The Ultimate Guide to Returns Management

Customers often return items after purchase because of various issues, including the size not fitting well, damage during shipping, or general dissatisfaction with the product. Whichever the reason, it is important as a business to facilitate easy returns for your customers. A customer returns management strategy is crucial, especially for online merchants. 

An Invesp study estimates that up to 30% of products bought online are returned compared to just 8.89% for those purchased in brick-and-mortar stores. The same study also found that 67% of customers check the returns page before making a purchase decision. A further 92% say they will buy again from a brand if the returns process is easy.

This intensive returns management guide will introduce you to what it is, why it’s important for your business, how to manage returns, challenges you can expect along the way, and the best tool to help your store execute an effective returns strategy.

What is Returns Management?

Returns management is a term used to refer to how a business handles the return of products that customers have bought. As a process, it involves offering excellent customer service by receiving the customer’s request to return an item, analyzing if the reasons are valid based on your returns policy and approving the return. 

Returns management also involves managing the logistics of getting the product back to your business premises or returns management services provider warehouse and handling the financial transaction. Most businesses, offer a like-for-like replacement, a product exchange, a full or partial refund, or store credit.

Returns Management vs Reverse Logistics

Although the terms returns management and reverse logistics are often used interchangeably, subtle differences in the activities involved in each process make them unique.

Returns management is the process of handling returned merchandise from customers. The main activities under returns management include authorization of returns, transportation, inspection, refunds, and disposal of the item. Returns management is more customer-facing and focuses on ensuring the customer is satisfied with the final returns resolution and has a positive relationship with the brand, to meet customers’ satisfaction.

On the other hand, reverse logistics is a broader term covering the collection, transportation, repair, refurbishment, remarketing, and disposal of a product throughout its entire lifecycle. Reverse logistics is business-facing with its main concerns being how a brand can minimize costs, maximize value recovery, and ensure minimal environmental impact.

Why is Return Management Important?

As we saw in the introduction, effective returns management plays a crucial role in a modern business. This section of the guide will highlight the importance of this post-purchase service which is a mainstay of many D2C brands today.

Cost Reduction

Managing your brand’s product returns effectively has a direct impact on any cost reduction efforts you may have in place. A streamlined returns process helps to minimize the expenses involved in handling returns by customers such as transportation, labor, and restocking costs. Effective returns management is also key to mitigating losses arising from damaged or unsellable items since your brand can swiftly identify and resolve any issues early. 

Operational Efficiency

Operational efficiency is vital for business success and returns management has an important role to play in that. A well-executed returns management strategy can help your brand optimize resource allocation and minimize disruptions in the supply chain. 

By automating returns and stating clear protocols, you can also expedite the returns process, reduce errors, and allocate resources efficiently which helps to improve overall operational performance.

Inventory Management

Poor inventory management will crumble any retail business regardless of size. However effective returns management can turn things around by offering the business valuable insights into product performance, demand trends, and any arising quality control issues. 

Brands that analyze their return data can make informed decisions regarding inventory levels and supplier relationships. Additionally, the timely processing of returns can help to ensure quick reintegration into the business inventory which minimizes the risk of overstocking and stockouts.

Customer Satisfaction

Efficient returns help your brand provide a positive experience for the customer. Going a step further to ensure you have simplified return procedures, hassle-free returns, free returns shipping, quick refunds, and reliable customer support boosts customer satisfaction and loyalty. Enforcing customer-centric return policies also fosters trust and loyalty leading to repeat purchases and referrals.

Brand Reputation

Returns management also influences your brand’s reputation and perception among customers. When you provide a seamless returns experience, it reflects positively on your brand and shows its reliability and commitment to customer satisfaction. 

On the flip side, a poor return experience will do more than just tarnish your brand’s name. It is also the leading cause of negative reviews, decreased trust levels, and lower brand equity. It is important to prioritize customer needs and efficient returns to help your business maintain a good reputation and gain a competitive advantage.

Step-by-Step Guide: Workflow for Returns Management Process

More than just allowing customers to return products they have bought online, it is essential to have a simple returns management process. Simicart reviewed research by IMRG and discovered that 57% of shoppers preferred an online shopping experience that provides simple and reliable returns.

The workflow below is a straightforward returns management process that if followed, ensures an exceptional experience for your customers.

Step 1: Customer Initiates Return Process

This first step sees the customer state their intention to return a product because of a myriad of reasons including late arrival, damage upon arrival, incorrect size, and any other that an online store allows to state as the reason for a return.

Step 2: Seller Authorization

The seller reviews the return request and checks its validity against the store’s return policy to determine if it qualifies. If it does, he or she accepts the request and instructs the customer on the next step.

