Returns are an inevitable part of business for online retailers, but that doesn’t mean you can’t improve the experience or reduce the impact of returns on your business.
A smooth and efficient returns management process improves customer satisfaction, brand reputation and operational costs.
In this article, you’ll learn what returns management is, why it matters and exactly how your business can optimise its returns process to improve efficiency and profitability.
What is returns management?
Returns management is the process of handling and processing online returns. It covers every step of the returns journey, from when a customer initiates a returns request to restocking and reselling.
Here’s what an effective returns management system looks like:
- Customers read a clear return policy, which sets expectations and outlines timelines and costs
- Customers request returns via an online returns portal
- Online retailers give customers one or more return methods
- Customers package and return the goods
- Retailers receive and assess the goods
- Customers receive a refund or replacement
- Retailers restock, refurbish or dispose of products
Returns management also aims to minimise unnecessary returns. A robust system reduces losses while maintaining a positive customer experience, ensuring that returns do not negatively impact brand loyalty.
Returns management vs. reverse logistics
Although returns management and reverse logistics are closely related, they serve different functions within the supply chain.
- Returns management is the customer-facing side of the process. It includes the return initiation, refund processing, and inventory decisions. It aims to create a seamless return experience that satisfies customers while minimising losses.
- Reverse logistics is the physical transportation and processing of returned goods. It involves moving products back to warehouses, sorting them, and determining whether they should be restocked, repaired, or recycled. Reverse logistics is the operational backbone that supports the returns management process.
In other words, reverse logistics involves moving goods in the opposite direction of traditional supply chain logistics. Returns management covers the broader strategy of handling product returns, including customer service and decision-making processes.
Why is returns management important?
A strong returns management process can reduce waste, increase profits and improve customer loyalty. Here are four reasons retailers should invest in returns management:
1. Boost customer loyalty and retention
Customers care about your returns processes to the point where they base shopping decisions on it.
Studies show that 92% of shoppers are more likely to buy again from a retailer that provides a hassle-free returns process. Conversely, 84% of consumers would avoid shopping with a brand again after a negative return experience.
By making the return process easy and convenient for customers, retailers can turn potential negative experiences into opportunities to delight and retain them. Customers will have no ill will if they can return their products quickly, easily and, ideally, for free.
2. Reduce the financial costs of returns
Returns are often more expensive than retailers anticipate. The Times estimates it costs UK retailers an average of £20 every time consumers return a parcel. According to research by ParcelHero, returns cost online retailers a total of £20 billion.
Moreover, businesses fail to account for the hidden costs of processing returned items. These can include:
- Shipping costs. Covering the cost of return shipping—especially for retailers that offer free returns—adds a direct expense to each transaction.
- Customer Support. Managing return requests creates additional work for customer service teams.
- Restocking and processing. Once retailers receive returned products, they must inspect, sort, and repackage them, which takes up warehouse space and creates additional labour costs.
- Product depreciation. Many returned products lose value due to handling, repackaging, or obsolescence. This is particularly true for seasonal items, electronics, and fast-fashion apparel.
Optimising returns management helps businesses minimise these financial losses by improving efficiency, reducing fraudulent returns, and ensuring they can resell goods whenever possible.
3. Create a competitive advantage
Offering a well-structured returns policy gives retailers a competitive advantage. Customers are more likely to buy from retailers that offer flexible return options, knowing they won’t be stuck with an unwanted product.
In contrast, businesses with rigid or complicated return policies risk losing customers to competitors who provide a more seamless experience.
For example, over half of UK consumers surveyed by the CBRE said they wouldn’t purchase online if returns weren’t free. This increased to 67% among online shopping enthusiasts.
4. Improve sustainability and reduce waste
Returns contribute significantly to environmental waste, with millions of returned items ending up in landfills each year. Businesses can improve sustainability by managing returns, refurbishing and reselling returned products, and minimising the carbon footprint associated with unnecessary return shipments.
How to improve your returns management process
Optimising your returns management process can minimise costs, enhance customer satisfaction, and improve operational efficiency.
Below are three key strategies to improve your returns management process:
1. Invest in an end-to-end returns solution
Most online retailers lack the resources or experience to significantly improve the returns process themselves. They are, rightly, more focused on getting customers into their stores and orders out the door.
