The labyrinth of returns management is no longer just a backend operation; it’s a battleground where strategies can either make or break a brand. In 2023, the rate of ecommerce returns was a staggering 14.5%, according to insights from the National Retail Federation (NRF). This number amounts to $743 billion in merchandise, a signal to all brands that returns processing can no longer be an afterthought in your supply chain.
In a recent webinar hosted by Fulfill.com, a panelist of experts took part in a Q&A around the complexities of returns management. From handling refurbishments to tackling fraudulent returns, they covered a LOT of ground.
Join us below as we explore all the burning questions around optimizing returns management, and the expert answers from Kyle Bertin of Two Boxes, Tom Stringer of Cariuma, and Mark Ang of GoBolt.
First things first, what is returns management?
Ecommerce returns management is the process of handling the entire lifecycle of returned merchandise, from the point of return initiation by the shopper to the product’s final destination (restock, recycle, or landfill).
Returns management typically includes:
- Shipping and receiving returned items
- Inspecting their condition
- Determining eligibility for refunds or exchanges
- Processing refunds
- Restocking returned items
- And managing inventory adjustments
Effective returns management streamlines the entire returns process, minimizing associated costs, and maximizing shopper satisfaction, ultimately contributing to improved operational efficiency and shopper retention.
How can brands and 3PLs work together on return process optimization?
This was a question asked by a large furniture brand, as furniture returns have long been a hot topic for big & bulky retailers. In his response, Mark Ang highlights the importance of setting clear standards, operationalizing expectations, and addressing the potential resource and cost implications of creating a segregated clean area for inspections.
“This comes down to ensuring your [3PL] partner knows what standard you expect and operationalizing it (which often comes with an incremental resourcing/cost requirement),” says Ang. “Speaking from experience, this is doable. It just needs to be weighed against the cost.”
Further to Ang’s comment, optimizing returns processing involves tight collaboration between a brand and their 3PL partner. Here are a few other suggestions to put into practice:
- Set clear return policies and procedures: Ensure alignment between the brand and 3PL regarding the return criteria, processing timelines, and documentation requirements. Setting these clear guidelines upfront reduces ambiguity and increases processing accuracy.
- Integration of systems and technology: Implement integrated systems and technology solutions that facilitate seamless communication and data exchange. This can include real-time inventory visibility, automated return authorization processes, and barcode scanning for efficient tracking of returned items. Integrations improve accuracy, reduce manual errors, and accelerate returns processing.
- Efficient reverse logistics operations: Optimize reverse logistics operations by coordinating pickup schedules, consolidating returned items, and prioritizing returns based on urgency or value. A tech-forward 3PL, like GoBolt, will have efficient routing plans and transportation strategies to minimize transit times and transportation costs. Streamlining this piece of the operations puzzle helps to reduce turnaround time and enhances overall efficiency in returns processing.
- Quality inspection and disposition: Define clear criteria for assessing product condition, such as resaleable, refurbishable, or disposal. In addition, it’s important to establish standardized inspection protocols and workflows to ensure consistency and accuracy in product assessments. Efficient quality inspection processes enable timely decision-making and facilitate prompt restocking or disposition of returned items.
- Continuous improvement and collaboration: Foster a culture of continuous improvement and collaboration to identify opportunities for optimization within your returns process. Regularly review returns data and performance metrics to identify trends, root causes of returns, and areas for improvement. Collaborate on implementing corrective actions, process enhancements, and technology upgrades to address inefficiencies and drive continuous improvement in returns operations.
By implementing these strategies, brands and their 3PL partners can optimize returns processing, improve customer satisfaction, and enhance operational efficiency in managing reverse logistics operations.
How can brands fit sustainability into ecommerce returns management?
Brands are increasingly recognizing the importance of integrating sustainability into their returns processes. This involves a holistic approach, from utilizing eco-friendly packaging materials and optimizing return labels to streamlining reverse logistics and prioritizing repair and refurbishment over disposal.
Additionally, donation or resale programs offer returned items a second life, while recycling initiatives ensure proper disposal of materials. Through customer education and lifecycle assessments, brands can reduce environmental impact and foster responsible consumption practices, creating a more sustainable return ecosystem for both businesses and shoppers.
“From a brand’s perspective, if we can’t put [the product] back into stock and redistribute it, it will end up in the landfill, which we really want to avoid at Cariuma,” says Tom Stringer. “But it’s essential also that returns are cost-effective, and they make sense from a cost perspective. Having scalable systems are incredibly important to meet both our sustainability goals and our financial goals.”
What are the best return rate reduction strategies?
