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Returns management: How to optimise and stay profitable
Order fulfilment

Returns management: How to optimise and stay profitable

Versha Kamwal
July 18, 2022
mins read

In ecommerce, product returns not only leave customers unhappy but also cut into the profits of a brand. In the year 2021, returns hit an all-time high of $761 billion worldwide. Moreover, for every $100 in returned products, ecommerce brands lost $10.30 to return fraud.

As long as your ecommerce sales grow constantly, returns are inevitable. However, that doesn't mean returns are a dead end. On the contrary, returns provide an opportunity to collect customer feedback, implement strategic improvements and delight your customers.

In fact, 92% of customers say they will buy again from a brand if the returns process is easy. Well, this statistic is worth exploring to reap benefits from your returns process. These current trends persuade ecommerce brands to rethink return management as a critical part of their business strategy! In today's world, returns aren't just the cost of doing ecommerce business; they really are an opportunity to engage with your customers and build loyalty.

In this blog, you will learn what is returns management, the process of returns management, tips to stay profitable with an efficient return management process, and how to optimise your returns management process with Eshopbox.

What is return management?

Returns management is the process an online brand follows to manage ecommerce returns. The process is designed to handle product returns, whether for an exchange or refund, to decide what to do with a product once it's returned.

The logistics supply chain is impacted by returns (such as warehouse management, inventory management, shipping and profitability)—making returns management crucial for ecommerce brands.

Now that you know what returns and returns management entails, let's understand why returns occur and whether they can be controlled or not.

Controllable returns vs uncontrollable returns

Depending on the reason why the product was returned, you can categorize them as controllable or uncontrollable.

Controllable returns

Controllable returns are the returns that can be reduced or completely eliminated through various strategies. These generally originate from how products are displayed on the product listing page to how they are shipped.

Here are a few examples:

  • Damaged product: When the delivered products are damaged before or during shipping process
  • Inaccurate description: When the delivered products don't match the displayed description or images
  • Malfunctioning product: When the delivered products don't work properly
  • Delayed delivery: When the products arrive too late that the customer doesn't need them anymore

Uncontrollable returns

Uncontrollable returns are the returns that cannot be reduced or prevented no matter what you do—they are simply out of your control. Unfortunately, this happens a lot in the apparel industry.

Here are a few examples:

  • Wrong size: When the customers order the wrong size of apparel or footwear
  • Returns fraud: When the customers order products with an intention to return them and get financial gain
  • Change of mind: When customers simply change their minds about the delivered products

What are the steps involved in a returns management process?

Step 1: A customer initiates a return request

After receiving an order, customers may or may not like their purchase. If unhappy, the customer can initiate a return (refund or exchange) request on your website or the marketplace.

Step 2: The returned product is received

After receiving the return request, you (in the case of an online store) or the marketplace can schedule the pickup of the product. In some cases, ecommerce brands ask the customer to send the product to a predetermined location (a fulfilment centre, warehouse or any other location).

Whether you handle your returns yourself or your fulfilment provider handle them on your behalf, you need to decide what to do next with the returned product—restock it, refurbish it, raise a claim for it (if found defective), or even donate it.

Step 3: The return is processed

From here, it's crucial to act promptly.

  • If the customer qualifies for a refund, process it as soon as possible.
  • If the customer requests an exchange, ship the exchange order immediately.
  • If the returned product is eligible for resale, add it to the available inventory.
  • If the product is defective, you can refurbish it and add it to the inventory.
  • If the product is found defective (only applicable for marketplace returns), raise a claim for it.

Tips to stay profitable with an efficient return management process

1. Formulate an easy and quick process for initiating a return

The first thing you need to ensure is that the procedure for initiating a return is simple and fast for your customers. Such a hassle-free return experience will enable you to keep your customers happy even while returning a purchase. If not, your customer support team will be bombarded with hundreds of emails or calls from frustrated customers. Moreover, these angry customers can also state their troublesome experiences on social media—damaging your brand's reputation.

2. Turn return requests into exchanges

You can easily drive exchanges by encouraging your customers to buy another product when they are initiating a return request. You simply have to provide recommendations for colour, size, and style. By turning returns into exchanges, you can retain the revenue from the sale and you only have to incur costs for restocking the returned product into the inventory.

Moreover, you can give the option to get the refund in the store wallet so that your customers can purchase something else in the future.

3. Align the return shipping of the product with a scheduled delivery

When a return is initiated, you have to incur expenses on the return shipping. However, you can align the return pickup with an upcoming scheduled delivery in the same or nearby location.

4. Distribute your inventory

You can split your inventory in multiple fulfilment centres located across India to expedite order delivery as well as the speed of return shipping. It will help you optimize the process of restocking the returned products in the available inventory and making them re-sellable quickly.

5. Conduct a quality check

Once you receive the returned product in the fulfilment centre, you need to conduct quality checks to find out if there is any defect or damage in the returned product. This is a crucial step as it will determine the next course of action.

6. Process returns according to the quality check

  • Refurbish the returned product if found defected or damaged during the quality check
  • If a marketplace return is found to be defected or damaged, raise a claim based on the guidelines set forth by the marketplace
  • Restock the returned product if it was passed during the quality check or after refurbishing it

7. Prevent and handle return frauds

You can protect your business against returns fraud by detecting fraudulent behaviour via fraud-protection software. You can also implement a quality check at the customer's doorstep and send OTP (one-time-password) to the customer to ensure the delivery of high-value orders.

How to optimise your returns management process with Eshopbox

Eshopbox helps you manage returns effectively by ensuring revenue is recaptured in the following ways:

Returns management with Eshopbox
Returns management with Eshopbox

Bottom line

An efficient returns management can help ecommerce brands to attain various objectives. If you can handle the returns management process efficiently, it might help you reach your business goals fast. However, if you seek external help from experts, you can outsource your ecommerce operations to a 3PL provider like Eshopbox to accelerate the process and amplify the results—without losing sight of your core operations. Eshopbox will enable you to manage your returns, recapture your revenue and build everlasting confidence of your customers in your commerce brand.

Connect with our fulfilment expert today.

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