Returns management

Everyone who operates an ecommerce business should have a returns management system in place. After all, returns are an all but inevitable process in ecommerce fulfillment. Some estimates indicate that up to 30% of all items purchased online may be returned, with certain industries bearing a much higher cost of returns. Understanding the types of customer returns and how you can manage them for the best possible outcome can help you cut down your costs and improve customer satisfaction.

What is returns management?

Returns management is the process of managing customer returns and the procedure to follow for the returned products. This can include a number of options, including whether items can be returned to inventory, refurbished, discarded, overstocked, or donated, all depending on how and why the customer returned the product.

Returns management is sometimes referred to as reverse logistics. Unlike forward logistics, which is all about getting the goods to the customer, returns management is about the flow of goods from the customer back to the seller. A fulfillment partner can manage the returns process for an ecommerce business, adding speed and efficiency to the process.

There are many reasons why customers make returns, including poor fit, damaged goods, mistaken orders, late delivery, quality issues, or simply a change of mind. These different types of returns can be handled differently to maximize profits and minimize the negative effects of returns.


Why is returns management important?

Ecommerce businesses often worry about returned products because they can cut into profits and reduce conversion rates. There are costs associated with returns management, and some businesses choose to deal with this by imposing restrictive return policies.

However, a solid returns management process can be important to customer satisfaction. An overwhelming majority of customers report that they’re more likely to purchase again from ecommerce businesses and direct-to-consumer brands with easy return policies. Good return policies can generate good customer reviews, while difficult return policies can lead to a negative reputation.

A streamlined process is critical to cutting down on the costs that affect your company while improving the customer experience. Returns management can be critical to customer retention and satisfaction as well as improved brand loyalty.


What is the returns management process?

Returns can be classified into two main buckets: controllable returns and uncontrollable returns. Controllable returns are made due to reasons that are under the control of the seller and are part of your logistics process. A high number of controllable returns can point to changes that need to be made in the logistics, fulfillment, inventory management, or manufacturing process.

Types of controllable returns include:

  • Defective goods from the manufacturer
  • Damage or breakage during shipping
  • Defective or opened packaging
  • Incorrect or misleading description of the product
  • Mistaken order sent to a customer from the warehouse
  • Delayed shipping and transit

In most cases, controllable returns can be reduced by identifying and resolving problems in the manufacture of items, improving the information on the website, and partnering with a professional fulfillment or third-party logistics (3PL) provider like Airhouse.

Uncontrollable returns are made for reasons outside of the control of the seller. These are quite common in industries like clothing and apparel, where the customer must try the item on in order to determine the look and fit. Some customers may order multiple sizes and styles with the intention of keeping some and returning the others. Uncontrollable returns include issues with size or color, customer preference, or a change of heart.

There are generally a few steps to any return management process:

  • Customers initiate returns according to the policy. Your policy could offer refunds, exchanges, or store credit. In most cases, you will offer return labels to track the package.
  • Next, customers return products to the fulfillment center or ecommerce warehouse.
  • The returns are processed according to your standards. Customers receive their refund or credit, and the product is returned to inventory, refurbished, salvaged, or recycled, depending on whether it is in salable condition or is broken or defective.

What's the difference between returns management and reverse logistics?

Returns management and reverse logistics often refer to the same general process. Both terms address the flow of goods from the consumer to the ecommerce business in order to return them to the marketplace. However, returns management tends to focus on the customer return process, from the return and refund policy to the processing of items at the warehouse. Returns management ensures that undamaged items are again made available to customers.

Reverse logistics can encompass a wider range of activities, including dealing with recalls, product refurbishment, and the decision to move products that are in overstock or have defects or quality issues. In all cases, returns management and reverse logistics are very important as they cut down on losses caused by customer returns. They also maximize efficiency and customer loyalty.


What is a return and refund policy?

A return and refund policy describes how exactly customers can return an item and receive a refund on their purchase. The refund and return policy should be clearly described on the website so that customers can assess it before they place an order. Being clear and transparent about the policy is one of the most important aspects of an ecommerce business, particularly because managing returns is such an inevitable part of doing business when customers cannot see and touch items in person. Developing and stating your return policy is one of the most important steps in setting a clear basis for product returns management.


Here are some best practices for writing a return policy for your business.

How does a return policy drive sales?

A return policy is often the first thing that customers check when they consider purchasing on an ecommerce website. This is especially true when the cost of each item is somewhat substantial, as customers will need reassurance that they can be made whole in case of a problem. By setting clear expectations for refunds or store credits, customer retention and satisfaction improve.



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A transparent return management system can help minimize the inevitable costs that come with customer returns in ecommerce while improving customer service and retention. Fulfillment professionals like Airhouse can help make your system more efficient. Connect with a fulfillment expert at Airhouse to discuss how your returns management process can improve with a strong and experienced partner.

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