With the changes brought on by the pandemic, more and more people are choosing to shop online. To keep up with demand, e-commerce retailers are tasked with augmenting their websites and offering the latest conveniences customers crave. One such service that has become an expected part of the online shopping experience is a hassle-free returns policy.

However, offering this convenience comes at a price, as amplified return rates create problems within a retailer’s supply chain. Below, we’ll briefly explore the impact of returns on retailers and how organizations may better optimize the return process for more efficient logistics.

First, why do customers return so many orders? With in-person shopping, a customer can try on clothing products, get a feel for a new gadget, compare colors in real life and so much more to determine if a product is a great fit. These deciding factors are typically not a part of the online experience. Because of this, return rates for online stores are much higher.

Other factors influencing the decision to return an order include receiving a broken or damaged item, being given the wrong item and the delivery arriving too late. Another reason for elevated returns is that a purchase was made with the intent to return. Whether the order included multiple sizes, colors or otherwise, the idea is to choose one to keep and return the rest. In fact, this trend is on the rise, with 58% of U.S. consumers reporting they make purchases with the intent to return.

Whatever the reason behind the decision, high rates of returns can have drastic effects on a business. While many consumers may falsely assume the return process is as simple as placing the item back on the shelf, this is hardly the case. The practice actually requires a more involved quality-control process which takes up extra time and staff. As such, a high number of returns may result in warehouse build-up, staffing shortages, inventory availability issues and other similar impacts on a company’s operations.

How might these organizations improve their returns management process and reduce the impact that high rates of returns are having on profitability? The first step is often to strategically redesign the process. Doing so works to improve transparency, therefore improving operations at the organization level. For example, a freight broker might be used to increase and facilitate communications between a carrier and a shipper. It also benefits customers by reducing the time it takes for them to receive a refund or replacement product.

Another effective solution is to invest in return merchandise authorization, or RMA. Also referred to as return material authorization, this approach uses identification numbers as part of the customer’s return request. That number is then utilized by the store to determine if a refund, replacement or repair for the product is in order. RMA numbers also enable easier product tracking when combined with real-time warehouse inventory management software.

For more information, please see the accompanying resource.

Infographic provided by KGR Logistics