Step 3: Products Transported Back to the Seller

The customer packages the product and drops it off at the merchant’s or 3PL drop-off location for further processing. A return shipping label is generated and the product is shipped to the seller’s location or 3PL warehouse.

Step 4: Seller Inspection and Evaluation

Upon receiving the returned product, the seller will assess its condition to determine the extent of damage or use. The return is also evaluated to determine the right amount of refund or reimbursement the customer will receive. It is also important for sellers to review the refund request submitted by the customer against the product returned to ensure it is not fraudulent.

Step 5: Seller Initiates Refund or Reimbursement

Once the seller has ascertained the return request is legit and consistent with the condition of the product, he or she will proceed to initiate the refund or reimburse the customer with store credit, future discount, product exchange, or any other compensation as stated in the store’s refund policy.

Step 6: Seller Refurbishes, Recycles, Resells, or Disposes Product

With the customer catered to, it is up to the merchant to decide how they will recoup some value from the returned product. This value recouping is possible through refurbishing and reselling the product or reselling it as is at a discount price. The product may also need to be recycled or disposed of in an environmentally-conscious manner.

Key Elements of Effective Returns Management

As a return manager looking to offer customers product return services in your business, it is important to know what are the key elements of effective management and their influence on your business. This knowledge helps with better returns process management and fostering better relationships with the customers. These key elements are as follows.

Clear Returns Policy

An important pillar for effective returns management is having a clear and well-communicated returns policy. This policy should state the conditions allowable for customers to return products after purchase, the time limits, acceptable reasons for a return, and any associated fees or restocking charges that apply. A clear returns policy is essential for ensuring transparency that fosters trust with customers and minimizes frustrations and confusion during the return process.

Efficient Logistics

The logistics involved in the returns process need to be streamlined to minimize process processing time and the costs involved. Your business must establish efficient procedures covering receipt, evaluation, and processing of returns. Additionally, you may need to coordinate the transportation of the products to ensure the timeliness of the return process.

Quality Control

Businesses aiming to execute a successful e-commerce returns management strategy cannot ignore the importance of quality control through inspections for maintaining inventory accuracy and customer satisfaction. 

Each returned product needs to be inspected thoroughly to determine the right next steps. After inspection, your business has the option to restock, refurbish, recycle, or dispose of the returned product. Efficient quality control practices prevent the restocking of damaged or defective items, reducing losses and maintaining product quality standards.

Order Tracking

Just as with the shipping process after purchase, order tracking during returns is essential to help customers monitor the status of their returns and ensure transparency. With tracking included in returns management, customers know when their returns have been received and processed, enhancing the returns experience.

Customer Communication

The other key element of returns management is effective customer communication throughout the entire return process. Proactive communication is essential for managing their expectations and providing much-needed support. 

Effective communication with the customer during returns includes confirming the receipt of the return, providing updates on the status of a return, and issuing refunds and replacements. This builds trust and loyalty with customers even in the event of a product return.

5 Effective Returns Management Strategies

Effective returns management ensures your business provides customers with standout returns service that earns their loyalty and retains them longer. Moreover, it helps your business know what is the cause of product returns and gives you insight into how to remedy this. 

For effective returns management, implement the following five strategies.

1. Streamline the Return Policy

The importance of a clear, concise, and easy-to-understand return policy cannot be understated. Your customers need your business to have a policy that reduces confusion and frustration for them. A clearly outlined return policy also benefits your staff who know exactly how to handle customer returns.

2. Simplify Logistics

For effective returns management, you also need to have an efficient process for handling the returns. Make sure that you have easy-to-follow instructions for customers and extend even further to offer prepaid shipping labels, organize pickup services, and set up drop-off points where customers can leave their returns.

3. Enhance Customer Communication

All your brand’s efforts to effectively manage customer returns will amount to nothing if you do not communicate with them. It is vital to keep customers informed at every step of the returns process. Additionally, provide timely updates about the status of their returns including if they have been received at your facility or are being processed. By doing this, you manage customer expectations and gain their trust.

4. Analyze Return Data

Another strategy that a foolproof returns management system should include is consistent data collection and frequent analysis. This practice helps you identify trends, patterns, and potential areas for improvement. When your business understands the reasons behind customer returns, it is easier to address underlying issues such as product defects, fulfillment errors, and sizing issues so that they don’t result in more returns and undermine the customer experience.

5. Leverage Technology Integration

Businesses with a stellar returns process leverage technology to help them provide the best service to their customers. Shipment tracking systems, data analysis tools, and automated returns processing software are some of the technologies you can integrate to help you manage customer returns professionally.

TrackingMore is the number one shipment tracking software for e-commerce businesses, logistics, and 3PL brands looking to upgrade their returns handling. With TrackingMore, you gain end-to-end visibility into the returns process from the time a customer drops it off or it is picked up at their location to when it arrives at your processing facility.

