Best Practices to Minimize the Cost of Returns for Your Business
Returns can be costly for any retail, manufacturing, or other business. In fact, according to our 2023 Reverse Logistics Technology Survey, a whopping 77% of respondents don’t know what product returns actually cost their company!
The key to earning more profits is not to eliminate returns—that is likely impossible—but to manage your returns with the right software and an efficient reverse logistics process and eliminate waste in the process. Here are some best practices for minimizing the hit to your bottom line from returns.
Reduce or Eliminate Fraudulent Returns
One very costly type of return is the one that you never got any profit from in the first place. There are a few different ways you might see this:
- Bringing stolen merchandise back in to get a refund or store credit
- Falsifying store receipts or stealing them to use for returns (for example, purchasing a falsified receipt online for a product that was stolen)
- Purchasing items at one store for a discount and returning them to another store to get a refund or store credit in a higher amount
- Returning an article of clothing that was worn once and claiming it was never worn; this is especially common around the holidays when people want expensive clothing to wear to a party or event but don’t plan to keep it
- Returning items fraudulently with the help of an employee
While no software can completely prevent fraud, a returns management system (RMS) can significantly reduce it. For example, your returns portal can quickly verify that someone purchased the specific item(s) they are trying to send back before approving the return. It can also create specific steps to inspect returned items for damage to make sure they weren’t used/worn.
Remove Bottlenecks in Your Returns Processing
Another costly issue for many online retailers is not knowing exactly where a return is at any given time. If you have a manual returns process that involves several employees in different departments, items can easily get misplaced or delayed. The longer it takes to complete the return the more it costs your business. You may miss the window to be able to resell it (even on clearance) or send it back to the manufacturer. It also costs money to store and warehouse items that are not for sale. The right software can provide reports to spot these inconsistencies and opportunities for improvement.
Automating More of the Returns Process
Software can also automate much of the things your employees were doing manually, saving time and allowing them to focus on other more important tasks. In the same study mentioned above, a majority of companies want more automation for returns management, but only 24% currently use automation technology.
Automation technology could be as simple as customer notifications that are triggered at specific stages of a return, reducing call volumes or emails asking “Where’s my refund?”