it from occurring again. As a bonus service, some 3PLs offer quality assurance testing for your product.
  4. Financial Impact: Companies could be losing millions of dollars in value if nobody is keeping an eye on their returns management process. It is crucial to be able to evaluate the worth of a returned product and determine whether or not it can be refurbished, reused, or reintegrated into the business. To keep tabs on how much money you have lost due to returns, all 3PLs should provide you with reports on the number of items that have been sent back or are missing.

AMS Fulfillment Provides Your Customers With Efficient Returns Management

efficient returns management - AMS Fulfillment

 

The management of returned items is an essential component of any eCommerce company. It is possible to improve customer service and contribute to an increase in revenues by reusing products that have been sent back to the company if the appropriate inventory management system and processes are put into place.

You may wish to consider forming a strategic alliance with a third-party logistics provider (3PL) for assistance, given how challenging it may be to implement an effective returns management procedure. They can handle the burden of implementing and managing all of the different procedures since they are professionals in the management of all different sorts of logistics.

AMS can lead customers through the most effective product returns management solution with our dedicated team members, best-in-class systems, extensive expertise, and years of industry experience. In addition, we have the facilities, resources, and partners necessary to ensure that your customers’ returns are processed on time and that they are completely satisfied with their overall shopping experience. You can also ensure that we always do the right thing for our stakeholders, the community, and the environment as a B Corporation.

Nobody in the retail industry likes dealing with customer returns, but if you outsource your reverse logistics to AMS Fulfillment, you’ll have more time to focus on growing your business. Get in touch today to learn how we can help streamline your returns management process.

 

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