The downside to a rise in eCommerce literacy and e-shopping is the rise of returns. In fact, eCommerce return rates are estimated to grow by $1.4 Trillion by 2025(Gitnux). While there’s no avoiding returns altogether, learning to control and minimize them through returns management streamlines operations and protects revenue. It also ensures that the process isn’t so tiresome and unnecessarily complex that it discourages customers from ever wanting to transact with your store again.
In the B2B space, returns refer to retailers sending the product back to the original manufacturer. And while they’re not as common as they are in the B2C or D2C space, consistently unresolved high returns have a negative impact on image and reputation nonetheless.
Let’s examine what returns management entails, how it forms a sub-part of reverse logistics and strategies to manage, handle and minimize returns .
What is Returns Management?
Returns management is a more detailed post-sale process which the seller takes ownership of. It starts from the moment the customer initiates a return until it reaches its end destination.
So how does it differ from reverse logistics then?
Reverse logistics and returns management are often mistaken to mean one and the same but there’s an important distinction. Reverse logistics is about moving a product from the buyer back to the seller from the time the former decides that they do not want the product. It includes returns management (making it a sub-component of the process), refurbishing, resale and recycling. It’s a multi-step process that involves accepting the return, registering it, arranging for its transportation, quality-scanning and determining what next to do with the product subject to the condition it is in. The refund is also simultaneously processed where applicable. Reverse logistics moves goods backwards in the supply chain to the distributor or from the distributor to the original manufacturer, and is a crucial part involving products that are returned due to damage, seasonality, restocking, recalls or excesses.
The objective of reverse logistics is to recover some value and drive repeat business from the same customer down the line.
Returns management, on the other hand, is more end-to-end and starts from initiating the return to all warehouse activities after the product reaches its destination.
Why Returns is Important
In four words: revenue protection and customer satisfaction.
While the more logical move may be to prevent mistakes from repeating, all sellers know that it’s practically impossible for them to guarantee every customer a return-free experience, for reasons beyond their control.
Accepting returns indicates that the seller is admitting to their oversight,actively investigating the issue and seeking to remedy it rather than evade the situation altogether. A clear returns and refunds policies leads to higher customer satisfaction, reduced churn, repeat orders and an overall size increase in revenue.
How does the returns management process work?
The steps to returns management are:
The customer requests a return through app, email or call. In the case of a physical store, they can simply walk in with their invoice as proof of purchase and process it instantly. eCommerce retail returns take longer than brick-and-mortar due to the number of steps.
Once the seller acknowledges the initiation, pick up is arranged either at the doorstep or at the closest dropoff point. The product is then sent back to the distribution hub or fulfillment center.
The items being inwarded are scanned by ground staff for quality inspection. Processing returns requires the seller to check for the reasons behind return before taking appropriate action.
If the product passes the check, it is relisted for future fulfillment. If the product fails the check, the refund is issued or replacement gets approved for dispatch.
Repair, restore or dump:
Depending on the condition and future feasibility, the product is sent for repair and restoration to bring it to a quality standard fit for other orders. If the product is of the wrong size, fit or color, it is simply sent back to the inventory with an update made to listings across channels.
Common Reasons for B2B Returns
B2B returns happen for several reasons and a few common culprits include;
Defective, missing and damaged items trigger returns, and can be minimized with robust quality control.
Incomplete and inaccurate product descriptions that mislead the customers can prompt them to return the goods. The misrepresentations extend to -
Incorrect delivery information:
The buyer has opted for a certain timeline and the order is reaching them at a later date. This makes them consider switching brands. As a result, one supplier may incur excess inventory.
Incorrect stock level information:
Selling a product that is unavailable in inventory spills over to shipping. It adds delays to the delivery timeline, which frustrates customers and causes them to cancel the order, initiating a return.
Lack of product information:
The purchase is missing crucial details regarding the fit, dimensions, size etc.
