If you run an online store, you are most likely in the business of shipping items to customers. However, this also means you deal with parcels or items sent back. Data from Invesp found that 30% of all items purchased online come back compared to just 8.89% of items from brick-and-mortar retailers.
While there are multiple reasons why returns are a common challenge for ecommerce stores, the point is that your online store’s bottom line will suffer if you don’t employ an optimized returns management process.
With online stores like Shopify, you can benefit from a wide selection of app integrations to assist you with the operational function of your store, including customer support, marketing, sourcing inventory, and 3PL logistics. The online stores’ app marketplaces, such as Shopify’s, make it easy for you to direct your attention toward your core strengths and automate or outsource the business areas that aren’t as easy or profitable for you to manage through an internal team.
But reverse logistics is one area ecommerce merchants often forget to outsource or automate.
There’s more an ecommerce business can gain by embracing a returns culture than assuming and pretending it doesn’t exist.
If you don’t utilize the opportunity to automate your business returns process via the support of returns management software, you’ll be missing out on the benefits far more than just a simplified process.
Returns management software, also referred to as reverse logistics, is an efficient solution that makes it easy to manage the return process for manufacturers, online sellers, retailers, and third-party logistics (3PL) businesses. This includes communicating with consumers via self-service platforms or portals to manage shipping options, inventory, tracking, replacements, credits and refunds, and printing prepaid return labels.
The component of returns management software is a set of solutions aimed at controlling and managing the reverse flow of items.
The goal is to either get returned goods back to the supply chain for them to regain value or dispose of the inventory in the most efficient way.
Many return policies easily forgive, leading to a large number of returns. This results in increased costs and other challenges for manufacturers, sellers, and retailers. A return management platform helps you organize and contain these challenges by limiting the turnaround time for returns, minimizing costs, maximizing value recovery, and simplifying refunds, this will ultimately help you achieve operational efficiency.
Ecommerce businesses use this software to maintain exceptional customer experience by setting return policies and rules, providing return timelines, and offering particular returns to be auto-approved.
Any ecommerce business needs to accept that returns are a vital part of the online business model. It’s, therefore, counterintuitive to make the returns process easier rather than harder.
Online retailers lose a significant amount of revenue from returns. In 2020, the National Retail Federation estimated that ecommerce retail sales in the U.S accounted for $565 billion, with $102 billion being returned. In 2021, the same federation estimated that the total returns rate was 16.6%, equivalent to approximately $761 billion in merchandise. And remember, these numbers represent the US alone.
But these unfortunate outcomes present a lot of business opportunities.
There’s always a reason why customers would return an online purchase. It might be the wrong color or size, or they simply changed their mind. There are also customers who buy products and just return them. 62% of consumers admit that they have bracketed their online purchases in the past year, according to Narvar.
The truth is that an ecommerce returns culture is a necessary evil. Research shows that 79 per cent of online shoppers consider free returns a critical factor during an online purchase, so it’s also about customer retention. Each return offers you the potential to enhance your customer’s shopping experience and create a pleasant impression on your consumers – but only with an effective returns management strategy.
As earlier mentioned, managing the returns process entails a lot of challenges, including:
developing and maintaining return rules and policies, which can vary for separate goods or product categories,
tracking returned inventory’s movement along the supply chain,
coordinating store credit, refunds, or product exchanges,
analyzing the impact and value of returns on the business’s bottom line and more.
Brick-and-mortar retailers can definitely handle all this manually. But any larger business will get swamped with massive paperwork and mess up refunds, orders and warranties.
The good news is that today there are several software solutions in the market that helps businesses out by automating the process. Some of these tools are specifically built to solve the needs of online vendors, while others are more comprehensive to be used by wholesalers, 3PL companies, and manufacturers.
You have a wide variety of options to choose from, and generally, an automated returns management system will include the following features:
It’s crucial to have a user-friendly, self-service customer platform for efficient communication. This feature is most useful for companies to provide shoppers with the best opportunity to initialize and manage returns.
Once the return is requested, the system rejects or approves it, depending on your return policy. This process is known as the Return Merchandise Authorization (RMA). If the goods are eligible to be returned, a user-friendly portal will allow the customer to select the most preferred shipping and drop-off method (e.g., via email or carrier office, in-store drop-offs, or scheduled carrier pickups, etc.), print their shipping label, ask for refunds or exchanges, and present the reason for return.
There are several benefits that such a self-service platform presents. You can limit the number of returns by adding the option for exchanges and encouraging your customers to pick them. Also, with some effort directed toward customizing your customer portal with personalized messages, color, logo, and other design features, you can have a stellar marketing tool that creates brand awareness. And an exceptional return experience increases retention and loyalty.
