How to Streamline Returns Management to Minimize Product Returns [Ultimate Guide in 2023]

Did you know your returns management could be the key to elevating customer satisfaction and loyalty? 

Understanding the importance of returns management, and more critically, learning how to streamline returns management, can significantly influence your ecommerce success.

A streamlined returns process not only simplifies operations but also has a direct impact on customer satisfaction, turning potential negatives into positive customer experiences.

In this comprehensive guide, we delve into:

• How to streamline returns management and use our 10+ years of experience to reduce the number of returns your eCommerce business gets,
• The link between a streamlined returns process and enhanced customer satisfaction,
• Simple 10 step process, techniques and strategies to optimize your returns management,
• And more!

Join us at Fulfyld as we uncover the power of an effective returns strategy and how it can propel your e-commerce business to new heights!

The Current State of Returned Products and Why Streamlining Returns is a Must!

The e-commerce landscape is growing rapidly, and a rise in product returns follows suit. According to a report by Statista, return delivery costs in the United States alone are expected to reach $550 billion by 2020, a 75.2% increase from four years prior. 

This indicates a need for understanding how to streamline returns management and an efficient ecommerce returns management strategy to reduce returns.

The Challenges Businesses Face in Reducing Returns

If it feels like reducing returns is like an uphill battle – you are not alone!

Well….it comes with many challenges!

In the current climate, businesses confront several hurdles in reducing the number of product returns. Every returned item, is a cost and that’s a very tricky thing to tackle.. 

One of the most prevalent issues is the complexity of handling and processing returned items.

It’s a multifaceted operation involving tracking, quality control checks, deciding whether to restock or discard the items, and ensuring the customer is refunded promptly, maintaining transparency throughout. 

Another challenge is managing the sheer volume of returns, especially during peak seasons. This situation calls for an effective system to handle high return volumes efficiently. Reducing turnaround time is another problem. 

A swift returns process not only enhances customer satisfaction and loyalty but also is key to effective inventory management. However, achieving this requires overcoming resource constraints and operational inefficiencies. 

The Cost of Inefficient Returns

The cost implications of inefficient returns management and every single return your business gets – is quite substantial.]

In addition to the obvious shipping and handling expenses, there are ‘hidden’ costs. 

As reported by the IHL Group, retailers lose over $600 billion each year due to overstocks and returns. 

This hidden cost encompasses factors like the loss of saleable inventory, additional customer service time, and potential damage to brand reputation.

Why It’s Critical to Streamline Returns Management Process

Efficient returns management brings several benefits, including improved customer experience, reduced operational costs, and better inventory management. Answering “how do you manage ecommerce returns?” is, therefore, key to overall business success.

Enhancing Customer Experience

A seamless and efficient returns process can significantly bolster customer experience and loyalty. A Narvar study found that 95% of consumers are likely to shop again with a retailer if the return process is convenient. 

To know how to streamline returns management, optimizing all your processes for efficacy is the start. Fortunately, companies like us can be of great help by allowing you to outsource reverse logistics so you can focus on enhancing the overall customer experience.

Reducing Operational Costs

Efficient returns management can help cut operational costs significantly. This process, often referred to as reverse logistics, involves minimizing manual errors, reducing time spent processing returns, and optimizing resource usage. 

Optoro suggests that efficient reverse logistics could save retailers up to $50 billion per year.

Improving Inventory Management

Lastly, improved returns management contributes to better inventory management. A well-executed process ensures a quicker turnaround time for returned items to be inspected, sorted, and either reintegrated into the inventory or disposed of as needed. 

This practice helps maintain accurate inventory levels and reduces the chances of overstocking or understocking, which can be financially draining.

Companies like Fulfyld offer a comprehensive solution for managing returns, allowing businesses to maintain real-time visibility of their inventory for improved inventory management.

Bonus Tip: Need guidance on strategic inventory management? Check out our guide on everything you need to know about just-in-time inventory. 

Next, we’ll uncover the top 10 steps on how to streamline your returns management!

How to Streamline Returns Management and Reduce The Number of Returns for Your eShop 

So, this is it!

After managing 3PL returns for our clients for more than 10 years – we will detail our secrets of streamlining returns management and what has helped us to reduce the number of returns our clients get.

Let’s get down to business!

Step 1: Understanding Your Returns

The first step to how to streamline returns management is understanding your returns processes. Based on our experience, this means analyzing returns data and pinpointing the most common reasons for returns. 

This initial analysis illuminates patterns and insights which enable you to reduce returns, refine your ecommerce returns management, and augment customer satisfaction.

Analyzing Your Returns Data

Your returns data is a treasure trove of valuable information that could reveal pertinent insights on how to reduce returns and guide you in making crucial business decisions. 

