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Returns Management Guide: Best Strategies for eCommerce Logistics
Did you know that more products ordered online are returned than those bought in brick-and-mortar stores? In fact, the National Retail Federation expects the total cost of eCommerce returns to reach $816 billion in 2023. [1] With this current trend of customers rejecting orders, it is pertinent that online retailers look to optimise the returns processes. The reason is not far-fetched!
More than 90% of shoppers said they will purchase a product again if the process is easy [1], while 33% will abandon a retailer if the procedure is difficult. [2] This underscores the importance of making it easier for shoppers to send back a package if they are not satisfied.
In this ultimate guide, we aim to help eCommerce businesses optimise the whole return management journey by sharing tips on optimising the process and best practices.
What Is Returns Management?
The returns management process is a systematic approach to handling orders that customers do not accept. It involves the receipt, inspection, and processing of items, determining whether they qualify for a refund or exchange. This procedure is crucial for meeting customer expectations and mitigating the financial impacts on a business.
Returns Management vs. Reverse Logistics
In eCommerce, customers often confuse these two terms. Let's take a look at the differences between them:
Both processes are integral to a successful retail operation, particularly in eCommerce, where the volume of rejected orders can be significant. Effective management of both can lead to a stronger reputation for reliability and sustainability.
Common Reasons Why Customers Return Items
Understanding why shoppers don't accept orders is important for any online retailer. By identifying the root causes, you can employ proactive measures to reduce these rates and improve satisfaction.
The Returns Management Process
Let's take a look at some of the processes the package will pass through before it gets back to the retailer.
Receiving Returns
The initial phase involves handling products that customers send back, which can be conducted via mail, direct in-store, or through digital portals. Implementing a straightforward and easily understandable returns policy on your website is crucial to guide shoppers. For example, Amazon allows customers to print shipping labels directly from their accounts and drop off returns at various locations, streamlining the experience and increasing customer loyalty.
Inspection and Quality Control
After the product is received, it undergoes inspection to check for any damage or defects. This process, known as quality control, is essential to verify that the item matches the buyer's stated reason and meets return policy standards. To this end, some retailers have a dedicated process where rejected electronics are meticulously examined to confirm their condition and functionality. This ensures that all orders are handled fairly and those suitable for resale are quickly identified and processed.
Restocking
When the item passes quality control and is deemed in good condition, it can be restocked and made available for resale. If, however, it is damaged or considered unsellable, it must be either sent for refurbishment or properly disposed of. For instance, IKEA often restocks rejected items that are in sellable condition and discounts those that are imperfect but still functional.
Refurbishment
Products with minor damages are candidates for repair. This process entails cleaning, fixing, and thorough testing to confirm it's in optimal working condition. Once redone, they are restocked and put back on sale. A pertinent example is Apple's Certified Refurbished program. Through this initiative, Apple takes returned or damaged items, makes necessary repairs, ensures they meet original functional specifications, and then sells them at a reduced price.
Disposal
When an item is not suitable for resale due to its condition, it requires proper disposal. This process involves either recycling the item or sending it to a specialised disposal facility to minimise environmental harm. For instance, an eCommerce business can send unsalable electronic products to recycling centres, where they ensure that all components are either repurposed or disposed of.
Full Refund
Once the package is inspected and processed, the buyer will receive either a credit or a refund, which depends on their original payment method and the retailer's specific policy. For instance, some stores allow customers who send back orders within the specified window, and in accordance with their policy, to choose between receiving store credit or a reimbursement to their original payment method. This flexibility ensures a timely refund.
Tracking and Reporting
When addressing orders shoppers reject, it is essential to meticulously track and report on the number and reasons, as well as the associated costs. This valuable data is instrumental in identifying trends and pinpointing areas for improvement. Some shops utilise an advanced tracking system that analyses patterns and feedback to enhance quality and customer satisfaction. This strategic approach optimises returned inventory management and helps in refining offerings based on customer insights.
Customer Communication
Effective communication is part of the whole process and includes confirming the receipt of items and status updates about the outcome – whether it's a credit or a refund. To excel in this area, you can send timely emails at each step of the return process. Shoppers receive notifications when the package is received, when it is being processed, and when the refund or credit has been issued. This transparency builds trust and enhances customer experience.
Best Practices on How to Reduce the Number of Returns in Your Business
This section explores some strategies to reduce the number of rejected products for eCommerce businesses.
