Everything you Need to Know about a Returns Management System
Managing product returns is a core function for retailers and eCommerce companies. An average of 8% of retail products are returned, and as much as 40% are returned from eCommerce buys.
In the B2B world, manufacturers and 3PLs are reacting to increases in online purchases, as well as complicated returns processes with factors like warranties, repairs and recalls.
Despite the frequency of returns, few B2B or B2C organizations have optimized their returns processes for efficiency and cost.
This is where a returns management system (RMS) comes in. Let’s take a look at what it could do for your organization.
What is a Returns Management System?
A returns management system is technology that coordinates and streamlines every aspect of the returns journey and after-sales care management for B2C, B2B or hybrid companies. It can be configured to a customer’s own processes and requirements, and it fully integrates with other supply chain solutions.
It is a cloud-based, SaaS solution that delivers two major functions:
- Manages the entire, end-to-end returns process based on an organization’s specific needs
- Centralizes/analyzes returns-related data from other core supply chain software
Managing the returns process
From start to finish, an RMS manages everything that goes into the returns process, whether it’s a B2C, B2B or hybrid environment. This includes returns processing, repairs, return-to-vendor, customer portals, returns merchandise authorization (RMA) initiation, and customer notifications. Configurable workflows drive a faster returns process, standardize tasks and improve accuracy.
Centralizing and analyzing returns data
Because an RMS integrates with other supply chain systems, it delivers game-changing insights into returns. It enables users to view analytics within every module, queue and order. Relevant data and business intelligence are easily accessible, as well as reports. No more point solutions or relying on warehouses and 3PLs for returns data! Centralize data in an RMS for maximum insight.
Why is a Returns Management System Necessary?
Unlike a point solution that addresses one part of the returns process (like returns initiation), an RMS manages the complete lifecycle of the return. This comprehensive approach is a cost-effective investment and an essential solution for maximizing efficiency, speed, and resources.
The increase in returns and growth of eCommerce
Although eCommerce shopping has cooled since its peak during the COVID-19 pandemic, it’s still a significant source for high return volumes. Online returns average nearly 21% and some product categories approach 30%.
The impact of returns business profitability
Returned items are a profit loss for companies: Appriss Retail reports that return rates are growing faster than revenue rates for 91% of retailers. B2B companies aren’t immune to returns either, with eCommerce sales increasing as new generations of leaders expect and prefer making online business purchases.
The data gathered, centralized, and analyzed by an RMS opens up new insight into what returns are costing your company, the most cost-effective strategies for handling returns.
Customer expectations for the returns process
B2C and B2B consumers expect a returns experience to be at least as fast and easy as the initial purchase. With an RMS, companies can refund customers faster, automate manual processes for faster exchanges or repairs, and support multiple return channels for more return options.
What are the Benefits of a Returns Management System?
An RMS saves time, money, and makes for happier customers. At ReverseLogix, we’ve seen organizations report up to a 5% increase in profits and a 15-25% increase in improved customer satisfaction after streamlining and optimizing their returns.
Here are a few specific reasons to consider a returns management system …
Employees are spending a lot of time on returns processing
If employees don’t have standardized, digital workflows to help them efficiently receive and process returns, an organization is likely losing money. The same is true if there aren’t clear rules and processes around managing warranties or repairs.
Solving costly crediting problems
Error rates drop drastically when an organization has more control and when returns are verified. For instance, with an RMS in place to record an actual item count, a manufacturer will only credit its dealers for actual received inventory, which will be verified in the system prior to crediting.
Increased visibility into returns trends
If you don’t have visibility into why an item is being returned, or you’re missing return trends, then you’re overlooking valuable ways to save money or fix the situation. Multiple point solutions can’t give the full picture, either: Only an RMS can pull all the pieces together to solve the entire puzzle.
A new revenue stream for 3PLs
An RMS delivers tremendous value for 3PLs when it supports a new service or improves a current revenue stream. For example, a 3PL offering returns management delivers better visibility, reporting, and processing – for itself and for its customers. This can significantly improve margins and dramatically differentiate itself from competitors.