An efficient returns management software should be able to produce shipping labels and other documentation for customers in accordance with carrier standards.
Internally, it should automatically generate the RMA number needed to track the goods and assign the DC or warehouse where the shipment will be delivered.
If you operate with external carriers and have your returns systems sufficiently integrated, your returns management software should pass the shipping and pick-up information to your partners and enable you to track transportation.
Once you receive the returned inventory, the barcode scanner feature makes it easy to get the items’ details, log them into the system, update stock levels and adjust order status without any network required.
Returns management software should support any type of workflow. You need to choose who pays processing and transportation fees. The software also has to account for situations such as repairs, shipping to the original supplier (in which case you’d have to initialize return), restocking, liquidation, and more. Like with refund and credit, you need a wide choice of possible follow-up strategies both to request and give compensation.
Large companies like Walmart, Target or Amazon sometimes even issue compensation without getting back the inventory – for example, if the goods are damaged, making it not worth shipping. This is another situation that needs to be supported by the software.
Gathering and analyzing data is crucial for businesses to understand a company’s performance and to support a data-driven management approach. The following are some aspects of returns that are vital to assess:
reasons for product returns,
percentage or number of reverse shipments,
value of product returns and breakdown of costs,
regained inventory value from refurbishment, reselling, etc.,
customer satisfaction rate with your returns process, etc.
Clearly, it’s not just about monitoring financial outcomes but also receiving and analyzing customer feedback. Knowing what your customers think helps you adjust your inventory assortment, provide better service, consider their descriptions, control the quality of products you sell and helps improve the inventory management. So it’s crucial to have a solid analytical module with various financial dashboards and reports.
With good returns management software, you can handle returns initiated by the consumer through various sales channels, including vendors and marketplaces, based on the origin of the return process.
Your software should allow you to seamlessly manage the returns that did not reach the right destination due to a location that couldn’t be found or a locked door etc.
It is critical to confirm that the product is eligible to be returned before approving a return. Through existing data from the shopper’s purchase history and creating a series of questions about the product, for example, is the product in new, unused condition? You’ll have the potential to determine the right action to take for the consumer’s request, whether it means approving returns, refunding the consumer’s money without asking for a return, declining to offer compensation or accepting an exchange — all without the need for manual intervention.
When a customer requests an exchange or return, finding out the reason can help you understand why the purchase failed to allow you to optimize your inventory. It can also provide you with insights to correct the customer’s issue. Your returns management software can give you options for return reasons, including style or sizing problems. Your software can then access your inventory to offer replacement products for an exchange.
The purpose of using returns management software is to streamline the returns workflow by changing manual processes and slowing down returns through methods such as generating shipping labels or releasing RMAs to automated processes.
The Best Returns management software should integrate directly with your ecommerce platform to get visibility over the end-to-end returns process. This allows you to easily configure a process that matches your specific needs as an ecommerce retailer. From enabling you to automate your returns process to assisting you in limiting your return rate using insightful data, here are other reasons why an efficient returns management software solution is an excellent benefit for your business:
An exceptional customer experience through the entire buying journey is crucial if you want to increase repeat customers – including their experience with your returns process. 84% of customers admit that a seamless, positive returns experience increases their chances of buying from an online retailer again in the future. In addition, it enhances customer satisfaction thanks to better turnaround time. Simplified return and refund or exchange processes through improved integration of back-end and front-end tasks create a satisfying experience.
Managing returns is often time-consuming. The amount of time saved with automated returns is a tremendous advantage by itself. Think of the cumbersome processes involved when facilitating a merchandise return manually. Typically, a sales rep will have to handle the returns request, get the reason for the product return and determine what actions are necessary for the customer to be satisfied with the returns process.
Your sales rep was busy but not productive. While helping a customer to process return accounts as being productive, the process can be delegated to returns software. By automating much of your returns process, the software can make dealing with online returns hassle-free: providing a self-service return portal to customers, automatically generating return labels, and automatically producing shipping updates for returned inventory.
Returns software reduces turnaround time with customization and simplification of the process. This is achieved through a centralized network of multi-channel product return hubs allowing you to receive your returns, categorize, inspect and report on the condition and status of each.
One of the rising ecommerce trends is providing customers self-service options with their returns. Over 60% of consumers reported that they prefer using automated self-service options rather than contacting a sales rep or customer care representative, according to American Express. More consumers prefer handling such processes without having to pick up the phone, send an email or get involved in a chat session. By using returns software, you can empower your customers to process and take charge of their experience.
