E-commerce returns have always been a hassle for online sellers and omnichannel retailers. Retail and e-commerce fulfillment centers are typically much more focused on getting goods to the consumer than getting returned products back into inventory. As a result, many fulfillment centers have an area where returns pile up until someone finds time to process them for disposal or resale.

The COVID-19 pandemic has exacerbated this problem. Returns for e-commerce sales rose 70 percent in 2020 as consumers stayed away from stores and turned to online shopping instead. This rise in returns has made it nearly impossible for fulfillment centers to keep ignoring their reverse logistics issues.

Why is Returns Management Important?

Returns may be expensive and inconvenient for e-commerce and omnichannel retailers, but they are still part of the sales cycle and should be treated as such. Incorporating good returns management processes can have a positive impact on your business in a number of ways. Some of these include:

  • Improving your brand image. An easy and efficient returns process gives your customer a positive impression of your brand. Even if they returned this item, a positive return experience may encourage them to buy from you again in the future.
  • Optimizing your inventory. Unprocessed returns create a black hole in your balance sheet. Managing returns effectively returns usable goods to inventory and keeps damaged or unsalable products from occupying space in your warehouse.
  • Improving your environmental impact. Even if the returned product isn’t suitable for resale, getting it back into your hands allow you to donate it, refurbish it, or dispose of it in the most responsible way.
  • Gaining valuable data. When you properly manage returns, you also gather data about why products have been returned. Your design, sales, and logistics teams can use this data to develop solutions to the problems that result in returned goods

How Do I Manage Customer Returns?

It is standard practice in many distribution centers and warehouses to let returns stack up until a slow period when warehouse associates have time to deal with them. While this strategy isn’t great in the best of times, the pandemic has left those facilities waiting more than a year for a slow period that never comes. Here are some ideas that can help you to improve your returns management capabilities:

  •  Review your returns handling process. Audit your returns process from the moment the customer initiates the return to the moment the product is processed back into inventory or disposed of at your facility. This will allow you to identify any potential hang-ups in your returns process and also figure out what’s working.
  • Automate as much as possible. It may be tempting to assign a large team specifically to handle returns, but this practice is largely outdated and inefficient for any mid-sized or larger retailer. Much of the return process can be automated, freeing up your employees for other tasks. Automating the returns process also lets customers easily initiate returns without the need to speak to your representatives and allows you and your customer to easily track the returned item with minimal effort involved.
  • Inspect your shipping packaging. A key part of returns management involves finding ways to reduce the number of returns you have to manage. If you get a lot of returns due to shipping damage, take a look at your packaging to make sure it sufficiently protects your goods while in transit.
  • Use a third-party logistics (3PL) provider. Outsourcing your fulfillment operation to a 3PL will take the burden of returns management out of your hands entirely. As part of an order fulfillment services package, your 3PL will receive returned items, put them through any required quality control processes, and put them back into inventory or dispose of them appropriately.

Given that e-commerce is expected to keep much of the market share it gained during the pandemic, it’s safe to assume that the higher volume of returns will stay as well. It’s best to get a handle on your returns sooner rather than later so your retail business can remain competitive in the growing e-commerce market.

About Phoenix Logistics

Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.

Frank P. Crivello is a Milwaukee-based developer and Chairman & Founder of Phoenix Investors.