eCommerce returns processing best practices for 2024

Nowadays, shopping doesn't conclude with the delivery of the product. Today's customers also expect excellent post-purchase service, with returns and exchanges being among the most critical elements. 

While around 30% of online purchases end up being returned, 58% of users demand a process that is easy, fast, and convenient. Therefore, all major eCommerce brands are focused on providing a safe, fast and simple return process that is well-planned and optimized on each step.

What is the Return Process?

In the context of eCommerce, the returns process is a series of procedures that allow customers to return products they have purchased. This cycle begins with the customer's return request and concludes with the refund or product exchange, or, in some cases, a rejection of the return by the online retailer. Each online store may have a unique return process, with its characteristic sequence and steps.

Product return process: main steps

Step 1: The customer requests a return

The process begins when a customer identifies a problem with their order, whether it is a defect in the product, dissatisfaction with the delivery, or a discrepancy with expectations. At this point, the customer can contact the customer service department directly or request a return (RMA) through a digital portal. The second option is the most recommended, as it allows you to automate the entire process, saving significant time for your customer support team. Automated self-service processes are also much more user friendly and an easy way to immediately increase customer satisfaction.

Step 2: The online store reviews the request

Once the request is received, you need to assess whether it complies with the guidelines and conditions of your returns policy. This step can be automated using a return management system such as Outvio, which automatically checks the eligibility of the return based on set rules. It can also be carried out manually by the online stores support team. While manual approval may be necessary in rare cases with certain products, it is also extremely time-consuming and can create bottlenecks, human errors and really hamper the shopping experience.

Step 3: Return label

The next crucial step is for the online store to generate and send the return label to the customer. This document contains the information necessary for the carrier to deliver the product to the correct return warehouse. Typically, these labels are provided by the return software itself, allowing the buyer to print them out and attach them to the package, or having the courier label it on pick-up or drop-off.

Alternatively, a pre-printed label can already be included in the original delivery package. Pioneered by Amazon, this practice used to be very common, but it is being used less and less, due to the fact that it makes online shops have less control over what and when is being returned, while also ‘promoting’ returns by putting a return label in customers hands already on initial delivery.

Step 4: Collection and transportation

With the return label in place, the next step is to arrange for the customer's package to be handed over to a courier. The most common ways being home pick-up or drop-off at a designated point. We recommend offering multiple options for customers to choose the most convenient method for them. Additionally, consider enabling in-store returns, as an omnichannel approach is highly valued by consumers. For further insights, you can explore our reverse logistics guide for eCommerce.

Step 5: Return tracking

Just like the real-time updates that are provided on the status of the order during the shipping process, you should extend this same level of transparency to the returns. Sending notifications with clear and detailed information builds trust with the customer and generates new business interactions, which you can leverage to promote alternative items.

Step 6: The return resolution 

Once the return has been received and validated, the online store must facilitate the refund for the return. Usually, online stores offer three types of refund: store credit, product exchange, or cash refund. The process of choosing the refund method can already be automated within the returns portal when the customer first makes a return request. 

Automation is a good idea, because it will enable you to push the customer to choose an exchange or store credit instead of a cash refund, which retains your revenue and lowers costs. Even more so, if a customer requests a return due to a damaged product, the system can automatically suggest a cash refund and if the product is indeed in poor condition, even forgo the return of the item.

Reasons to improve the return process in eCommerce

Increase customer satisfaction: A good return process provides a very positive experience for the buyer, improving their perception of the store and encouraging their loyalty. In fact, a positive return experience can turn dissatisfied customers into loyal followers.

Reduce operational costs: An automated return process frees up work from your team so they can focus on higher-value tasks. Additionally, accurate processing reduces logistical and transportation risks.

Improve reputation: By prioritizing satisfaction and simplifying returns, you can elevate your brand's position and gain a competitive advantage that sets you apart from the rest.

Maximize revenue. Optimized returns can even serve as a strategic tool to maximize revenue. For example, by using a robust returns management system, such as Outvio, you can encourage customers to exchange returned items for higher-value products.

