The Return Management Process: The Ultimate Guide

Introduction

Within the retail and e-commerce industry, product returns play an integral part of the business. According to research, around 9% of customer products are returned due to several reasons. Companies selling products need to be open-minded towards product returns. 

However, processing a product that is returned is far more complicated than imagined. You can’t simply put the item back on the shelf. They need to be managed well so that you can avoid major impacts to your business. Return Management is a huge responsibility for a business so that confusion is avoided and business operations run smoothly.

Meaning of Return Management

The retail and e-commerce industries have to work relentlessly with customers to return products. These products need to be collected, organized and restocked back to the inventory. After the return of the product, depending on the product’s condition, the seller has to decide whether to save useful spare parts, destroy the item, repair it, refurbish it, or recycle it. Also, they need to decide the further action to be taken with the customer. Whether the customer should be provided a refund, replacement, a store credit or repair of the product. 

Quality process is essential when dealing with returns. Defects in the product should be looked into to enable adjustments during the production process. There is still a long way to go when it comes to cracking the formula for the most effective return management process. Over 72% of consumers demand more flexibility when it comes to returning products. However, only 4.5% of companies are actually implementing it in their business models.

Process of Returns Management

• Company confirms or denies Returns, Exchanges, or Refunds. Customer support executives will review the return policy and check if you are eligible for a refund or exchange.
• Company collects product at delivery address. Companies that process returns in – house struggle to optimize delivery and collection routes. This is due to the difficulty of managing last – mile orders. Companies that rely on third – party logistics service providers (3PLs), use prepaid digital return labels.
• The product is returned to the sorting facility or warehouse for checking. A delivery driver returns the product to the specific sorting facility or warehouse. Product quality is checked, inspected, sorted and classified as required. After classifying the products, a returns management inspector examines all returned products. He then attempts to determine the reason for the product return.
• Lastly, the product is restocked and back in stock. If the product is still in good condition, it is restocked on the inventory shelf. It is also added to the inventory count, and offered for sale to other future customers.

Required features of a Returns Management Software

With the help of a Returns Management Software, you can organize the events included in the Reverse Logistics process. Simultaneously, you can power up the business operations with a smooth and efficient software.

1. Efficient Integration– With the help of returns management software you can include several stable integrations to create a seamless customer returns experience. You can create custom returns for all the marketplace returns and courier returns for all shipping provider returns.
2. Automated Reverse Pick Up– Frame your own rules on the basis of which the order delivery and the return pickup can be automatically allocated to the desired shipping provider.
3. Fast Turnaround Time– You can manage your Customer Initiated Returns (CIR) and Return to Origin (RTO) through a centralized process. You can ensure smooth and fast turnaround time with a robust and flexible return management software.
4. Partial Returns– You can relax your efforts of managing your returns from multiple orders with partial returns feature. This feature of the returns management software helps your facilitate your returns in a fragmented manner effortlessly.
5. Advanced Dashboards for Returns– You can get insights about why customers are returning certain products with the help of elaborate returns dashboards. This will eventually help you optimize your operations.
6. Accurately Scan Returns– Update the shelf code and return reason with the unified platform of a returns management software. You can capture complete information about returns, leading to faster and accurate returns.
7. Customer Initiated Returns (CIR)– Handle returns that are initiated by customers via multiple sales channels. These include marketplaces and vendors, depending upon the origin of the returns.
8. Return to Origin (RTO)– Use return management software to seamlessly manage returns that are not delivered to customers for specific reasons. These include unanswered doorbells, missing locations, etc.
9. Trackable Inventory– Software ensures there is total tracking visibility of returned products by sorting and binning returned products based on multiple quality inspection parameters.

Why Return Management is essential for Retail and Ecommerce

In the retail and e-commerce industry, more products are being returned to merchants. This is due to changes in how consumers interact with retailers and make purchasing decisions. The growth of online buying and generous return practices have led consumers to view purchases as risk – free discoveries in size and style, rather than final purchases. This is extremely true for some categories, such as women’s shoes and dresses. Especially online purchases, according to the retailer. Returns management is an essential part of any e-commerce and retail business. Having the right systems and processes in place can improve customer service. It also increases profits by reusing returned products. Setting up a streamlined returns management process can be a daunting task, so it is encouraged to work with your 3PL to help. They are experts in managing all types of logistics. They can handle the burden of implementing and managing all the different processes.

How Return management is useful for Retail Pharmacy store

As retail pharmacy stores grow in importance and e – commerce enters the market, product availability becomes very important for retailers. If customers can’t find what they need, they simply switch to another pharmacy. Inventory management is useful for managing delivery dates by always having products in stock. It’s also likely that purchases are consistent throughout the year, but buying behavior changes. Holidays are likely to boost buying, but may slow down at the end of the fiscal year. A large part of your role as a pharmacy retail owner is inventory management. It helps you maintain accurate records of all the products you have in stock in your pharmacy. Overall, the pharmacy’s goal is to order and sell the right products to customers who buy and use them. This means working with third parties to return expired products to manufacturers or wholesalers to minimize the amount of unsellable products in its inventory. The process of “drug return” is also called reverse distribution. This process is often performed by a reverse sales company. The company receives unsellable and expired medicines from pharmacies and returns them to manufacturers and wholesalers for credit or disposal. This credit goes to the pharmacy.