Analyses could reveal vital metrics like return rates, the most common reasons behind returns, the cost incurred due to returns, and even the impact of returns on customer behavior.

Specialist companies like Fulfyld provide advanced analytics tools that offer businesses a comprehensive and transparent overview of their returns data. 

With Fulfyld’s streamlined returns management process, businesses not only enhance customer satisfaction but also can keenly observe, understand, and continually improve their returns management strategies.

Identifying Common Reasons for Returns

Why are returns important to eCommerce? To answer this, we need to understand the common reasons that drive returns. These reasons could span from product quality issues, wrong product or size shipped, general customer dissatisfaction, to simple buyer remorse. 

Identifying these reasons equips businesses to adopt proactive measures to prevent preventable returns. 

For instance, by enhancing product descriptions and images or providing accurate sizing information, businesses can help align customer expectations, thus reducing returns due to inaccurate product expectations.

Step 2: Developing a Clear and Concise Returns Policy

A returns policy holds immense significance in driving customer satisfaction and loyalty. A fair and lucid returns policy can convert a one-time shopper into a loyal customer. 

Hence, it is vital for businesses to invest time and effort in crafting a clear, concise, and customer-friendly returns policy.

Key Elements of an Effective Returns Policy

A robust and effective returns policy should encompass the following elements:

• Clear Terms and Conditions: The policy should precisely outline the terms and conditions for returns. This includes details like the return window, the condition of the product eligible for return, the process to initiate a return, and the method of refund.
• Exceptions: The policy should clearly state exceptions. If certain product categories are non-returnable, it should be stated explicitly to avoid any customer dissatisfaction.
• Free Return Shipping: Offering free return shipping can be a major driver of customer loyalty. While it might increase costs in the short term, it can boost customer retention in the long run.
• Easy Returns Process: The policy should ensure that the return process is simple and customer-friendly. A complicated return process can deter customers from future purchases.
• Multiple Return Options: Offering options like in-store returns, return by mail, or courier pickup can greatly enhance customer satisfaction.

Communicating Your Returns Policy to Customers

Once an effective returns policy is in place, it is equally important to ensure that it is communicated effectively to the customers. 

The policy should be easily accessible and visible – ideally linked on the home page, product pages, and during the checkout process. In addition, the language should be simple and easy to comprehend, avoiding legal jargon as much as possible.

Step 3: Implementing a Hassle-Free Returns Process

The next step on how to streamline returns management is developing a hassle-free way for customers to return items.

Creating a hassle-free return process forms the core of an ideal returns management process. A simple and smooth return process can significantly enhance the customer experience, leading to higher customer loyalty and repeat purchases.

Easy-to-Follow Steps for Customers

The return process should be designed with the customer’s ease in mind. Customers should be able to initiate return requests with a few easy steps. 

Businesses can provide a step-by-step guide for initiating returns. This removes ambiguity and makes the process smoother for customers.

Bonus Tip: Master your returns policy with these 10 ways to create an effective returns policy! 

Providing Multiple Return Options

Providing customers with multiple return options adds a layer of convenience. According to a survey by UPS, 73% of shoppers say the overall returns experience impacts their likelihood to purchase from a retailer again. 

Moreover, having a reliable inventory management system in place helps track returned products effectively. This ensures that products are quickly reintegrated into the inventory or disposed of, keeping the inventory levels accurate. 

Step 4: Leveraging Technology in Returns Management: A Key to Streamline Returns

The infusion of technology has revolutionized the e-commerce landscape, including the vital area of returns management. 

Today, ecommerce businesses can employ a variety of digital tools to optimize their returns management system, thereby transforming the return shipping process and enhancing the entire customer journey.

The Role of Returns Management Software in Streamlining Returns

Returns management software plays a crucial role in streamlining returns management. The software brings several benefits to ecommerce businesses:

• Centralization: The software provides a unified platform to handle all return requests. This not only eliminates manual tracking but also reduces errors, making it an effective tool on how to streamline returns management.
• Automation: It automates various tasks associated with returns like generating return labels, sending return confirmation emails, and updating inventory.
• Analytics: The software provides comprehensive analytics, illuminating patterns that could help businesses reduce future returns.
• Customer Experience: By enabling swift and seamless returns, the software significantly enhances the customer experience, fostering loyalty and retention.

Automating the Returns Process: Streamlining Returns Management

Automation is an indispensable part of an efficient, modern returns process. Here are some tools that businesses can use to automate their returns management and streamline the reverse logistics process:

• Fulfyld: With advanced warehouses that provide automated returns management, Fulfyld ensures swift and efficient processing of returns. This not only accelerates the return process but also ensures accurate inventory updates.
• Returnly: This comprehensive solution manages all aspects of returns, from return requests to customer refunds.
• AfterShip: This return management solution offers a branded return center, simplifying return requests for customers.
• Optoro: Optoro’s solution optimizes the reverse logistics process by efficiently rerouting returned goods to maximize recovery and reduce waste.

