How to Reduce Your Product Return Rate
ReverseLogix
The only end-to-end, centralized, fully integrated returns management system for retail, ecommerce, manufacturers & 3PLs
In 2023 alone, $247 billion worth, or 17.6% of products sold, were returned. These numbers are expected to grow in 2024. And while you may agree that the best returns are those that never happen, the nature of product returns makes it a segment that is improbable to ever go away entirely. However, that does not mean your business cannot enact the much-needed steps to reduce the rate of these product returns.?
Although product return rates are largely propped up by factors beyond the control of the supply chain, it is still true that controllable factors like wrong product description make up a significant reason for the over $200 billion worth of returns last year. By addressing them well, your business can significantly reduce returns, leading to a substantial positive impact on your supply chain efficiency and overall profitability.
There are four key strategies that a business across any industry can leverage to reduce the product return rate.
1. Provide more information
2. Enhance quality control
3. Leverage customer feedback
4. Optimize the order fulfillment and shipping process
However, although these strategies will work for any business or supply chain, the success of implementation will depend on the nature and flow of each of them.?
Read our piece for a more in-depth review of these strategies, including the causes and benefits of reducing the product return rate.
Industry Voices
"Retailers are constantly looking for ways to improve the efficiency and sustainability of their supply chains, and managing returns is a critical part of that equation."
Know Your Term
Product Returns
What is it?
Simply put, product returns are purchased goods that customers return for various reasons, some of them their fault and others the fault of the business. Whatever the reason behind the returns, the business bears the brunt of the cost impact of those product returns and the logistics involved in receiving them.
The higher the return rate, the greater the negative impact on your business. There have been instances when the cost of returns was so high that businesses asked customers to keep the products at no cost. Others, when the fault lies outside the supply chain, have shifted the return shipping costs to the customer.
What are the Causes of High Product Returns?
Ultimately, while reverse logistics and returns management are great solutions in the modern retail economy, the goal is to reduce product returns as much as possible.
1. Product Related Reasons
Despite all efforts in supply chain and sales optimization, 23% of product returns still result from sending the wrong item. However, this isn’t the only challenge. Issues such as poor product quality and inaccurate descriptions also contribute significantly to the volume of returns.
2. Customer Related Reasons
There are situations where businesses have no control over the returns. Some of these are buyer remorse and wardrobing (when customers purchase multiple sizes and colors to keep just one and return the rest). Then there are situations where customers realize that the gift items they purchased were unsuitable for the person they were purchased for.?
3. Operational Reasons
Operational failures, such as long lead times during the delivery process or poor packaging that leads to product damage, could significantly impact customers' satisfaction and their decision to return items. For instance, customers might order a meal that takes several hours to deliver, prompting them to find alternative solutions.
What's Up in The Market?
Mobile Shopping Will Drive Half of Online Holiday Sales
This year, mobile devices are predicted to account for 53% of online sales during the holiday season, a trend expected to continue into 2025. Mobile spending increased 10.2% year-over-year from January to July, reaching $280.4 billion and constituting almost half of all online sales. Personal care, groceries, and apparel led to mobile purchases. This indicates a shift in consumer behavior towards mobile shopping , particularly for frequent, lower-priced items.
Air Freight Continues to Ride Wave of E-commerce Demand
E-commerce, particularly from Chinese platforms like Temu and Shein, is driving a significant surge in air cargo volumes , creating a 'perpetual peak season.' Even with a potential slowdown in consumer spending, this trend is expected to continue due to the shift in consumer behavior toward online shopping. However, while this benefits airlines, freight forwarders struggle to capitalize on this boom. E-commerce shipments, largely B2C and often falling under de minimis thresholds, offer limited value-add for forwarders accustomed to handling complex B2B shipments.
领英推荐
Cargo Theft Continues to Rise
Cargo thefts have risen significantly in the first half of 2024, increasing by 49% compared to last year. The average loss per incident has also jumped to $115,230, showing that thieves are targeting high-value shipments . California, especially the Southern California Red Zone, remains the hotspot for these thefts, accounting for many incidents. Electronics are the most commonly stolen items, and facility theft and pilferage incidents are rising. This alarming trend highlights the need for companies to improve their supply chain risk management and security measures.
The Feature of the Month
A return merchandise authorization (RMA) is a crucial step in the return process . Using the RMA allows customers to return products for refunds, replacements, or repairs seamlessly. ReverseLogix's RMA process ensures that brands can manage returns and uphold fairness, benefiting both the customer and the company. Our comprehensive solution is designed to help your company achieve its efficiency and customer satisfaction goals, providing a reliable and effective tool in your business operations.
How it Works
Step 1: Request for Return
The RMA process begins when the customer initiates a return request. This step sets the entire process in motion. The customer must provide a reason for the return so the company can understand the issue and categorize the return. Customers might return products for many reasons, including:
Step 2: Return Merchandise Authorization Issuance
Once a return request is submitted, the company reviews it to ensure it meets the return policy criteria. If the request is approved, the company provides an RMA, which includes an RMA number. This number is crucial for tracking the return throughout the entire process.
Step 3: Product Return
Once the RMA is issued, the customer receives detailed return instructions. The most critical part of these instructions is the packaging and shipping guidelines, which ensure the product returns in good condition. ReverseLogix simplifies this step by generating clear, user-friendly return instructions.
Step 4: Receipt & Inspection
After the product is shipped back, the company receives the returned item. Now, they use the RMA number to log the return and correctly identify the product. ReverseLogix provides the tools necessary for efficient receipt and inspection. Our platform automates logging returned items, ensuring all returns are tracked accurately.
Step 5: Processing Returns
After the inspection, the company decides whether to approve or reject the return based on the inspection results. If they accept, the company will proceed with the appropriate next steps. ReverseLogix uses predefined criteria to determine how to handle each return quickly. The platform can initiate repair , replacement, or refurbishment workflows for approved returns, ensuring maximum efficiency.
Step 6: Resolution & Follow Up
The final step in the return merchandise authorization process is providing the customer with a resolution. Some examples include:
ReverseLogix sends notifications about the status of the return and the resolution. These automated communications ensure that customers are always informed. Furthermore, our platform can facilitate follow-up surveys to gather feedback.
Scenario Spotlight
Amer Sports , a global leader in sporting goods, was already enjoying the benefits of ReverseLogix's returns management system for its B2B operations. Faster returns, better automation, and clearer visibility into returns data were all wins.?
However,? as the company's B2C business grew, so did the complexity of its returns. They were dealing with a mountain of tried-on, repackaged, or wrinkled products that all needed careful handling. The pressure was on to process hundreds of thousands of returned units quickly and efficiently.
ReverseLogix, already a trusted partner, offered the solution. Their end-to-end returns management system perfectly fits Amer Sports' B2C needs. It provided a seamless way to manage the entire returns process, from the customer initiating a return to the final disposition of the product. The results were impressive.?
Amer Sports saw a dramatic improvement in returns processing speed. Customers were getting their refunds faster, and employees were more productive. The system's intuitive interface made training a breeze, even during peak seasons. With real-time visibility into returns data, Amer Sports could finally make informed decisions about product improvements and reduce overall returns.
Testimonials
Our decision for ReverseLogix was driven by the idea of having an end-to-end solution for the whole process flow, covering the needs of our consumers with a state-of-the-art returns process for our operational needs.