Returns Management Guide: Best Strategies for eCommerce Logistics

Freddy Bruce
December 6, 2023
16 min read

In the fast-paced world of eCommerce, customer satisfaction is paramount. One aspect that often gets overlooked but has a significant impact on the buyer experience is returns management. With return rates in the online sector reaching up to 30%, mastering the art of managing this procedure is not just a necessity but a strategic imperative. This comprehensive guide aims to equip you with the best strategies, ensuring a seamless customer experience and efficient operational workflow.

What Is Returns Management?

Returns management, often referred to as the reverse logistics process, is a multifaceted area within supply chain operations that focuses on the procedures, policies, and practices involved in taking returned products back from consumers and providing them with a satisfactory resolution. This can include refunds, exchanges, or credits, depending on the situation and the company's policy.

The Scope of Returns Management

This procedure isn't just about handling the physical return of a product; it starts from the moment a customer decides to send back an item and continues until the product has been resolved. 

This involves several key stages:

  1. Initiation: The buyer initiates the return, often through an online portal or customer service.
  1. Authorisation: The return is reviewed and approved or denied based on the company's policy.
  1. Logistics: In case of approval, the product is shipped back to the warehouse or a designated returns centre, often involving third-party logistics providers (3PLs).
  1. Inspection and Sorting: Upon receipt, the item is inspected for quality and sorted based on its condition and the reason for the return.
  1. Disposition: The future of the item is decided – whether it will be restocked, repaired, recycled, or liquidated.
  1. Customer Resolution: The customer is informed of the outcome and provided with a refund, replacement, or store credit, as applicable.
  1. Data Analysis: Data related to the return is analysed for patterns that could indicate product or service improvements.

The Importance of a Returns Management System

A Returns Management System (RMS) is often employed to automate and streamline these stages. An RMS can integrate with other systems like Order Management Systems (OMS) and Warehouse Management Systems (WMS) to provide a seamless experience for both the customer and the business. It can also offer real-time tracking, analytics, and reporting features that can help companies improve their returns process and reduce associated costs.

The “Five Rs” of Returns Management

The concept of the "Five Rs" serves as a framework for understanding the different facets of efficient returns management. Let's delve into each one in detail:

The Five RsDescriptionImplications for Businesses
ReturnsThe initial stage where a customer decides to send an item back to the retailer or manufacturer.A streamlined process can enhance client satisfaction and loyalty. The first point of interaction sets the tone for the entire journey.
RecallsProducts that are returned due to safety issues, defects, or quality concerns are usually initiated by the company.Recalls can have significant legal implications and can affect brand reputation. Effective communication and quick action are crucial.
RecyclingThe conversion of waste materials into new, reusable products.Recycling can help in reducing the environmental footprint and align with consumer expectations for responsible business practices.
RepackagingInspecting, cleaning, and preparing a returned item for resale.Ensures that the resold items meet the same quality standards as new items. Effective repackaging can recover a significant portion of the item's original value.
RepairsFixing a faulty product instead of replacing it, usually for products with minor defects or issues.Repairing items can be more cost-effective than replacing them and contributes to sustainability by reducing waste.

Why Is an Effective Returns Management Strategy Important?

Returns management is a strategic component that can significantly influence various aspects of your business. Here's why it's crucial:

FactorsDescriptionImplications for Businesses
Customer RetentionCan boost satisfaction, trust, and loyalty.Increases the chance of repeat business and enhances customer lifetime value.
Operational EfficiencyCan reduce time and labour costs.Lowers operational costs and adds value to the business by turning a cost centre into a value-add.
SustainabilityFocus on recycling and repackaging to minimise waste.Aligns with buyer expectations for responsible business practices and can reduce operational costs.
Brand ReputationCan mitigate the risk of negative reviews.Builds and maintains brand reputation, leading to positive word-of-mouth.
Competitive AdvantageCan differentiate your brand in a crowded market.Attracts more customers and can be an influencing factor for them when choosing where to shop.
Legal ComplianceAdherence to various consumer protection and environmental laws related to returns.Avoids legal issues and fines, ensuring smooth business operations.
Data-Driven InsightsAnalytics can offer valuable business insights.Informs various business strategies, including product development, marketing, and an inventory management system.
Customer SegmentationAllows tailoring the returns process based on customer behaviour, value, or history.Enhances client experience and allows for more targeted marketing and loyalty programs.

Understanding Why Customers Return Items and How to Minimise Returns

Understanding why customers return items is important for any business aiming to optimise its management process. By identifying the root causes, you can employ proactive measures to reduce these rates and improve satisfaction. 

Reasons for ReturnsDescriptionHow to Address
Product MismatchThe item received doesn't match the customer's expectations based on online descriptions or images.Accurate product descriptions and high-quality images can mitigate this issue. Virtual try-on features or sizing guides can also help.
Defective or Damaged ItemsProducts arrive damaged or have a manufacturing defect.Quality control checks and robust packaging can reduce the incidence of defective or damaged items.
Buyer's RemorsePost-purchase regret, which is often due to impulse buying or reconsideration of the good's value.Detailed product descriptions, customer reviews, and Q&A sections can help buyers make informed decisions.
Better Price ElsewhereDiscovering the same product at a lower price from another retailer.Price-matching policies or loyalty programs offering exclusive discounts can help retain price-sensitive customers.
Complexity of UseThe item is too complicated for the customer to use effectively.Comprehensive user guides, video tutorials, or customer support can help buyers understand the product better.
Gift ReturnsGift recipients return items because they already have something similar or it doesn't suit their taste.Offering gift receipts or gift cards as an alternative can mitigate this issue.
Seasonal or Event-Specific ReturnsGoods bought for specific events or seasons are returned after the occasion has passed.Stricter policies for seasonal items or clearly stating that such items are non-returnable can reduce rates.