That’s why leading online brands trust Pro Carrier’s innovative returns solution to provide end-to-end control throughout the process. Here’s how our dedicated solution helps:
- We have one central portal for deliveries and returns to streamline the process.
- Our free consumer portal makes it easy for customers to return goods. You can define the options and design the portal to match your brand colours.
- Labels are free, too. When you use both Pro Carrier eCom and Returns, you and your customers can save money by avoiding the cost of generating and printing return labels
- We check all returns at our warehousing, verifying product quality, flagging items for early refunds and holding stock that can be shipped again.
- When handling returns from abroad, we use your data to automatically collect duties owed to you by HMRC.
We aim to make returns simple and efficient for retailers and your customers.
2. Improve customer service
A well-handled return experience can turn a dissatisfied customer into a loyal one. Businesses must ensure that customer service teams are well-equipped to manage return inquiries, provide guidance, and offer solutions that enhance the customer experience.
To improve customer service in returns management:
- Offer multiple return options, including in-store returns, drop-off points, and scheduled pickup services.
- Provide live chat and AI chatbots to assist customers in initiating and tracking returns.
- Train customer service representatives to handle returns efficiently and empathetically, ensuring customers feel valued throughout the process.
A streamlined, customer-focused returns process can improve brand reputation and increase customer retention.
3. Reduce the cost through paid returns
Offering free returns is an attractive option for customers, but it can be costly for retailers. Businesses can explore strategies such as partial cost-sharing or conditional free returns based on the reason for the return to balance customer satisfaction with cost efficiency.
There are several ways you can reduce the cost of returns:
- Charge for returns on non-defective products while keeping returns free for faulty or incorrect items.
- Offer discounted return shipping labels rather than fully covering the cost.
- Introduce store credit incentives for customers who choose an exchange over a refund. This will encourage retention while reducing financial losses.
- Introduce a one-off fee for free annual returns.
The latter can be particularly powerful. According to research by Whistl, almost half of frequent online shoppers found a £20 annual fee for free returns somewhat appealing.
How to reduce your returns
Over half of UK online shoppers return orders. They are an unavoidable part of retail, but you can proactively reduce return rates and improve efficiency.
Here are five strategies you can implement today:
1. Improve your product descriptions
Consumers frequently return products that don’t meet their expectations or look the same as they did on screen. This is particularly common in the fashion industry, where return rates are highest.
Retailers can address this issue by providing high-quality product images, 360-degree views, and detailed descriptions. Offering size guides, fit recommendations, and real customer reviews can also help shoppers make more informed purchasing decisions.
Pizza oven manufacturer Ooni does a great job of giving users clear product information, as well as information on warranties and returns.
2. Create a transparent returns policy
A clear and accessible return policy can reduce confusion and prevent unnecessary returns.
Retailers should outline their return conditions—including timeframes, acceptable product conditions, and any associated fees—on product pages and during checkout.
ASOS’s returns policy is one of the best in the business. It is incredibly clear and thorough, giving shoppers everything they need to make a purchase decision.
3. Analyse returns data to detect trends
Analysing return data can help businesses identify patterns and common return reasons.
For example, if a particular product has an unusually high return rate, it may indicate issues with sizing, quality, or misleading descriptions. Addressing these problems proactively can reduce future returns.
4. Improve your shipping process
Improve your shipping process to decrease the number of returns because of damage or late delivery.
Using sturdy packaging materials and conducting pre-shipment inspections can prevent costly mistakes.
5. Use AR and VR to help customers try before they buy
Retailers in the fashion and homeware industries can leverage virtual reality (VR) and augmented reality (AR) technology to help customers try before they buy.
AI-powered chatbots and virtual assistants can also guide shoppers toward the right products, reducing the likelihood of returns.
Improve your returns management with Pro Carrier
You can never eliminate returns, but working with Pro Carrier can make them less stressful and more cost-effective. We combine optimised processes with an all-in-one customer portal backed by customer service excellence to ensure that returning goods is as easy as sending a parcel.
Download our Guide To Robust Returns for Retailers to learn more about the state of returns and discover how you can build your own returns strategy with Pro Carrier.
Alternatively, speak to one of our experts today to learn more.