Write Comprehensive Product Pages
If customers receive items that differ from their online portrayal, it can lead to unmet expectations, and it is only natural for them to consider sending them back. Hence, as mentioned earlier, one way you can avoid that is by writing a comprehensive description page that is filled with pictures to show the actual size, colour and variety of the goods.
This is necessary because when shoppers buy online, their decision-making heavily relies on the information presented on your site, unlike physical stores, where they can examine orders directly. So, ensure the description is accurate and that the images reflect the true condition of the goods.
Ensure the Products Are Packed Properly
No customer will like to receive a damaged or faulty order due to poor packaging. For example, a broken electronic might not be useful to the buyer anymore, hence the need to send it back. Importantly, the impact is felt beyond the buyer. The business will also experience negative customer feedback. While attractive packaging is beneficial, you should ensure it does not compromise the item’s protection, especially for fragile or high-value products.
Using outer packaging that withstands external conditions and internal packaging that minimises movement and provides sufficient cushioning is a good practice.
Send the Right Orders!
For shoppers, receiving an incorrect item is never a pleasant experience, as it will reduce the trust they have in the online store. This problem is a result of mistakes during fulfilment. For businesses offering a limited range of goods, it's relatively simple to ensure that buyers receive the correct items. However, as your product line expands and your customer base grows, the complexity of delivering orders increases.
Implementing a robust quality control system can mitigate the risk of errors. If the challenge of maintaining precision in order fulfilment becomes overwhelming, considering an outsourcing solution like Bezos.ai might be beneficial.
Communicate With Your Customers
When orders are delayed, particularly beyond the estimated delivery date, buyer frustration is likely to increase. Often, such waits are due to issues over which retailers have little control. Therefore, in these instances, proactive communication is essential.
Informing shoppers about potential setbacks as they arise is crucial, and this can be effectively managed through various channels. Consider implementing a banner on your website to alert customers to delays during the shipping selection process. Additionally, direct emails can be sent if they are anticipated post-purchase.
Inform Customers of the Environmental Impact
Daily returns from online purchases considerably affect the environment. Highlighting this fact to your customers could encourage them to reconsider their decision to return packages unless necessary. The eCommerce sector includes a substantial proportion of environmentally aware buyers who might appreciate a gentle reminder of the impact of their choices.
Additionally, offering services such as repair or refurbishment can further reduce the frequency of disposal. This not only diminishes the need for dumping but also promotes recycling, aligning with eco-friendly practices that benefit all.
Encourage Reviews and Feedback
Feedback is highly important for online retailers, offering valuable insights and opportunities for improvement. It is beneficial to actively request reviews from buyers who send back products, particularly when consistent patterns begin to emerge. Such feedback can highlight specific areas requiring enhancements, be it on your website or within your fulfilment processes.
Encouraging them to review their purchases can also help reduce the likelihood of returns. Various methods can be employed to motivate customers, including loyalty programs, exclusive discounts, or complimentary items. These strategies not only foster engagement but also enhance the overall shopping experience.
How to Optimise Your Returns Management Strategy
Handling returns is a complex operation that requires a strategic approach to maximise efficiency and increase customer satisfaction.
Here are some best practices to consider:
Clear Returns Policy
A well-articulated policy that outlines conditions, timelines, and exceptions is necessary.
This not only sets clear expectations for the customer but also provides a guideline for your team to manage returns more efficiently. Make sure this policy is easily accessible across all sales channels and platforms to avoid any confusion.
Free Returns Shipping
Offering free shipping can be a significant incentive for customers to shop with you, despite the obvious cost implications for the business. Studies have shown that people are more likely to complete a purchase if they know that they can send back items for free. This can increase sales and loyalty, potentially offsetting the costs associated with the incentive.
Understand the Cost
It's essential to have a clear understanding of the costs involved. This includes not just the direct fares like labour and shipping but also indirect ones like warehouse space and the environmental impact. By understanding these costs, you can identify areas for improvement and allocate resources more effectively. For example, you might find that using a more sustainable packaging material could reduce both the costs and environmental ramifications.
Automate Workflows and Processes
Utilising RMS (Returns Management System) can automate various aspects, such as approval workflows, restocking procedures, and customer notifications. Automation not only reduces the time and labour involved but also minimises human error, making the process more efficient and reliable.
