Returns Management

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The e-commerce industry has a lot of management and monitoring in every parallel. Everything is handled carefully by business owners, from the management of warehouses to product returns. Managing e-commerce is quite a complex task, so you should handle every step carefully. 

You must manage the return policy with utmost importance as a responsible business owner. Let’s understand the meaning of return management and how you can successfully manage a return policy. 

What is Returns Management?

Returns management is a process that deals with the return policy of customers. It ensures a smooth return experience of products to customers. 

The activities that come under return management are– 

  • interfacing with customers
  • reverse logistics
  • gatekeeping
  • restocking the items as they’ve been returned. 

A triumphant return management process manages the return process efficiently and identifies the pointers as to why the return of a product happened in the first place. 

Once you’ve identified the loopholes in your business, you can rectify and control them to prevent further return issues. Mismanagement of the return process leads to unsatisfied customers and decreased sales. 

The Importance of Good Returns Management

Good returns management saves you from multiple possible adverse outcomes, such as– loss of customer base, decrease in sales, legal actions, and other things that might come along the way. It increases your sales and revenue if you successfully strategize the return process. Here are some of the points as to why it is essential to have good returns management. 

  1. Customer satisfaction: A well-managed returns management increases customer satisfaction as customers don’t have to worry about a possible hindrance while returning. It makes the process streamlined and leaves the customers satisfied.
  2. Create brand loyalty: You can use your return process as a USP to attract more customers and fulfill their expectations. Offer a reasonable deadline with simple and understandable return conditions.
  3. Increase sales and customer base: Customers who buy your products will likely post good reviews about your company if your return policy is well-managed. This will, in turn, increase your sales and customer base. 
  4. Professionalism: Returns management is a mandatory section every company must have. It shows your professionalism and how truthful you are to your business. 

Why Managing Returns is So Difficult

Product returns management is often seen as challenging as it seems to reverse the flow of events. This could be why the return process is somewhat challenging to manage. Here are some of the common hindrances that entrepreneurs may face. 

Consumer-friendly retailers feel obliged to accept high levels of returns

E-commerce business owners, especially apparel manufacturers, must pay high shipping rates for loyal customers. One of the most important ways to make customers stick to their brand is high levels of returns and free shipping for customers, which could create a loss in revenue due to the high cost of partnering with a 3PL. 

Reverse logistics process efficiencies are difficult to achieve

It is not easy for retailers to build a smooth reverse logistics process. There are many factors associated with it, such as– reverse logistics, inventory replacement, restocking, and fixing the damage.  Therefore it becomes a hard pill to swallow for e-commerce businesses. 

Ownership is challenging to define, given the cross-functional nature of returns

In a survey conducted by McKinsey, it was found that 58% of respondents find the lack of ownership of returns management is due to the cross-functional nature of returns. Returns management is not handled by just one department of the organization. It involves the operations, merchandising, marketing team, and other verticals within the same company. Therefore, putting the authority on just one department becomes cumbersome and somewhat unjustified.  

Data limitations restrict companies’ ability to understand and address root causes

Retailers don’t find it easy to identify the root cause of returns. It could be just one category facing maximum returns, incorrect shipping and handling, or any other reason. Retailers find disposing of the returned item more manageable and profitable than finding a disposal channel. It further creates more hindrance in their returns management than actually solving it. 

Key to Successful Returns Management

  1. Evaluate the process: Start with the basics if you’re new to managing the return process. 
  • Evaluate your process. 
  • Find loopholes in your current e-commerce return management system (if any). 
  • Ask questions about your business. 
  • You’ll find a couple of mistakes, gaps, or pain points, which can be rectified.
  1. Evaluate the policies: You should examine the policies that may impact your business negatively and positively. These policies are highly influential and tell a lot about your business.
  2. Evaluate the technology: We all understand how e-commerce and technology are closely intertwined. We can use this technology in your return management system to examine the process.
  3. Explore the strategies: With the help of your team, explore the different approaches to implement in your returns management. Manage the returns through regional fulfillment nodes. It can help you with new and increased sales opportunities.
  4. Consider BOPIS and BORIS: Many retailers opt for one of the new ways of e-commerce: Buy Online, Pick-up store. The research found that about 64% of BOPIS shoppers opt for in-store pickup more often, especially after the pandemic. BOPIS has improved the shopping experience.

Similarly, many e-commerce channels also go for Buy online, return in-store (BORIS). This smoothly navigates the customer’s experience and eliminates shipping costs.

  1. Leverage carrier partnerships: If you have partnered with the most appropriate fulfillment provider for your business, then using their service for return management can open the doors to a successful business. It helps to build a strong foundation in returns management, and your customers will likely return to your products and services. 

Returns Management Considerations


The first thing to consider in return processing is how many returns you get in a month. Are the same products being returned time and again? If this is the case, focus on resolving the issue and reducing the return volume. You can also go for other freight forwarding services if the problem lies within your shipping.

Percent of Sales

Like the previous point, sales are also associated with your return process. You should have a clear understanding of the number of products being returned versus the number of sales. What is the percentage of sales being affected by poor returns management? Having accuracy with these ratios helps with your returns management. 

Condition of Returned Products

Business owners should have straightforward instructions on the state of the returned products. They can mention the required details in their description. It helps customers better understand what measures they need to consider before filing for returns. 

Financial Value

Return management’s cost or financial value is more than you’ve imagined. You could lose millions of dollars if you don’t have a well-organized returns management system, as it is one of the crucial cogs in your system. Therefore, it is advisable to have an accounting system for product return management. 

Benefits of Optimized Returns Management

Better profit margins

An organized e-commerce returns management system helps you find specific factors in your business. For instance, if your reverse logistics, transportation, and reselling of items require more money, then with the help of returns management, you can quickly rectify these hurdles. Once you have figured out a way to eliminate the loopholes, you will be able to generate more significant profit margins. 