How to Optimise Your Returns Management Strategy

Returns management is a complex operation that requires a strategic approach to maximise efficiency and increase customer satisfaction. Let’s explore some best practices to consider:

Clear Returns Policy

A well-articulated policy that outlines conditions, timelines, and exceptions is crucial.

This not only sets clear expectations for the customer but also provides a guideline for your team to manage returns more efficiently. Make sure this policy is easily accessible across all sales channels and platforms to avoid any confusion.

Free Returns Shipping

Offering free returns shipping can be a significant incentive for customers to shop with you, despite the obvious cost implications for the business. Studies have shown that people are more likely to complete a purchase if they know that they can send back items for free. This can increase sales and loyalty, potentially offsetting the costs associated with the incentive.

Understand the Cost of Returns

It's essential to have a clear understanding of the costs involved. This includes not just the direct fares like labour and shipping but also indirect ones like warehouse space and the environmental impact.

By understanding these costs, you can identify areas for improvement and allocate resources more effectively. For example, you might find that using a more sustainable packaging material could reduce both the costs and environmental ramifications.

Automate Workflows and Processes

Utilising RMS can automate various aspects, such as approval workflows, restocking procedures, and customer notifications. Automation not only reduces the time and labour involved but also minimises human error, making the process more efficient and reliable.

Leverage Returns Data for Insights

A robust RMS will collect and centralise data. This information can offer valuable insights into patterns and trends, such as frequent reasons for returns or specific products that have high return rates. By analysing this, you can make informed decisions to improve product quality, update your policy, or even tailor marketing strategies.

Implement an Autonomous Return Policy

An autonomous return policy, backed by technology like AI and machine learning, can make real-time decisions, reducing the need for manual intervention. This speeds up the process for the buyer and frees up customer service resources for other tasks, enhancing operational efficiency.

Choose the Right Location for Managing Returns

Whether it's a dedicated warehouse, a 3PL facility, or even a physical store, the location should be chosen based on cost-effectiveness and logistical convenience. For example, using a 3PL return warehouse located closer to the majority of your customer base can reduce shipping costs and increase efficiency.

Offer Multiple Return Options

Providing customers with multiple options, such as prepaid shipping labels, in-store returns, or carrier pick-up services, can make the process more convenient for them. This enhances satisfaction and can be a competitive differentiator.

Streamline Customer Communication

Clear and timely communication can significantly enhance their experience. This includes sending confirmation emails, providing return tracking information, and updating them on the status of their refund or replacement. Effective communication not only improves satisfaction rates but also reduces the likelihood of clients reaching out to the customer service team for updates, thereby reducing workload and enhancing efficiency.

Enhance Staff Training

Well-trained staff can have a significant impact on how quickly returns are handled. Investing in coaching ensures that all employees understand what is involved, how to handle different types of returns, and how to use RMS, leading to a more streamlined operation.

Customer Feedback Loop

Implement a system to gather consumer feedback. This can provide valuable insights into areas for improvement and can help you understand the customer experience better, allowing for more targeted improvements.

Fraud Detection Measures

Unfortunately, returns fraud is an increasing concern for many retailers. Implementing scam detection measures can help identify fraudulent or abusive practices, protect your revenue, and ensure fair treatment for all clients.

Leverage Technology

Technological advancements can streamline operations and enhance customer satisfaction. Here are some key strategies:

  • Implement Internet of Things (IoT) Devices: Smart tags and sensors can track the condition of returned items, especially useful for perishable or sensitive goods.
  • Explore Blockchain Technology: Blockchain can verify their authenticity and provide a transparent transaction record, reducing fraud risk.

Bezos: Your Ultimate Partner in eCommerce Logistics 

In the complex world of eCommerce, returns management can be a logistical nightmare. But what if you could outsource all your returns-related headaches to a trusted partner? Enter Bezos, a full-service fulfilment provider that's revolutionising the way small and medium enterprises (SMEs) manage their logistics.

Why Choose Bezos?

  • Global Reach: Bezos operates in regions like the UK, Europe, Australia, and New Zealand, as well as the US and Canada. This makes us an ideal partner for businesses looking to expand internationally.

  • Time-Saving: You can save one to five hours a day on logistics tasks. That's time you can invest in product development, marketing, or even some well-deserved relaxation.

  • Cost-Effective: We help you save £1 to £2 per order and up to 80% on international orders. Plus, our proprietary AI technology identifies and resolves logistics issues before they become a problem.

  • Transparency: Bezos offers real-time tracking of inventory and fulfilment status through our bespoke software. We also provide a dedicated account manager to ensure your orders are in safe hands.

  • Flexibility: No long-term contracts, no hidden fees, and the freedom to cancel your monthly subscription at any time.

  • Customer Experience: We focus on improving customer experience through more accurate and reliable fulfilment and delivery.

Ready to take your returns management to the next level? Get your free quote from Bezos today and start saving time and money while improving your customer experience.


In today's competitive eCommerce landscape, effective returns management is not just an operational necessity but a strategic asset. From understanding why people return items to implementing best practices and leveraging cutting-edge technology, a well-thought-out business can significantly impact customer retention, operational efficiency, and even sustainability.

However, for businesses that want to focus on growth rather than grappling with such complexities, outsourcing is a viable option. That's where Bezos comes into play. With its global reach, cost-effective solutions, and a focus on transparency and customer experience, we offer a one-stop solution for all your logistical needs.

Keen to simplify your returns management and focus on what you do best? Speak to an expert at Bezos and start your journey towards efficient and hassle-free logistics today.

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