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10 Ways To Improve Your Returns Process

Peter Sobotta
Updated 05/19/18 2:24 PM

For many retailers, product returns feel like a bottomless mineshaft into which they pour money. Many seek to cut their losses through liquidation, but it’s not much relief: retailers typically recoup just 12% to 25% of an item's original cost through liquidation, according to the Reverse Logistics & Sustainability Council.

Fortunately, there is a lot that retailers can do to turn that bottomless mineshaft into a motherlode of value. Optimizing returns policies and processes can even help deepen customer relationships and drive future sales. Here are ten ways retailers can improve the returns process and the bottom line as a result:

1. Make returns policies more liberal. Meta-research by University of Texas-Dallas concluded that that leniency in return policies increases purchases more than it increases returns.

2. Track everything. One missing button seems minor. Ten missing-button returns in two days can flag an entire shipment of shirts with missing buttons that can be pulled off the site before they turn into next week’s returns. Little things can help you discover big problems. 

3. Connect parts of the business that don't usually talk. The more marketing knows about what really happens in customer service or the warehouse, for example, the better they can understand the merchandise and connect with consumers. 

4. Don't rely on a spreadsheet. Sifting through endless columns of data will cost you hours and obscure meaningful insights. Instead, use returns analytics software to aggregate customer feedback easily so you just have to pay attention to the insights.

5. Act on insights immediately. One electronics client was experiencing steady product returns due to damage to the lower left corner of incoming TVs. ReturnLogic investigated and determined that the packaging was causing the problem. One misplaced piece of foam was leaving pressure marks on the TVs and causing high rates of returns. Once we notified our client, they repacked the TVs, avoided future returns, and as a result saved $36K.

6. Learn from your mistakes. Every retailer struggles with product return rates until they start facing down the problem. In start-up world we realize the most important thing is that we learn from mistakes, not that we never make them.

7. Turn a return into an opportunity for loyalty. Researchers from the University of North Carolina at Chapel Hill and Georgia State University discovered that “a satisfactory product return experience can lead to increases in customers’ future purchases and referrals and in the profit they yield for the company.”  

8. Get the right people and process in place. People and process are as important as the technology. Here are best practices many companies never establish: getting manufacturing, marketing, customer service, R&D, etc. around the table for a monthly check-in to set goals, share insights, and use metrics to measure progress. 

9. Choose software that integrates with existing systems. To do its job, returns prevention software needs to access key data stores within your business. Make sure its API enables tight integration with your merchandising and warehouse management software.  

10. Start with a baseline analysis to measure improvement. You won’t know if you’re getting close to that rich vein of gold unless you are measuring how deep you’re drilling. 

The answer to many retailers’ merchandise returns problems can be found by prospecting right in their own data. Adopt these ten tips, and you’ll be well on your way to striking it rich in returns insights that will drive your business forward.