A deeper understanding of your business: By integrating professional software for optimizing the return process, you will have access to real-time performance analytics. Identifying and understanding return patterns is essential for lowering them.

7 best practices for eCommerce returns

1. Integrate a returns management software

Optimizing the return process is nearly impossible without efficient software. Powerful return management software provides a centralized portal enabling customers to manage returns, generate shipping labels, coordinate pickups with carriers, receive updates on return status and even shop for additional items.

By eliminating manual processes, you not only significantly reduce the risk of errors but also accelerate processing returns and improve operational efficiency and productivity, enable additional sales opportunities and gather valuable data for further improvements.

Luckily, there is a wide choice of return management solutions available, each with its own pros and cons. You can take a look at our article comparing the top solutions out there, highlighting their key distinguishing qualities to start your quest for the perfect match for your business. 

2. Distinguishing between controllable and uncontrollable returns

Not all returns are created equal. It's important to focus your time and resources on those that are most likely to respond to your strategies and actions.

Controllable returns

Controllable returns are those thatcan potentially be minimized or prevented through proactive measures. These returns often arise from suboptimal practices within the sales or outbound logistics process, such as:

• Issues with product listings: Vague or inaccurate descriptions, poor quality or misleading photos, missing size charts etc. can lead to buyer dissatisfaction and returns. Make sure your product listings are clear, concise, and accurately reflect the product's features and specifications.
• Poor packaging: Poorly packaged items are more likely to be damaged during shipping, resulting in returns. Invest in high-quality packaging materials and proper packaging techniques to minimize product damage.
• Slow delivery times: Extended delivery times can lead to customer frustration and increased return rates. Simplify fulfilment processes and partner with efficient shipping carriers to ensure timely deliveries.
• General poor management: Lack of attention to detail, poor inventory control, and inefficient return processing can all contribute to controllable returns. Implement solid processes and procedures to address these issues.

Uncontrollable returns

Uncontrollable returns are those over which sellers generally have no influence. These returns can arise from:

• Customer change of mind: Sometimes, buyers simply decide that they don't want the product, even after receiving it. While it's disappointing, it's a common event that sellers can't control.
• Product damage due to courier handling: Occasionally, items are damaged in transit even with the best couriers. While sellers can do their best to protect the product during delivery, they can't prevent accidental damage 100% of the time.
• Product defect or manufacturing issue: In rare cases, returns may be due to genuine product defects or manufacturing errors. While sellers should address these issues promptly, they can't always prevent them from occurring.

3. Creating a workflow for your return management process

In the context of returns in eCommerce, a "workflow" is a set of organized processes that are used to efficiently process the product return cycle.

This structured process begins with the customer's return request and encompasses authorization, label generation, shipping, receipt, verification, processing, inventory update, and customer communication.

The effective implementation of a return workflow is essential for improving the customer experience by providing a clear and efficient response to return requests, optimizing internal operational efficiency, ensuring compliance with company policies, preventing fraud, and maintaining accurate inventory management.

Ultimately, a smart rules system will allow you to design workflows that are focused exclusively on revenue retention and profitability increase.

Some strategies that you can apply with a workflow return management process:

• Automate carrier selection: Use returns software to analyze data from each return request in depth to identify the most efficient carrier according to the selected criteria. For example, to choose the carrier with the lowest rate, the one with the lowest percentage of incidents or the one with the shortest delivery times. You can select carriers that align with your business goals and pricing structure.
• Request photos to verify the legitimacy of the return: Whenever a customer requests a return for a damaged product, you can request that they provide a photo or video of the product to personally assess the return. This type of practice is essential for minimizing return fraud.
• Send returns to the most convenient distribution center: By leveraging streamlined workflows, you not only ensure significant savings on shipping expenses but also gain the flexibility to direct returns seamlessly to a diverse range of destinations tailored to your preferences. This includes strategically chosen store locations, targeted resale channels, and even dedicated centers.
• Offer return options depending on custom parameters: For example, you can set up custom return timeframes for specific products, or choose not to arrange reverse shipping if the product price is below $10 and it arrived damaged to save unnecessary costs.