In the past, returns meant reversed or lost sales. But today, returns don’t have to mean the end of a sale. With the right technology, you can recommend a customer who wants to process a return to alternative items or facilitate simple exchanges for different sizes or colors.
Your returns management software lets you analyze returns processing costs from logistics to liquidation. This information, in turn, helps you determine the best way to manage returns, whether through refund or replacement. The software can also automatically determine the most efficient shipping carrier and routing depending on the customer’s location and the type of the item through your built-in integrations allowing you to save costs on return shipping.
Understanding the reasons your customers return items is key to improving the shopping experience and reducing returns percentage. Returns management software provides you valuable returns insights such as high rates of shipment damage or product sizing is off. You can use this data to adjust and improve customer satisfaction, reducing your return rate.
If a customer returns an item, it’s a good idea to figure out how to process it quickly to regain its value and avoid missing out on potential resale. Using returns software enables you to speed up approvals and update product inventory faster.
A returns management tool lets you significantly reduce the number of returns in landfills through conditional logic. This helps identify the environmental advantage of a return request rather than issuing compensation and asking your customer to recycle unwanted products. Since long return windows and accepting extensively used items in less-than-perfect conditions often mean costly returns for your ecommerce, green returns may be the perfect solution for both your business and the environment. Green return is a strategy designed to solve the problem and reduce waste that would otherwise end up in a landfill.
Dealing with product returns is painful, messy and complicated for businesses. However, that doesn’t mean you should lose money because of returns.
With a good returns management solution, you can not only automate the entire process but also save yourself from possible future business losses. However, with so many software tools available in the market, choosing the best one for your business might be overwhelming. So here are factors to consider when selecting the right ecommerce returns management software for your ecommerce business.
One of the key things to look for when shopping for returns management software is its integration with existing systems. It’s important to build connections between external and internal systems, and in the case of returns management solutions, it’s an absolute must as that’s what efficient automation entails. For example, integrating your software with your email marketing platform makes it easy to send out customized shipping updates. Meanwhile, selecting returns software that efficiently integrates with your customer support software makes supporting agents to assist customers process returns easy.
As already mentioned, returns management is a complicated process; without a seamless data exchange, your returns process will fail.
So when choosing a software solution to manage returns, consider available integrations and whether it fits your needs. Which integrations you require depends on your existing systems and business model. As a rule of thumb, though, connecting to the WMS/OMS is crucial so that you can automatically update inventory levels when products are returned and exchanges are issued. In addition, integrations with preferred external carriers are usually beneficial to accurately arrange pickup and transportation, generate shipping labels and track reverse shipments.
If the systems you need are not listed, or you need to integrate with systems like the wholesaler’s custom platform, you can design bespoke connections. So ensure open APIs exist. Remember that, in this case, there will be additional investment and involvement of an expert IT team.
According to Statista, returns management or reverse logistics cost businesses $102 billion in the US in 2020 alone. To reduce the impact of returns on your business bottom line, it is critical to optimize both your returns and the customer experience with your inventory.
Nothing is more crucial than the customer returns data collected. By providing customer returns data in an organized and clean dashboard, returns software makes it easier to pull valuable insights needed to process returns more efficiently and cost-effectively. It also offers consumers an enhanced experience hence reducing the return rate.
In addition, through data analytics, you can highlight recurring return patterns. This knowledge helps you address key problems that consequently reduce return rates.
This factor can’t be stressed enough. Your ecommerce returns management software should provide an easy-to-use interface with an intuitive design. This applies to both the back end and front end of the returns software.
Any shopper visiting the portal to initiate a return process should be able to instinctively navigate the site and make the return without requesting guidance. Accessing the functionalities and tools of the software must similarly be quick and easy for employees. They should not have to navigate through intimidating menus or click several buttons to perform their tasks.
While choosing the best business returns software, go for the one offering real-time visibility across the entire organization. This helps you avoid duplicated records and a messed-up inventory. Imagine a case where a customer initiated a return; hours later, an employee who deals with inventory notices it and records the transaction in an excel sheet. A few days later, the update is noticed by a warehouse employee who updates their own records. However, the problem arises since the warehouse team has already received the returned product and processed and updated their inventory records. But the team who should update the website inventory doesn’t know about this returned product yet.
As a result, a customer shopping through your website some days later might buy a similar product from your competitor since your inventory shows it’s out of stock while the item is in your warehouse waiting for a resale.
Good returns management software enables you to improve customer experience and satisfaction. But there’s a thin line between good and best.
