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What Is Ecommerce Returns Management? Why Is It Essential for Your Business?

Tinka Carrick

Published on: Mar 23, 2023

what is ecommerce returns management

Here’s a wild thought: “If the returns industry were a country, it would be #18 in terms of GDP.” 

Sounds incredible? Well, that’s exactly what Tony Sciarrotta, Executive Director of the Reverse Logistics Association, says about the state of ecommerce returns today. 

This shouldn’t come as a surprise, considering that the total value of returned retail merchandise reached a staggering $816 billion in 2022 (including returned online purchases worth $212 billion).

Although the concept may be relatively new, from Zara to Target, most bigger brands have already implemented successful “returns management” strategies to gain a competitive edge in the market. As Sciarrotta puts it, “No one ever thought about returns until America embraced a satisfaction-guaranteed culture driven by big-box retail stores that use return policies as a competitive sledgehammer.”

All this to say, online retailers, both big and small, must start viewing returns management as an opportunity—instead of a headache—if they want to stay ahead of the competition. In this article, we’ll explore returns management and its importance, along with real-life examples from some of the most successful online brands that are using it to their advantage.

What is returns management?

Returns management (or reverse logistics) refers to the entire process of handing from customers, including the collection, sorting, inspection, restocking, or disposal of the returned items.

Importance of returns management strategies for businesses

While returns management may be a relatively new concept, the idea of “transference of risk” from the buyer to the seller has been around for ages. “Easy, effective returns,” therefore, quickly gained popularity amid what some may call “a culture of entitlement” as a means to keep customers happy and loyal.

If a coveted e-commerce purchase disappoints—be it too small, too big, wrong fit, wrong color, or just an impulse buy they now regret—customers have the option to return it. In fact, our research shows that are influenced by a brand‘s returns policy at least some of the time.

The benefits of having a good returns management process

Let’s take a look at some of the benefits of a solid product return process:

Boosts customer satisfaction

A successful product returns process that’s quick, efficient, and hassle-free for customers goes a long way in building trust and loyalty.

On the other hand, if customers are unsure of how to initiate a return, have to wait a long time for their refund, or do not have clarity on the status of their return, they are likely to get frustrated. Our research found that 62% of consumers won’t shop from a brand with whom they’ve had a poor returns experience.

customer survey about poor returns

Reduces costs

As part of your returns process, you don’t want the returned products to sit around for long. Every minute spent off the shelf means another minute the item remains unsold to a new customer. Plus, the refund processing will also take longer.

The good news: An efficient return management system reduces the negative impact of returned products through quick processing and restocking, which in turn helps in reducing returns costs.

Helps to detect quality issues

Handling returned products from customers and analyzing the reasons for your product returns can help you uncover any issues you may have with your product quality, packaging, or shipping. For example, if a large number of your returns are due to products being delivered broken or damaged, you may need to check the quality of your packaging or handling. You can then use these insights to improve your product design, quality, packaging, or shipping processes.

How to streamline your returns management process

What does a good product returns process look like? If you intend to manage returns in an efficient, customer-friendly way, it’s best to use a post-purchase experience platform that can facilitate your processes.

parcelLab, for example, can provide your customers with a guided, digital returns experience via our , which can be fully integrated with your website, making the return process seamless.

Customers can easily initiate a return by providing their order number and selecting the product(s) they want to return their quantity, and the reason for their return. They can also choose:

  • their preferred refund method (e.g. credit card, bank account, voucher, etc.)
  • preferred carrier
  • generate a label or go paperless
  • choose to drop off the item or get it picked up

Once initiated, customers are able to track the progress of their request in real-time through a branded tracking page—from the receipt of the item(s) to the processing of a refund. parcelLab will also send them automated emails at every step of the process to update them on the status of their return.

You can customize our returns or order status portal to match your branding (e.g. adding your logo and brand colors, etc.) and set up your return policies, such as setting return windows, eligibility, warranty cases, exchanges, and lots more.

Here’s how elevated its post-purchase customer experience using parcelLab’s solution.

hm returns management

The company wanted to provide its customers with a more streamlined and efficient returns process, with greater visibility and transparency. It also wanted to send them highly personalized and branded post-purchase communication.

By utilizing parcelLab’s return portal, H&M was able to provide customers with a user-friendly way to initiate returns and track their progress which greatly improved the customer experience. This also helped in reducing returns cost, as it no longer needed to provide additional paper inserts in its orders and was equipped to better manage its inventory (armed with enhanced data and insights into its returns process).

Final words

In the modern era of convenient online shopping and fickle-minded consumers, returns are inevitable. But they also present an untapped opportunity to elevate the customer experience and boost satisfaction and loyalty.

Contact parcelLab today to find out how you can implement these returns best practices in your business.

Read all of the Returns Management Playbook Chapters:

  1. Chapter 1 – What is Returns Management?👈 you are here
  2. Chapter 2 – Returns Management: Challenges and Best Practices 👉 read next chapter
  3. Chapter 3 – How to Reduce Your Return Rate: 11 Tips For Fewer Returns
  4. Chapter 4 – What is Self-Service Return?
  5. Chapter 5 – Guide to Retail Returns Management
  6. Chapter 6 – The Best Return Management Software
  7. Chapter 7 – Understanding B2C Europe Returns
  8. Chapter 8 – The Complete Guide to Retail Returns Marketing

FAQ

How do you best handle customer returns?

Simple: you want to make returns easy for both your customers and your team.

Start by having a clear return policy that explains the process for returning items, including time limits, condition requirements, and return shipping information. You should also have a system that provides a hassle-free process for customers to initiate a return. This could be through a self-service portal, such as the one offered by parcelLab.

From there, implement a returns management system to ensure that returns and refunds are tracked and processed efficiently.

What is the most effective returns management strategy for 2023?

In 2023, it’s best to have a returns management service that prioritizes digitization and automation. Rather than manually processing returns via email or over the phone, adopt a post-purchase platform that empowers customers to initiate returns online.

For best results, use a system that automates notifications and updates around returns and refunds so shoppers are kept informed at all times.

What are the challenges with handing returns in ecommerce?

There are a number of challenges that brands need to navigate when dealing with returns.

First, there’s the matter of cost. The fees of returns can be expensive for retailers, as they have to absorb the cost of return shipping, processing, restocking, and potential loss of inventory value. Additionally, complex or unclear return policies can lead to customer dissatisfaction.

And if you offer a lifetime warranty, managing returns can be tricky since items may be owned by different customers throughout their lifecycle.

How do you minimize returns?

One of the first steps to keep returns to a minimum is to craft detailed and accurate product descriptions. Provide all relevant information, including sizing and fit details, along with details on how to use the product. The key is to set the right expectations with shoppers.

High-quality product images from different angles can also help customers visualize the product and reduce the likelihood of returns due to differences in appearance.

Beyond that, you can also de-incentivize returns by charging for shipping or by encouraging customers to exchange products instead.

Written by

Tinka Carrick