Leverage Returns Data for Insights
A robust RMS will collect and centralise data. This information can offer valuable insights into patterns and trends, such as frequent reasons for returns or specific products that have high rejection rates. By analysing this, you can make informed decisions to improve quality, update your policy, or even tailor marketing strategies.
Choose the Right Location for Managing Returns
Whether it's a dedicated warehouse, a 3PL facility, or even a physical store, the location should be chosen based on cost-effectiveness and logistical convenience. For example, using a 3PL warehouse located closer to the majority of your customer base can reduce shipping costs and increase efficiency.
Offer Multiple Options
Providing customers with multiple options, such as prepaid shipping labels and in-store or carrier pick-up services, can make the process more convenient for them. This enhances satisfaction and can be a competitive differentiator.
Enhance Staff Training
Well-trained staff can have a significant impact on how quickly returns are handled. Investing in coaching ensures that all employees understand what is involved, how to handle different types of returns, and how to use RMS, leading to a more streamlined operation.
The Roles of Returns Management System (RMS) in Managing Customer Returns
RMS is a digital tool designed to assist eCommerce companies in the return management process. Such systems typically feature an accessible portal through which customers can easily lodge their requests. Upon the creation of a Return Merchandise Authorization (RMA), the RMS oversees the entire process, from monitoring progress to updating stock levels, managing refunds, and compiling detailed reports.
Features of RMS
The table below efficiently summarises the features of an RMS and how they help stores manage returns.
Why Is an Effective Returns Management Strategy Important?
Handling returns is a strategic component that can significantly influence various aspects of your business.
Here's why it's crucial:
Bezos: Your Ultimate Partner in eCommerce Logistics
In the complex world of eCommerce, returns management can be a logistical nightmare. But what if you could outsource this process to a trusted partner? Enter Bezos, an experienced fulfilment services provider that's revolutionising the way small and medium enterprises (SMEs) manage their logistics.
Why Choose Bezos?
- Global Reach: Bezos operates in regions like the UK, Europe, Australia, and New Zealand, as well as the US and Canada. This makes us an ideal partner for businesses looking to expand internationally.
- Time-Saving: You can save one to five hours a day on logistics tasks. That's time you can invest in product development, marketing, or even some well-deserved relaxation.
- Cost-Effective: We help you save £1 to £2 per order and up to 80% on international orders. Plus, our proprietary AI technology identifies and resolves logistics issues before they become a problem.
- Transparency: Bezos offers real-time tracking of inventory and fulfilment status through our bespoke software. We also provide a dedicated account manager to ensure your orders are in safe hands.
- Flexibility: No long-term contracts, no hidden fees, and the freedom to cancel your monthly subscription at any time.
- Customer Experience: We focus on improving customer experience through more accurate and reliable fulfilment and delivery.
Ready to take your returns management to the next level? Get your free quote from Bezos today and start saving time and money while improving your customer experience.
Conclusion
There is no doubt that an effective returns management process is not just an operational necessity but a strategic asset. From understanding why people reject items to implementing best practices and leveraging cutting-edge technology, a well-thought-out business can significantly impact customer retention, operational efficiency, and even sustainability.
However, for businesses that want to focus on growth rather than grappling with such complexities, outsourcing is a viable option. That's where Bezos comes into play. With its global reach, cost-effective solutions, and a focus on transparency and customer experience, we offer a one-stop solution for all your logistical needs.
Speak to an expert at Bezos and start your journey towards efficient and hassle-free logistics today.
Frequently Asked Questions
What is the meaning of refund management?
This involves overseeing and processing reimbursements to buyers for returned items or unsatisfactory services, ensuring both company policy adherence and customer satisfaction.
What are returns in supply chain management?
It refers to the approach of moving goods from buyers back to vendors or warehouses, often involving restocking, recycling, or disposal of items.
How do you manage a return policy?
It involves defining terms that may include the option to receive a full refund, regardless of the reason. Additionally, some companies may not require customers to provide the original receipt if they are sending the product to a brick-and-mortar store.
What are controllable and uncontrollable returns?
Controllable returns arise from factors within a company's power, such as product defects or errors in fulfilment. Uncontrollable returns are driven by external factors, such as customer preferences or circumstances beyond the organisation's influence.
References
2.https://webinarcare.com/best-returns-management-software/returns-management-statistics/#1