The wrong size, color etc. of a particular product gets picked up or the wrong customer gets it, causing customers to initiate a return.
Multiple return types encompass recalls from wholesale, 3PLs, multiple locations and offline stores, which see returns of a particular item in bulk.
Complicated return processes:
Unclear returns policies and empty promises can prompt returns, which is why the policy needs to be made clear and visible from the very start.
Poor customer service:
Evasive, unhelpful or unresponsive customer service can undo all the good you’ve been trying to do. Train the service and support team to ensure returns are managed and handled professionally.
Returns management does not mean that a seller should necessarily accept all returns without question because the hidden cost of returns is not something you can write off.
Rather, it’s about being able to tell a genuine return from a fraudulent one through a verification process for quality-control and making decisions that minimize and optimize returns costs. In the next section, we will examine the pillars of returns handling and management
The Cornerstone of Smart Returns Management
Returns impact a retailer’s profitability, with 80% of respondents from a ReverseLogix study rating their return costs from significant to severe.
Think about it- you have to pay an agent to pick up the item either directly from the customer or from a designated dropoff point, ship it back, scan the item and then decide on discarding, reshuffling or fulfilling another order. eCommerce returns are costlier than store order returns, but the two still consume valuable time and resources. On an average, returns reduce profitability, efficiency and productivity, with fraudulent practices such as bracketing causing enterprises to lose 57% of their revenue, according to data from the EasyEcom dashboard. This is why it’s essential to formulate a strategy where returns handling is simple, seamless and scalable in response to growing GMV and order volume.
The steps to optimizing returns management are;
Orchestrate the full return journey
Smart returns management comprises everything, from the time the return is initiated to reusing it. Through automated returns reconciliation tools, sellers can track statuses of confirmed and pending RTOs and reconcile the information they see online with warehouse teams on the ground, ensuring a sync when inwarding.
Use Integrations for Data Synchrony
Smart returns hinge on quality and accurate data. With integrations to courier partners, carrier networks and accounting, the business can systematically acquire vital information about consumer behavior, order histories, returns information, refund lead time and time to restock. This makes the return cycle fully visible, thereby fueling fact-based decision making and putting supply chain leaders in a position to predict return fluxes. Data is also useful in rebalancing manufacturing volume to demand surges.
Smart returns management transforms unstructured and fragmented processes to a returns ecosystem. Instead of micromanaging every aspect of the reverse workflow, organizations deploying returns management software (RMS) can utilize an external network of 3PL providers to do the heavy lifting of processing, storing and checking product quality. A wider network reaches more consumers and ensures no reason for return slips through the cracks.
Returns management strategies
The returns management cycle can be streamlined for efficiency improvement through the power of automation. Automated reconciliation systems can not only indicate fluctuations in returns quantity by seasonality but can also flag fraudulent returns, helping to recover millions of dollars.
Here are a few strategies to help B2B sellers manage returns vigilantly
Draft clear returns policies:
Work with your supplier and manufacturer to outline the terms and conditions in which returns are accepted. The window for returns, appropriate reverse charges and payment accountability should also be indicated to ensure that the costs of reverse logistics, from the manpower needed to storage and inventory costs are covered.
Outsource to a fulfillment company:
A fulfillment service can take the heavy chunk of returns management out of your hands, as they have the expertise to take care of quality control.
With historic data and sales trends, you can analyze the returns flow and determine which product categories see the highest returns, and the most-cited reasons behind their reversal to the origin. Clothing merchants, for example, see the highest eCommerce returns, averaging 88% while electronic gadgets see 8% in returns,
Document reasons for historic comparisons:
list out reasons per return and compare them by SKU code, months, location and customer details to identify patterns to buying behavior. Documentation can also rank reasons for most to least common and help you control returns.
Use sales trends, product performance reports and returns analytics to understand where the defect starts, remains and ends, so that spot corrections can be applied to minimize returns. This is ideal for any B2B business and saves costs associated with bulk returns.