Why is Returns Management important for the supply chain?

In the world of e-commerce fulfillment and supply chain management, returns management is an underrated and under-discussed. This is a topic that many e-commerce businesses need to consider. A returns management process is an integral part of a healthy supply chain. It is vital to customer satisfaction, and can improve your bottom line. In today’s economy, managing the forward flow of products to customers is difficult enough. Let alone thinking about the reverse flow. But if you don’t think about product regurgitation, you could miss a key opportunity to get through the tough times. Effective returns management can have a positive impact on a company’s supply chain. It improves the performance and provides additional opportunities to strengthen relationships with customers.

Important ways to improve Return Management

• Product returns can stop your business and harm your customers, so do everything you can to cut the impact.
• Manageable returns are returns that can be reduced or removed through better forward logistics. This includes checking for inadequate product descriptions. Improving poor packaging leading to reduced damage. Reduce slow delivery times and general negligence.
• Uncontrolled returns are returns that are generally beyond the seller’s control. For example, a buyer who changed his mind after purchasing a product, not the seller’s fault.
• Understand the cost of returns. Maintaining customer satisfaction through a good return policy is essential. Customers love it when a company offers free returns.
• Either way, it’s important to understand how returns impact your bottom line to cover return shipping and tracking costs.
• The same applies to the number of working hours required to manage returned goods. This includes from answering the phone to replenishing the product.
• Have a clear return policy. A clear and transparent return policy is an important part of providing a great customer experience.
• Just like your shipping policy should be easily accessible to your customers, so should your return policy.
• It should be posted on your website or any partner site you sell on. Also a printed copy should be included when the product is shipped and delivered.
• The likelihood of customer dissatisfaction is reduced by managing customer expectations.
• Analyze Returns. Every time an item is returned, we learn something about the product and the customer. I have an opportunity. Make sure there is a feedback area for him that identifies the ‘item returned and why’. Customers can tell you what you did right and move on, and what you did wrong can move on, so you can make changes.
• Provide insight into ecommerce returns through tracking. Most ecommerce companies have visibility into the shipping process. A similar level of transparency should be applied to the returns management process. Therefore, it is important to provide return tracking information to make this process transparent.
• You can also set up automatic text alerts or notifications to let you know once your return has been received and refunded.

What is Reverse Logistics?

Reverse logistics is a type of supply chain management that returns goods from the customer to the seller. Processes such as returns need reverse logistics as soon as the customer receives the product. Reverse logistics starts at the end user. It works its way back through the supply chain to the retailer. Reverse logistics also includes processes such as recycling, remanufacturing, and resale. It’s when the end user handles the final disposal of the product.

Why do companies use Reverse Logistics?

Organizations use reverse logistics when goods move from their destination back through the supply chain to the seller or suppliers. The aim is to regain value from the product or dispose of it. Globally, returns cost companies almost a trillion dollars annually. It has become highly common with the growth of ecommerce.

The objectives of reverse logistics are to ensure customers are not lost. Only 10% of in-store purchases are returned. Compared to that, at least 32% of online purchases are returned to the seller due to several reasons. The ultimate goal of reverse logistics is to build customer trust and loyalty. It is done so that customers are repeated in the future and losses related to returns are reduced.

Steps involved in reverse logistics process

1. Processing the returns   

The return process begins when the consumer indicates that they would like to return the product. This step includes return material authorization. The condition of the return should be examined. This process also includes scheduling returns and authorizing refunds. Also, defective products should be replaced. 

2. Handling the returns

Once the returned product arrives at your site or center, you need to inspect it. You need to determine in which return category it falls into. Categorize the product into options such as repair, resell as new, return, recycle, dispose of, or refurbish. 

3. Continue Returns  

Reduce your return waste by sending repairable items to the repair department. 

4. Repair 

Inspect the returned products and determine if it can be repaired. If not, sell or recycle all the usable parts.

5. Recycling the product

Parts or products that cannot be repaired, reused, or resold must be sent locally for recycling.

Difference between Returns Management vs. Reverse Logistics

Reverse logistics is a type of supply chain management that returns goods from the customer to the seller or manufacturer. Whereas, Returns Management is a type of Reverse logistics process that deals with product returns. It is an activity that is quick, controllable, visible, and easy. It takes into account how customers judge your business by your return policy. A return is the resending of an item. Returns often lead to other extended return policies such as in-store or online credit points. 

Bottom Line

Returns are an unavoidable part of running a retail business. It doesn’t matter whether you sell online, in stores, or both.  Rising consumer expectations and increasing competitive pressure mean that returns management procedures must be carefully designed. An effective return policy, precautionary measures, and orderly receiving procedures can help minimize the impact of returns on your bottom line.