Increased customer satisfaction

Apart from evaluating your business, assessing customers’ choices is equally important. Detect the points where customers are dissatisfied with your return processing. Clearly understand your customers’ requirements and implement all that feedback in your business. This increases your customer satisfaction score, which helps you gain a more loyal customer base.

Faster turnaround

Businesses with a dedicated place for all their returns management systems receive a good outcome. They not only accept returns on time but can also provide the perfect solution to their customers, which could be a return, refund, exchange, or in-store credits. This further increases the satisfaction of customers and increases your sales. 

Reduced waste

Many businesses are considering the ‘go green’ motto as the e-commerce industry produces loads of waste in packing, shipping, and returns management. A strategized management system can help you reduce waste produced throughout the process. It also gives you room to reuse materials that can extend their lifecycle. 

Initiatives to Improve Returns Management

Advanced shopping tools

Many e-commerce businesses have started to use advanced tools such as augmented reality, high-resolution pictures, videos, 360-degree views, and many other tools. With the help of these advanced technologies, customers can better understand the products they are buying. This, in turn, reduces the return volume.

Using returns data

Retailers can scrutinize their returns management data from their previous cycle to see what went wrong or led to high management returns. They can architect their future purchasing process, design some products differently, and develop more things on their website to improve their return management. 

Faster, more accurate returns:  

Customers’ returns are completed faster if the retailers provide convenient drop-off stores.  It also helps them maintain the accuracy of their return orders. Therefore, every e-commerce business owner should look at numerous aspects that can help with faster and more accurate returns. 

An opportunity to encourage repurchase, exchange, or loyalty building

Generally, customers abandon retailers if they face a bad experience in returns management. Refund is not the only option that retailers have. There are more options available such as– exchange products, store credit, and repurchasing options. This would help sellers gain customers’ trust, making them more likely to buy products from your store again. 

E-commerce Returns Management Process: Best Practices

Have a shopper-friendly returns policy

This is the most important thing an entrepreneur should remember. Always think from the customer’s perspective and see what they want to see in your business. About 67% of the customers check the return policy before making purchases. This signifies that the return process is undoubtedly one of the most crucial factors for your customers. 

Make your return processing flexible for customers. You can launch flexible time duration (of return) in your business. Mention a specific period in which the product is returnable. 

Promise a hassle-free returns experience

The return policy that you offer should be hassle-free. It means that it shouldn’t be time-consuming and tedious at any cost. It saves both customers’ and entrepreneurs’ time. Use simple terms and conditions, which could make it easy for the customers to understand the long return process [policy] involved in it. Customers don’t have enough time to contact customer service repeatedly. Avoid as many obstacles as you can. This increases your customer satisfaction score, which helps you gain a more loyal customer base.

Keep your customers in the loop of their returns

Keep track of the date and time when a customer registers a complaint, details of the returned item, its shipping and delivery details, and so on. Customers become furious when they don’t clearly understand their returns process. Keep them updated with all the necessary details for them to know. Leaving the customers hanging is the last thing an entrepreneur should do. 

Moreover, always update your policy as per customers’ and business demands. It gives clarity to customers before buying the product. Mark the instructions with an asterisk if it is subject to change.

Get smart with your returns

It is understood that start-ups might need help to promise a 100% refund on the returned offer. The return process itself is quite a task for them. Therefore, try to come up with alternatives instead of full-fledged returns or refunds. You can offer your shoppers some store credits and exchange offers to keep them intact with your business. This would increase not only your sales but also skyrocket your retention rate. 

Automate your returns management process

About 25% of e-commerce sites don’t support non-product-related queries, such as returns or tracking details. Entrepreneurs can use this drawback in their favor by automating queries. Product returns management is a cumbersome process that cannot be dealt with by a single individual. It either requires a team or some technical tools that could help you with the process. Use some tools to automate the returns process to make everything streamlined.


A returns management system defines the authenticity of an e-commerce business. It tells how many business owners are concerned about giving their customers a suitable facility. It also boosts the business as many companies use the return policy as a USP.


How do I manage e-commerce returns?

A successful e-commerce return can be controlled by

  • Analyzing the customer data
  • Evaluating the loopholes in your business
  • Rectifying the issue through strategic management
  • Flexibility in the process

How is e-commerce return calculated?

 To calculate your return rate, divide the number of units returned by the number of units sold, multiplying the product by 100 to find your percentage.

How can e-commerce improve returns?

 E-commerce returns can be improved by 

  1. Understanding the reasons for returns
  2. Having a clear return policy
  3. Analyzing your returns
  4. Processing returns quickly
  5. Provide visibility through tracking
  6. Using a fulfillment center for returns management.

How do you process a return?

Step 1: Verify product returns request
Step 2: Create a return request
Step 3: Process payment & complete the return
Step 4: Complete in-store product returns
Step 5 (optional): Return the item to inventory.

Why is managing returns so difficult?

The reason why returns are difficult to manage is:-

  • Consumer-friendly retailers feel obliged to accept high levels of returns
  • Reverse logistics process efficiencies are difficult to achieve
  • Ownership is challenging to define, given the cross-functional nature of returns
  • Data limitations restrict companies’ ability to understand and address root causes

What is the return management process?

Returns management is a process that deals with the return policy of customers. The activities that come under return management are– interfacing with customers, reverse logistics, gatekeeping, and restocking the items as they’ve been returned.

How can e-commerce businesses reduce return rates?

Here are some of the tips by which you can reduce the return rates:-

  • Use high-quality images and descriptions
  • Implement size guides and fitting tools
  • Ask your customers for feedback
  • Provide outstanding customer service
  • Ship every order right the first time
  • Prioritize your packaging

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