Improved customer satisfaction and loyalty
With a branded customer returns portal, automatic notifications about a returns status, and automation that accelerates returns and refunds, an RMS turns a frustrating returns process into a surprisingly fast and easy experience.
When Genesco, a footwear focused specialty retailer, implemented ReverseLogix to improve returns management, its director of distribution center systems reports that “Satisfaction both internally and externally was evident on day one.”
Happier customers also mean fewer calls to customer service teams, asking “What’s the status of my return?” The world’s #1 luggage manufacturer, Samsonite, notes that the RMS’ automated emails have reduced customer service call volumes.
Recommerce and sustainability efforts
A lot of consumers believe their return (especially clothing or footwear) will go right back on the shelf. That’s not always the case: According to McKinsey, about 10% of all returns end up in a landfill. Globally, only about 20% of discarded textiles are actually reused or recycled, says Gartner.
An RMS is a must-have for companies that are serious about reducing waste and emissions from product returns. For example, an RMS can power recommerce solutions to put secondhand items back into circulation and out of a landfill.
What Features should a Returns Management System have?
When looking for software to manage reverse logistics, here are 8 of the most important features to consider:
- A user-friendly, branded customer portal for returns initiation
- In-depth RMA management
- Business intelligence
- Automated customer communications
- Disposition management to expedite recommerce opportunities or cost recovery
- Analytics and reporting
- Integration capabilities
- Multi-channel support
Customers – notably B2C but increasingly B2B – expect convenient returns tools and easy visibility into their returns status. A fully branded online portal allows them to initiate, track, and manage the entire process from start to finish, such as: product registration, contacting support, returns merchandise authorization (RMA) and printing labels.
RMA management allows store associates, support associates and return center associates to work with the same data and information. Organizations can manage and clear discrepant returns, as well as create rules for different types of returns and grading at receiving – all to expedite the disposition of the returned product.
The first step in slowing down returns is having good data about what is being returned and why. Look for comprehensive data and in-depth reports to inform better decision making, to optimize returns, and to stay ahead of trending problems. Help find inefficiencies in a reverse logistics process and better manage returns in the future.
Without reverse logistics software, a lot of customer and team communication happens manually. An RMS should include automated notifications about the status of a return to help build trust and engage consumers, encouraging them to make future purchases based on a positive returns experience.
This also removes unnecessary work from a customer service team who won’t have to field customer calls wondering about the status of a return.
Getting returned items to the right place quickly helps minimize losses. It also helps keep products moving so they don’t languish in a warehouse or the back of a store. Disposition management helps determine what to do with returned products, such as:
- Return it to warehouse or store shelves, and tracking that as inventory on your website so the product information is accurate
- Mark it for clearance or other sale pricing to recoup some of the costs
- Get warranty claims to the right internal teams for repair
- Identify return to vendor (RTV) items for a refund or credit
- Identify items that could be refurbished and resold, and sending those to the appropriate place for refurbishing
- Send it for recycling if it’s made of materials, or to the landfill
Analytics and reporting
Cost-efficient and resource-efficient returns management can’t be achieved without good data. Because an RMS integrates with other supply chain systems, it can gather returns-related data from across your operations and augment its own robust data and reporting.
The result: An RMS is your single source for returns information and insights. Improve how you sell, position, and restock, and use data to align processes with company sustainability goals.
- Detailed analytics
- Customizable returns dashboards
- Actionable intelligence
- Role-based reporting
“We’re finally able to see the big picture behind our returns. It’s been a game-changer to be able to discover specific problems in our workflows and then dig deeper on how to resolve it.”– ReverseLogix Customer
An RMS should have out-of-the-box integrations with top-tier enterprise software (such as NetSuite, Salesforce, and others) and eCommerce systems (such as Shopify, WooCommerce, FedEx, etc.). A world-class, comprehensive RMS will also integrate with 3PL partner systems.
Whether online, in a store, or even on a third-party marketplace site, an RMS efficiently auto-routes returns based on your rules and priorities. For example, customers located within 5 miles of a store may be directed to bring in the item for a return; returns made in-store are typically less expensive to process, saves on truck emissions, and gives the customer an opportunity to make another purchase.
Which Industries Benefit the Most from an RMS?