Bonus Tip: Need the best software options for your business? Read our guide on the top 9 e-commerce tools you need for your SMB!

Step 5: Training Your Staff for Streamlined Order Returns 

The fifth step on how to streamline returns management boils down to training your staff on technology solutions.

While technology is a crucial component, ensuring your staff is adequately trained to manage returns is equally important. 

Trained staff can significantly enhance the efficiency of your returns management system.

Importance of Staff Training

A well-trained team can process return requests more efficiently, handle customer inquiries proficiently, and minimize errors. 

They also play a crucial role in identifying trends in returns and suggesting improvements, thereby contributing to strategies on how to reduce returns.

Best Practices for Training Your Team

Here are some best practices for training your team in efficient returns management:

• Understanding the Returns Policy: Staff should be well versed in the returns policy and able to clearly explain it to customers.
• Customer Service Skills: Training in handling customer inquiries related to returns professionally and empathetically is essential.
• Using Returns Management Software: Proficiency in using returns management software is a key training area.
• Spotting Trends: Staff should be trained to identify common reasons for returns, helping in formulating strategies to reduce future returns.

Step 6: Managing the Financial Aspect of Returns: An Integral Part of Streamlining Returns Operations 

Returns are an inevitable part of ecommerce businesses, and managing their financial impact effectively is a key aspect of returns management.

Accounting for Returns in Your Financials

It’s essential to account for returns accurately in your financials. This involves adjusting your revenue figures for returns and recording them as a separate line item in your income statement. 

This ensures transparency and provides a realistic picture of your business’s profitability.

Strategies for Minimizing Financial Impact

Need to know, “What are the e commerce management strategies to minimize the financial impact of returns?”, we have all the answers!

1. Reducing Returns : Implementing strategies such as improving product quality and enhancing customer service can directly reduce the financial impact of returns.
2. Quick Processing of Returns: Swift processing of returns allows the products to be resold more quickly, reducing inventory costs.
3. Utilizing Returns Management Software: Investment in returns management software can reduce costs associated with manual errors and inefficiencies.
4. Efficient Disposal of Non-salable Returns: Having an effective disposal strategy for products that can’t be resold helps recover some value.

By integrating technology, training staff effectively, and managing the financial aspect of returns, businesses can create a robust returns management process that not only enhances customer satisfaction but also reduces costs and improves overall profitability.

Step 7: Dealing with Fraudulent Returns

The prevalence of fraudulent returns is a significant challenge for ecommerce businesses. According to a report by Appriss Retail, fraudulent returns cost retailers approximately $25.3 billion in 2021. 

These fraudulent activities range from wardrobing, where customers purchase products with the intention to use and then return, to counterfeit product returns, where customers return fake products.

Identifying and Preventing Return Frauds

Preventing return fraud is essential for minimizing losses and maintaining a healthy bottom line. Here are some ways to identify and prevent return fraud:

• Track Returns: Monitor the frequency of returns from individual customers. Customers with a high return rate could potentially be engaging in fraudulent activities.
• Clear Return Policies: Ensure your return policy is explicit and covers scenarios related to fraudulent returns. This includes clearly defining what constitutes a valid reason for a return.
• Product Serial Numbers: Use product serial numbers or unique identification codes to track products and prevent counterfeit returns.
• Require Proof of Purchase: Always require a receipt or other proof of purchase for returns to discourage fraudulent activities.

Handling Fraudulent Returns

When dealing with suspected fraudulent returns, it’s important to maintain professionalism and adhere to your company’s return policy. 

Ensure your staff is trained to handle these situations tactfully, without accusing the customer directly. You might want to involve legal advice in severe cases or when the value of fraudulent returns is high.

Step 8: Reintegrating Returned Products into Your Inventory

Properly managing returned products is crucial in reducing losses and maximizing revenue. This involves inspecting returned items and determining the best course of action for each item.

Inspecting and Grading Returned Items

Upon receiving a returned product, it should be thoroughly inspected and graded based on its condition. 

Grading could include categories such as “like new,” “lightly used,” “defective,” etc. The grade determines whether the product can be resold, needs refurbishing, or should be disposed of. 

To enhance the efficiency of this process, many online stores have started using automation tools for returns processing. 

These tools analyze returns data and automatically categorize the products, significantly reducing the time taken to process returns and reintegrate the items into inventory. 

Furthermore, they provide detailed reports that can help identify common issues leading to returns, empowering businesses to make strategic decisions that reduce return rates.

