As online shopping continues to dominate the retail industry, businesses are faced with the challenge of managing returns. In fact, e-commerce return rates range between 20-30%, meaning that a significant portion of products sold online is returned. This can negatively impact different parts of your business, such as finances, logistics and customer service, as well as customer loyalty and retention.
As a result, managing returns efficiently and effectively has become essential for brands to succeed. Since managing returns manually added different layers of complexity, such as errors, wasted time and logistics, many brands are seeking an alternative that digitises the process.
With the right returns management software in place, you can minimise the impact of returns on your operations, save time, and, most importantly, maintain the loyalty of your customers.
In this guide, we'll take an in-depth look at returns management, including how it works, why it's crucial, and the advantages of digitising the process with a returns management software. Let's get to it!
What is returns management?
Returns management, also called reverse logistics, refers to the process of handling and processing e-commerce product returns. It is an essential part of the overall supply chain management process and plays a critical role in ensuring customer satisfaction and loyalty.
Return management involves a series of steps, including receiving returned products, inspecting them for damage, determining the reason for the return, and deciding whether to issue a refund, exchange the product, or repair it. The process may also involve restocking returned items or disposing of damaged or defective products.
A streamlined returns process can reduce customer frustration and improve their overall experience with the brand. It can also help businesses reduce costs associated with returned products and minimise the impact on their bottom line. But how does it work in practice? Let's take a closer look at the steps involved in returns management.
How does the returns process work?
The returns process differs depending on whether the purchased item was bought in a physical store or online. For this article, we will focus on e-commerce returns as they add a level of complexity since it’s more tricky than returning something in-store. For e-commerce businesses, the process can be broken down into several steps:
1. The customer requests a return or refund
If the customer is unsatisfied with the product they have received, they may request a return, refund, or exchange. This request can be made through the proper channels provided by the company. The return policy page usually explains the process of requesting a return.
2. The brand decides if the return is accepted
The company will review the customer's request and determine if it is eligible for return, refund, or exchange according to their returns policy. The customer may be denied a return if the product does not comply with their policy.
3. The company arranges for the product to be picked up or dropped off
If the company approves the return, they will arrange the pick-up or drop-off method. This process may differ depending on the company's returns policy, the type of product, and the shipping location.
4. The product is checked at the warehouse
When the product is returned, it will be inspected by the warehouse personnel to ensure it is in good condition and can be restocked to be sold again. If the product is damaged or cannot be resold, the customer may not receive a full refund.
5. The product is put back in stock
If the product is okay, it can be restocked in the warehouse and sold to someone else who wants to buy it.
Now that we understand how the returns process works, we can see that it can be a complex and time-consuming task for businesses. With so many steps involved, it can be challenging to manage the process efficiently, primarily if you're relying on a manual system.
So, why is returns management so crucial for any business to remain competitive in today's marketplace? Let's find out.
Why is returns management important?
There are different answers to why return management is essential because it’s a process that can impact finances, product, customer support and customer retention. With the easiness of online shopping, many customers have come to expect a seamless returns process, and failure to provide one can lead to negative reviews and a loss of future sales.
However, traditional returns management processes are often manual and have significant drawbacks. Many businesses are turning to digital returns management solutions to overcome these challenges. The following section will explore the key differences between manual and digital returns management.
Additionally, returns management can provide valuable insights into customer behaviour and product quality. By tracking the reasons for returns and analysing the condition of returned products, businesses can identify areas for improvement and make data-driven decisions to optimise their operations and reduce returns.
Manual returns or digital returns management
In a manual returns process, customers typically need to fill out a paper-based return form and physically send the item back to the retailer. The retailer then manually processes the return, which can be time-consuming and error-prone.
In contrast, a digital returns process allows customers to initiate the returns process online, often through a self-service portal. The retailer can then automate many aspects of the returns process, such as generating return labels, tracking shipments, and issuing refunds or exchanges.
Choosing between a manual or digital system is an important consideration for businesses. Let's explore some drawbacks of manually managing returns and the benefits of digitalising the process.
Manually managing returns is outdated
Manually managing returns was once the norm for most retailers, but in today's digital age, it is becoming increasingly outdated. Ultimately, retailers who stick to manual returns management risk falling behind their competitors and failing to meet the expectations of today's consumers.
Manual returns management can pose significant challenges to businesses, such as delays in processing returns, increased costs due to errors and inefficiencies, and a lack of scalability.
Traditional returns management processes are often manual, involving paperwork, manual data entry, and returned product checks. This can be time-consuming and slow down the entire process, resulting in longer wait times for customers, which usually negatively impacts the chances of buying from that store again.
Prone to errors
The manual nature of traditional returns management processes also means they are more prone to human-caused errors. Mistakes in data entry or inspection of returned products can result in inventory discrepancies and inaccurate records, which can cause further issues down the line.
Lack of visibility
Traditional returns management processes often lack visibility, making it difficult for businesses to track the status of returns and make data-driven decisions. This lack of visibility can lead to inefficiencies in the returns process and a lack of insight into areas for improvement.
With many disadvantages to a manual returns process, many businesses choose to integrate a returns management software into their online store. We’ll explore some of its advantages in the next section.
Benefits of a returns management software
Digital returns management has revolutionised the way businesses handle returns. With return management software, companies can streamline operations and achieve a more efficient and cost-effective approach.
There are several benefits to digitising your returns management process, but in this article, we'll focus on the three most important:
By implementing returns management software, brands, and most importantly, their customer service and warehouse team, can significantly reduce the time it takes to accept, inspect, and restock returned items.
This means that your staff can spend less time on returns management and more on other tasks that can help grow your business.
In addition to saving time, returns management platforms can also significantly reduce human-caused errors. The traditional manual returns management process is prone to errors, such as miscounting or misplacing products, leading to delays and frustration for customers and staff.
In contrast, returns management software uses cutting-edge technology to track and manage returned products, ensuring accuracy and boosting efficiency.
Improves customer experience
With returns management software, customers can easily place a return request at their own pace and track the status in real-time. This transparent and streamlined returns management approach can help build customer trust and loyalty, increasing customer satisfaction and retention.
Additionally, since the return request form is digital, all customer feedback shared on the returned item can be stored and analysed to improve products and reduce returns.
If you're convinced that returns management software is the right choice for your business, it's time to start thinking about implementation. Lucky for you, we've got just the solution to make your life easier! 😉 Let's look at how our returns management solution can help you streamline your operations.