Returns management will improve efficiency and reduce costs for nearly any industry. But those with high or growing rates of returns – such as retail and eCommerce brands, manufacturing and 3PLs – stand to gain the most.
Retailers and eCommerce brands
An RMS delivers a total branded returns experience that facilitates fast and easy returns, as well as automated notifications to keep customers informed of the return status. It enables retail and ecommerce employees to inspect and grade items quickly, resolve customer issues faster, centralize returns data, and disposition returns as early as possible in the cycle. An RMS is also a critical solution for managing recommerce and sustainable returns programs.
Process returns, return-to-vendor items, perform repairs and refurbishments, and complete put-aways with one platform. An RMS can provide manufacturing-specific workflows to drive a faster returns process, standardize tasks and improve accuracy. Plus, drive customer loyalty with an easy returns process – rare in the world of complicated B2B returns.
Configure workflows and requirements for your business and customers across warehouses and shipping locations. An RMS is built to handle 3PL and customer complexity, fully integrating with other supply chain solutions and delivering a fast ROI (at a fraction of the cost of configuring a WMS).
Consumer electronics companies have special considerations compared with other retailers, such as repairs, warranties, kitting and consolidation, and, unfortunately, return fraud. A robust RMS with modules for managing product repairs and understanding warranty factors will significantly drive efficiency for these types of product returns. To combat return fraud, the RMS can display detailed product images, descriptions, serial numbers, and weight, helping employees ensure every piece that’s returned is intact and the original.
“Our customers have high expectations when it comes to speed, flexibility and service, and we thoroughly vetted partners that could live up to that. The ReverseLogix team and solution have a proven track record of reducing cost, speeding up processes, and allowing flexibility to meet our customers’ specific needs.”– Scott Paul, CEO, Premier LogiTech
Apparel and fashion
High return rates in fashion, coupled with consumer behaviors like bracketing and wardrobing, contribute to the apparel industry’s expensive returns’ challenges and big environmental impact. An RMS will identify the “why” behind high returns rates and even help identify customers with sky-high return frequency. By integrating with your ERP, warehouse locations, stores and even 3PL partners, the RMS becomes the single-source platform for managing and optimizing return processes.
Case Studies of Successful RMS Implementations
Genesco: Finding a Simpler Solution for Returns Management
Genesco Inc. is a footwear focused, Nashville-based specialty retailer and branded company with more than 1,400 stores throughout the U.S., Canada, the U.K. and the Republic of Ireland. It chose the ReverseLogix RMS to improve return processes at its largest facility.
“[We chose] ReverseLogix because we can go into one system and not have to do three or four other systems that we were doing previously. We just log into one and start the return and finish it all in one system,” said Erin Johnson, senior returns and vendor compliance manager.
With ReverseLogix RMS managing and orchestrating returns processes, Genesco saw a near-immediate ROI.
Premier LogiTech: An RMS for Returns and Repairs
Technology provider Premier LogiTech implemented ReverseLogix RMS to improve its repairs, kitting, order processing, and asset management operations. With an end-to-end platform that manages the entire returns lifecycle, Premier is reducing cost, speeding up processes, and gaining flexibility to meet customers’ needs.
Global Retailer: An Integrated Solution to Streamline Returns and Improve Data Visibility
An independently owned brand of men’s and women’s footwear was struggling to keep up with returns volume and inventory management. It’s SAP platform just couldn’t cut it.
The retailer switched to ReverseLogix, which was successfully integrated with 3PL partner systems, NetSuite, and a home-grown solution.
Returns processing automation and inventory accuracy have improved, along with the ability to receive and track every carton in the warehouse. ReverseLogix enables on-demand label printing as shoes are reclassified, allowing employees to generate a label, print it on the fly, and create a new SKU.
“That’s really helped improve inventory accuracy,” said the retailer’s director of distribution operations. “Returns with ReverseLogix are at least 50-60% faster than the previous system.”
Ready to learn more? Request a ReverseLogix RMS demo!
To see first-hand what an RMS can do for your business, schedule a demo of ReverseLogix, the market’s only end-to-end RMS built for B2C and B2B retailers, eCommerce brands, manufacturers and 3PLs.