Strategies for Reselling Returned Products

Determining how to resell returned products depends on the product’s grade. So, if you’re wondering “What are the e-commerce management strategies for reselling returned products?”, we’ll walk you through it below! 

• Resell as New: If a product is returned unopened or in like-new condition, it can be reintegrated into regular inventory and sold at full price.
• Discounted Sale: Lightly used or opened items that are still in good condition can be sold at a discounted price.
• Refurbishing: Defective items or those in poor condition might be repaired or refurbished and then sold.
• Liquidation or Donation: Items that can’t be sold might be liquidated or donated.

Step 9: Monitoring Your Optimized Returns Process

Next on how to streamline returns management is monitoring your performance and data. 

By tracking key performance indicators (KPIs) and regularly reviewing the returns process, businesses can identify areas of weakness and implement necessary improvements.

Key Performance Indicators (KPIs) for Returns 

Monitoring specific KPIs can provide valuable insights into your returns management process. Here are some key indicators:

• Return Rate: The percentage of sold items that are returned.
• Reason for Return: Categorize and monitor reasons for returns.
• Average Time to Process a Return: The time taken from when the customer requests a return to the return being processed.
• Cost Per Return: The total cost incurred to process each return.

Step 10: Continual Improvement 

Finally, to determine how to reduce returns and figure out how do you manage ecommerce returns, focus on continual imrpovement. 

Thanks to the previous step, e-commerce stores should have in-depth analytics and insights into their performance, allowing them to compare and measure different processes. 

Continual Improvement of Your Returns Process

Continual improvement is a critical aspect of an effective returns management strategy. Here are some ways to continually improve your returns process:

• Regular Reviews: Conduct regular reviews of your return policies and procedures to identify areas of improvement.
• Leverage Technology: Continually update and leverage technology to automate and streamline your returns process.
• Customer Feedback: Regularly seek and incorporate customer feedback to enhance the returns experience.
• Staff Training: Regularly update staff training to ensure they are equipped to handle return requests efficiently and professionally.

In conclusion, managing online returns effectively requires a strategic approach that incorporates fraud prevention, efficient returns processing, reintegrating returned products, and continuous improvement. 

Implementing these strategies will not only improve customer satisfaction when a customer decides to return a product, but also reduce the financial impact of returns on your business.

Conclusion

To run a successful e-commerce company, you need to know how to streamline returns management. An efficient and customer-friendly returns process not only improves customer satisfaction but also reduces operational costs and enhances inventory management.

Implementing strategies such as analyzing returns data, developing clear return policies, leveraging technology, and providing staff training can greatly enhance your returns process. 

Furthermore, dealing effectively with fraudulent returns, reintegrating returned products into your inventory, and continually monitoring and improving your returns management process are integral to maintaining a healthy bottom line and ensuring customer loyalty.

Companies like Fulfyld can help you achieve a streamlined returns management process. They offer a robust returns management system designed to minimize the hassle associated with returns for both businesses and customers. 

By outsourcing your returns management to a specialist like Fulfyld, you can focus on what you do best – growing your business.

CTA: We encourage businesses to explore Fulfyld’s returns management service for a more efficient and customer-friendly returns process.

Start improving your returns process with Fulfyld today.

FAQs

Have more questions? Check out these FAQs below!

What is the average return rate for online businesses?

The average return rate for online businesses can vary depending on the industry, but generally, it ranges from 20% to 30%. For some sectors like fashion and apparel, it can go up to 40%.

How can I reduce the number of returns?

Reducing the number of returns starts with understanding why your customers are returning items. Analyzing returns data can provide insights into this. 

Furthermore, clear product descriptions, accurate images, customer reviews, and effective communication can help customers make informed purchasing decisions, thereby reducing the likelihood of returns.

What is the best way to handle a high volume of returns?

The best way to handle a high volume of returns is to have a streamlined returns management process in place. This includes a clear return policy, efficient return requests processing, and effective inventory management. 

Leveraging technology and outsourcing returns management to specialists like Fulfyld can also greatly enhance your capacity to handle high volumes of returns.

How can technology help in managing returns?

Technology plays a crucial role in managing returns. Returns management software can automate return requests, categorize returned products, and provide analytics on return data. 

This enhances the efficiency of the returns process and provides valuable insights for businesses.

What are some common mistakes businesses make in managing returns?

Common mistakes include having a complex return process, not clearly communicating the return policy to customers, poor inventory management of returned items, not analyzing return data, and inadequate staff training. 

Avoiding these mistakes can lead to a more effective and efficient returns process.

Why are returns important to eCommerce?

Many business owners ask “Why are returns important to eCommerce?”, and the answer is eimple – customers may be dissatisfied with a prodyct and businesses must know how to handle this. 

Understanding how to streamline returns management will make this much easier as you can ensure reverse logistics is simple for your business and consumers!