Challenges of Returns Management

Returns management is not without its fair share of challenges that business owners and their teams must contend with. Familiarizing with these challenges and anticipating them can help your brand overcome them and ensure excellence in returns management. The issues to expect include:

• High Cost: Product returns can be quite expensive because of the reverse logistics (shipping, handling, and processing), refurbishment costs, and restocking fees involved. Businesses also have to contend with the loss of value of returned products, all of which put a dent in the profit margins.
• Complex Logistics: Returns logistics is not the simplest of processes as it involves coordinating pick-up and return shipping, processing of returned items, condition assessment, restocking or disposing of them appropriately, and updating inventory systems. It gets even more complex if the volume of returns is high or your business has a wide variety of products.
• Customer Satisfaction: Effective returns management plays a crucial role in ensuring customer satisfaction with your brand. The provision of a smooth and hassle-free returns process can enhance customer loyalty and trust in your brand. However, an agonizingly slow returns process is the cause of much frustration, negative reviews, and even loss of business.
• Impact on Inventory: Returns can cause major disruptions to your business’s inventory management systems, resulting in inaccuracies in stock levels, which may further affect forecasting and inventory replenishment processes. It is also a challenge handling returns alongside regular inventory. This balancing act can affect warehouse operations and lead to stockouts if not handled efficiently.
• Fraud and Abuse: The product returns process is susceptible to fraudulent activities with common ones being customers returning used or damaged items. Businesses also need to look out for counterfeit returns. You can protect your business’s bottom line by implementing robust fraud detection measures and establishing clear return policies to mitigate such fraud.

Beyond Returns Management: The Comprehensive Benefits of TrackingMore

TrackingMore is an all-in-one package tracking solution with functionality extending beyond streamlining returns management. This robust platform is trusted by businesses globally to help them track shipments across multiple carriers and gain real-time visibility into package movements. This section highlights some other TrackingMore features that can help your business stand out in your industry.

1. Dashboard Overview

TrackingMore features an intuitive shipment dashboard that acts as a central hub for your business to monitor all its shipments efficiently. From the dashboard, you can track the whereabouts of packages in real time, analyze delivery performance, and gain insights that will help you make informed business decisions to optimize your logistics processes.

2. Tracking API Integration

TrackingMore’s tracking API seamlessly integrates with over 1,200 carriers globally. Once implemented in your business system, it helps consolidate tracking information from different carriers into a single interface. With this, your business can simplify tracking management and enhance efficiency. You can also reduce the amount of manual effort exerted in keeping up with the latest status of each shipment, improving accuracy in shipment monitoring.

3. Branded Tracking Page

Another TrackingMore feature that goes beyond returns management is its branded tracking page feature. By leveraging this feature, your business can enhance the customer experience and reinforce brand identity throughout the order tracking process. Boost engagements with customers and gain a new marketing challenge by creating a custom marketing portal on your website using TrackingMore’s branded tracking page feature.

4. Automated Shipment Notifications

You can streamline connections with your customers with automated shipment notifications provided by TrackingMore. This feature allows you to set up SMS and email alerts that keep customers informed about shipment status, the latest shipping updates, and delivery notifications. By proactively updating your customers about their shipments, you enhance transparency, reduce inquiries, and improve overall customer satisfaction.

TrackingMore is more than a return management software, it is an advanced shipment tracking aggregator with cutting-edge features that help your business streamline returns management and optimize logistics operations. The features it packs also help strengthen the brand presence and elevate the customer experience throughout the post-purchase stage of their buying journey.

Customer Success Stories

When return and exchanges SaaS platform ReturnGo needed help to provide their users with return tracking functionality, the company turned to TrackingMore. With TrackingMore’s help, ReturnGo added tracking functionality, integrated more than 350 global carriers, and launched a new app within a tight deadline, all while cutting their development costs by 90%.

ReturnGo’s success story is an example of how a renowned returns management solution leveraged TrackingMore’s cutting-edge shipment tracking technology to provide customers with transparent and efficient return tracking. Implementing TrackingMore has helped ReturnGo increase its processing speeds, offer better returns management services, and boost customer satisfaction.

Conclusion

As entrepreneurs, it is crucial to understand that customer satisfaction often hinges on how smooth your returns process is. Therefore, Leveraging technology is key to overcoming the challenges that most businesses face when handling customer returns.

TrackingMore is trusted by leading e-commerce returns management system providers like ReturnGo to help them streamline returns for their users. You too can enhance your business’s efficiency in handling returns by using TrackingMore’s comprehensive suite of tools to provide customers with an exceptional returns experience.