Caution: The practices mentioned above are applicable with the algorithms provided by Outvio. Opting for another tool may limit your ability to implement advanced workflows, leaving you restricted to validating and assigning return requests.

4. Encourage exchanges for higher-value products

Product exchanges are more profitable for eCommerce than returns. They retain the revenue from the original sale and build a stronger connection with the customer. Also exchanges eliminate the risks of most of the return fraud types.

But can exchanges generate even more profits than the original sale? Yes, by setting up a returns portal to offer products of equal or higher value for exchange. Since customers must deal with return shipping anyway, they may reconsider their choices and select alternative products.  

Furthermore, online stores can employ various strategies to retain revenue if customers cannot find a suitable product for the exchange. Options include offering credits or vouchers for future purchases or presenting discounted alternatives priced similarly to the initial purchase. 

5. Personalize the entire return process and tracking

Customers always feel more comfortable when interacting with a returns portal that looks and feels like the rest of the company's shopping experience. This is because personalization helps create a sense of familiarity and trust.

For example, a company can use its own logo, colors, and corporate visuals throughout the return process, from the purchase confirmation email to the return labels. It can also use language and tone of voice that reflects its brand style.

This consistent branding strategy not only reinforces its brand identity, but it also transforms the return experience into a memorable and customer-centric interaction.

6. Add product recommendations in return tracking

Another effective strategy to maximize the value of returns is to incorporate product recommendations into the tracking process. This means that whenever a customer accesses the return notification, they have a high probability of seeing the message and potentially landing on a product page, leading to a new conversion.

7. Analyze your returns data

Returned products are a valuable source of information for improving your business strategies. Analyzing them can not only help you reduce returns in eCommerce, but it is also essential for segmenting processes and encouraging efficiency.

Return reasons

Beyond simply recognizing returns, a careful analysis of the reasons behind the returns provides a wealth of actionable data. It can reveal common problems, such as items damaged during shipping, which can lead to proactive optimization of packaging methods to minimize breakage or defects.

Additionally, it enables a deeper understanding of your customers' needs, allowing you to adapt your offerings accordingly. For instance, identifying sizing issues with specific products can prompt adjustments to product descriptions or the implementation of a warning message such as: 'This product tends to run smaller; consider ordering one size larger than your current one'.

Return rate

Understanding and measuring the return rate is essential for evaluating the effectiveness of your actions and strategies, such as the accuracy of product descriptions or the clarity of your returns policy.

At the business level, it is also crucial to monitor the return rates of specific products and sales channels. This will give you the ability to identify if any item or platform needs specific optimization.

Carrier effectiveness

Determine which carriers are more efficient or experience fewer incidents to select the best fit for your orders. It's essential to recognize that not all shipping companies are equally effective for various destinations. Monitoring their performance is crucial for identifying opportunities to save money and win on delivery time.

Conclusion

In conclusion, the modern landscape of eCommerce extends far beyond the initial purchase, with post-purchase service, including returns and exchanges, now playing a pivotal role in customer satisfaction. As evidenced by statistics showing a significant percentage of online purchases being returned, the demand for a seamless return process is evident. Major eCommerce brands are responding by prioritizing safe, fast, and simple return processes, emphasizing the importance of thorough planning and optimization at each step.

Understanding the returns process is essential for eCommerce success. From the customer's initial return request to the resolution and subsequent return label generation, each step requires careful consideration. By leveraging efficient return management software, businesses can automate processes, streamline operations, and enhance the overall customer experience.

Furthermore, distinguishing between controllable and uncontrollable returns allows businesses to allocate resources effectively. Proactively addressing controllable returns through improved product descriptions, packaging, and delivery times can significantly reduce return rates and enhance customer satisfaction.

Implementing personalized return processes, encouraging exchanges for higher-value products, and analyzing return data are strategies that can further optimize the returns process. By leveraging these practices and staying vigilant about carrier effectiveness, eCommerce businesses can not only reduce costs but also maximize revenue and foster stronger customer relationships in an increasingly competitive market.