In addition to creating a seamless customer experience, the most efficient returns software allows you to improve your brand image. With the best software, you can add small customization elements such as incorporating brand logos, colors, fonts etc., to maintain a consistent brand customer experience across various channels.
The returns process is unpredictable. There’s no way to accurately anticipate the various returns circumstances that can occur. For instance, a product with a particular level of damage might need repair or refurbishment, while another might need recycling. These returns decisions will vary depending on your business nature, operations, the product etc.
So the best way to handle the constant flow of unpredictable product returns is to choose returns management software that enables you to take into account your unique business rules and needs. It should allow easy customization.
The best software will provide the opportunity for you to accurately disposition your product inventory even before it becomes available in the warehouse. With the help of business rules, data, machine learning and algorithms, the returns software can determine the bucket ( refurbishment, back-to-stock, liquidation, recycling or donation) under which the returned product would fall.
This will save you money and time since you won’t have to send back all returned products to the warehouse. As a result, you get saved shipping time and reduced shipping costs and save on shipping time. Plus, your workers won’t have to inspect every product leading to reduced labor time and costs.
Cost is another critical factor to take into account when choosing the best software solution for your returns process. Consider answering the following questions:
Will using this returns software lower your business costs on labor and shipping? Â
Will it enhance your profit margins by helping you reduce the returns rate? Â
Will it help you to find a dynamic solution to meet your business needs? Â
Will it give you a high ROI?
Good returns management software is a necessary long-term business investment. Instead of considering the price, which will only impact short-term cash flow, identify whether the returns software can generate higher returns on your investment long-term.
You can optimize your returns process by using automatic return labels. WeSupply helps you generate them automatically instead of uploading them manually or emailing the customers one by one!
You can eliminate all returns at your online business, but you shouldn’t. If a customer decides that a product doesn’t match their needs, it’s best that you offer a straightforward and flexible returns process. 96% of online shoppers say they’d shop again with a retailer depending on whether they provided an “easy” return experience.
Instead, you should eliminate the returns that are under your control. For instance, if customers bracket their purchases due to the wrong color, you should consider adding comprehensive color guides to your site. Similarly, if low-quality packaging leads to items being damaged during shipping, you should rectify it to save your business reputation.
A generous returns policy is not just favorable to most customers; it’s an absolute requirement for ecommerce. According to Global Web Index, almost 80% of consumers will look at an online retailer’s returns policy before buying, while 63% will not purchase from a retailer lacking a return policy on their site.
The global pandemic effects have made consumers grow more accustomed to easy returns without questions. With the significant numbers of customers shifting to online shopping, ecommerce retailers are forced to update their policies for better flexibility. If you aren’t adjusting to the trends, consumers will likely find a competitor who does.
The key to providing a hassle-free returns process is being proactive instead of reactive. During order confirmation, you can include return instructions and a link to your software portal in the email body. This way, if someone decides to return an item, they can initiate the return process directly without contacting your customer support agents. This leads to a more satisfying experience with your returns process and a higher chance of repeat purchases.
Consumers don’t enjoy the returns process any more than ecommerce retailers do. Initiating a return can be time-consuming and stressful because most businesses don’t use return-ready packaging materials that can easily be used for the return.
If a consumer has to pay for return packaging due to low-quality design, it creates friction in the returns process. It’s inconvenient to go to USPS and perhaps get interpreted as you give back return costs to your customer.
With efficient return-ready packaging, it’s possible to avoid creating a negative customer returns experience. Plus, this saves you money by using materials that can be reused for multiple deliveries.
Businesses use the term ‘reverse logistics’ for good reasons. Successful returns management solutions require the end-to-end process to be coordinated just as your outbound orders. Slow returns or a process fraught with multiple inefficiencies can result in several issues: Missed upsell or resale opportunities, slow compensation, returned items piling up in the warehouse and customers who aren’t satisfied.
A returns management partnership relieves you of the entire workflow. It delegates the process to a fulfillment provider skilled in reverse logistics, someone with the proper infrastructure to coordinate a cost-effective, streamlined returns process that improves customer loyalty.
Managing reverse logistics is one of the necessary evils of operating an online store and one of the most difficult parts of running an ecommerce business. Even if you have a stellar order processing part, how your company deals with returns is critical to the customer experience. An efficient return management software can help your online business provide customers with the experience they want and also enhance the efficiency of your business operations as well as add value to your ecommerce business.
Assuming the reverse logistics business part won’t make it less vital. In fact, ignoring it can significantly hurt your business reputation.
With the best returns management software, you can simplify the returns process and mitigate the hassles and expenses associated with it while providing a favorable customer experience.
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