What is Returns Management? Return Management

Joanna Okedara
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    As the eCommerce industry continues to grow, so does the volume of returns. In fact, according to Statista, returns in the United States alone cost retailers $550 billion in 2020. To minimize these losses, wholesalers and eCommerce businesses need to have a solid understanding of return management.

    Key Takeaway: Understanding product returns management is essential for any business that sells products online. An effective return management process can help businesses identify patterns in returns and make improvements to their product offerings or customer service.

    In this blog post, we will take a closer look at what return management is and why it is important for businesses to have a solid understanding of this process. Let’s get started!

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    What is Returns Management?

    Returns management refers to the process of handling product returns by customers. This involves everything from authorizing returns, to processing the return and determining the best course of action for the returned product. 

    It is the complete cycle of returning products from customers. Typically, return management includes various stages such as pre-returns management, returns authorization, returns shipping, returns processing, and restocking or disposition. 

    Returns management is a crucial part of any business that sells products to customers, but it is especially important in the eCommerce industry.

    Key aspects of returns management include:

    • Returns Authorization: This refers to the process of determining whether a return is authorized or not. Businesses need to establish clear policies and procedures for customers to follow when they want to return a product.
    • Returns Shipping: Once a return has been authorized, the next step is to ship the returned product back to the business. This process needs to be smooth and efficient, with clear instructions and tracking information provided to the customer.
    • Returns Processing: This involves the inspection and processing of the returned product. Businesses need to determine whether the returned product can be resold, or if it needs to be disposed of or recycled.
    • Restocking or Disposition: The final step in the returns management process is to restock the returned product for resale or dispose of it if necessary.

    Why Your eCommerce Business Needs Returns Management

    Returns management is particularly important in eCommerce because customers are not able to physically see or touch the products they are purchasing. This can lead to higher return rates compared to traditional brick-and-mortar stores. 

    Efficient and effective returns management is essential for businesses to maintain customer satisfaction and loyalty. Additionally, returns management can provide valuable data and insights to help businesses improve their products and processes. 

    Finally, returns management can help businesses reduce costs associated with returns processing and restocking, which can ultimately improve profitability.

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    5 Stages of Returns Management

    Returns management involves several stages that need to be properly managed to ensure that returns are processed efficiently and cost-effectively. Proper management of each stage is critical to ensuring that returns are processed efficiently, cost-effectively, and with minimal impact on customer satisfaction. 

    Here are the five stages of returns management:

    1. Pre-returns Management

    This stage involves preparing for potential returns before they happen. 

    Pre-returns management involves setting up a returns policy, outlining return procedures, and ensuring that the necessary systems and tools are in place to facilitate returns management. It also includes providing clear instructions to customers on how to initiate returns and what to expect during the returns process.

    1. Returns Authorization

    The returns authorization stage involves validating the return request and determining if the product is eligible for return. This stage helps to prevent unauthorized returns and ensures that only eligible items are returned. 

    Typically, the returns authorization process involves reviewing the customer's request, verifying the purchase details, and checking the condition of the item.

    1. Returns Shipping

    Once the return is authorized, the next stage is to ship the product back to the seller. 

    This stage involves providing the customer with a return label and arranging for the return shipment. The returns shipping stage can be challenging, as it requires managing multiple shipping carriers and ensuring that the products are shipped back to the correct location.

    1. Returns Processing

    The returns processing stage involves receiving the returned products, inspecting them for damages, and verifying their condition. This stage also involves updating inventory levels, processing refunds or credits, and restocking returned products. 

    Returns processing can be time-consuming, and delays can lead to customer dissatisfaction and increased costs.

    1. Restocking or Disposition

    The final stage of returns management is restocking or dispositioning the returned products. Restocking involves adding the returned products back into inventory for resale, while dispositioning involves disposing of the returned products if they are no longer fit for resale. 

    This stage requires careful decision-making to ensure that the products are handled in a cost-effective and environmentally friendly way.

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    4 Benefits of Returns Management

    While returns management may seem like a headache, it comes with several benefits that can help businesses improve their overall operations. 

    Here are some of the benefits of returns management:

    1. Improves customer satisfaction

    One of the primary benefits of returns management is that it helps improve customer satisfaction. A hassle-free and simple returns process can make customers feel more confident about their purchase, which can lead to repeat business and positive word-of-mouth marketing. 

    When customers have a good experience returning a product, they are more likely to trust and recommend the brand to others.

    1. Helps reduce costs and increase efficiency

    Returns management can also help reduce costs and increase efficiency for businesses. By optimizing the returns process and streamlining it, businesses can minimize the time and resources spent on managing returns, thereby reducing associated costs. 

    Additionally, efficient returns management can help businesses quickly restock returned products, resell them, or dispose of them, which can lead to increased revenue.

    1. Provides insights for business improvement

    Returns management can also provide valuable insights for businesses to improve their products, services, and overall operations. By analyzing why customers are returning products, businesses can identify recurring issues with their products, such as defects or flaws, and take steps to address them. 

    This can lead to better product design, increased customer satisfaction, and higher sales.

    1. Helps build customer loyalty

    Finally, returns management can help businesses build customer loyalty. When customers have a positive experience returning a product, they are more likely to return to the business for future purchases. 

    Additionally, an easy and hassle-free returns process can make customers feel valued and appreciated, leading to increased customer loyalty and long-term business relationships.

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    Frequently Asked Questions About What is Returns Management

    What is the Importance of Returns Management?

    Returns management is important because of the following reasons:

    • Improves customer satisfaction
    • Reduces costs
    • Builds customer loyalty
    • Streamlines business operations
    • Reduces waste
    • Optimizes the supply chain

    What are the Three Parts of Return Management?

    The three parts of return management are:

    • Returns authorization
    • Returns processing
    • Restocking or disposition

    What is a Returns Management Department?

    A returns management department is a department within a business that is responsible for managing and handling product returns. This department is typically tasked with creating and implementing a returns policy, authorizing returns, processing returned products, and managing the disposition of returned products.

    What is Return Management Another Term For?

    Return management is also known as reverse logistics, product returns management, or return supply chain management.

    What are the Five 5 Key Processes of Return Supply Chain?

    The five key processes of return supply chain management are:

    • Returns policy creation
    • Returns authorization
    • Returns routing
    • Product disposition
    • Data management

    How Do You Handle Customer Returns?

    To handle customer returns effectively, businesses should have a clear and simple returns policy. Here are some other tips to handle customer returns:

    • Make it easy for customers to initiate returns
    • Provide clear instructions for returning products
    • Inspect returned products promptly
    • Communicate with customers throughout the returns process
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