Return rates refer to the percentage of products purchased by shoppers that are subsequently returned. Reducing return rates should be a proactive approach between a brand and their 3PL provider.
According to Kyle Bertin of Two Boxes, analytics are crucial (and one of the top strategies) when it comes to reducing return rates. “We can provide deep analytics to help brands reduce return rates, like supplier quality defects,” says Bertin.
Utilizing data analytics within tools, like TwoBoxes, can assist with analyzing return patterns, identifying common reasons for returns, and implementing targeted strategies to address underlying issues and reduce return rates over time.
Here are the top strategies that brands can implement to reduce ecommerce return rates:
- Improve product descriptions
- Provide high-quality product images, size guides and fit recommendations
- Add shopper reviews and ratings
- Outline an easy-to-understand return policy
- Offer personalized recommendations
- Provide proactive customer service
- Conduct post-purchase follow-ups
- Implement data analytics
Are refurbishment services considered a value-add?
When it comes to returns management, offering refurbishment services can be a game-changer for 3PLs and their brand partners. But should refurbishment be treated as a standard practice or a value-added service (VAS)?
“At GoBolt, we treat this as standard. We follow the brands SOP for refurbishment but we price the value-added-services as a fixed fee, so brands aren’t concerned about an hourly cost and having to estimate their unit economics.” says Mark Ang.
Collaborating with your 3PL partner to refurbish returns can drive immense positive change by:
- Maximizing Returns to Stock: By partnering with a 3PL with refurbishment capabilities, brands can significantly increase the percentage of returned items that are restored to “like-new” condition and returned to the shelves.
- Enhancing Shopper Satisfaction: Refurbishing returns isn’t just about bottom-line benefits but delighting shoppers. When a higher percentage of returns are successfully refurbished and restocked, it translates to more satisfied shoppers.
- Demonstrating Environmental Responsibility: Every returned item that ends up in a landfill represents a loss for the retailer and a burden on the environment. Refurbishing returns reduces your environmental footprint by diverting products from landfills, conserving resources, and minimizing the need for new production. It’s a win-win for everyone.
- Ensuring Regulatory Compliance: Compliance with environmental regulations and waste management standards is non-negotiable for today’s brands. Refurbishing returns demonstrates a commitment to regulatory compliance by actively seeking sustainable solutions for managing excess inventory and returned merchandise.
What is the impact of fraudulent returns?
The impact of fraudulent returns can be significant and multifaceted. They can lead to major financial losses for brands, as the brand may end up refunding shoppers for illegitimate returns or replacing stolen merchandise. According to the NRF, for every $100 in merchandise, brands will have lost $13.70 to fraud in 2023, contributing to an overall loss of $101 billion. This loss of revenue directly impacts the bottom line and reduces profitability.
Additionally, fraudulent returns can strain operational resources, as staff must investigate these returns, diverting time and effort away from other critical tasks.
The impact of fraudulent returns underscores the importance of implementing robust fraud detection measures and policies to safeguard against such risks.
How can brands and 3PLs best tackle fraudulent returns?
It’s critical to have partners in place throughout your supply chain touchpoints to help combat fraudulent returns.
- Implement strict return policies: Establish clear and stringent return policies that outline eligibility criteria, timeframes, and required documentation. Enforce these policies consistently to deter fraudsters.
- Use advanced data analytics: Utilize data analytics in tools, like Two Boxes, to analyze shopper behavior, transaction patterns, and return history for anomalies or suspicious activity. Look for patterns indicative of fraudulent behavior, such as frequent returns without valid reasons.
- Leverage fraud detection technology: Implement fraud detection software or services that utilize machine learning algorithms, available in products like Loop, to identify potentially fraudulent returns in real-time. These systems can flag suspicious transactions for further review.
- Monitor return trends: Regularly monitor return rates, patterns, and trends to identify any unusual or suspicious activity. Investigate any significant deviations from the norm and take appropriate action.
“At Two Boxes, we track inspection and disposition data at the unit level. We also capture photos and detailed notes. We are helping several brands right now with tracking fraud and sharing this data back with those brands’ other technology providers as needed,” says Kyle Bertin.
Final thoughts
Efficient returns management is not just a process; it’s a strategic advantage. Our panelists shared valuable insights into handling refurbishments, reducing fraudulent returns, improving processing times, and integrating analytics seamlessly. Incorporating these strategies can undoubtedly enhance your returns management capabilities, ultimately leading to improved shopper satisfaction and operational efficiency.
Looking for a returns management partner that integrates with Two Boxes? Contact our team to learn how we can optimize your returns process.
