Customers aren’t always content with the products they purchase and will sometimes decide to send them back. While the returns process isn’t a pleasant one, neither for customers nor for businesses that have to handle returned goods and process refunds, it’s still an important one to master. 

This guide explores smart ways to strengthen your returns management process.

Key Takeaways

• A clear, automated returns process improves customer satisfaction, reduces waste, and protects your bottom line.
• Leveraging data, KPIs, and smart tools like Logix WCS™ helps warehouses process returns faster and more accurately.
• Building a scalable, tech-enabled returns strategy today prepares your operation for future growth and evolving customer expectations.

Understanding the Returns Process in the Supply Chain

The returns process follows a path of reverse logistics. Products move from the consumer back up the supply chain to either the manufacturer or retailer that provided them. Like regular logistics, this process demands coordination and cooperation between the various parties along the chain, including retailers, third-party logistics providers (3PLs), and carriers.

Confusion can easily arise when processing returns, and this, in turn, can lead to delays and disruption, denting both customer satisfaction and brand reputation. In other words, the way you handle returns management has a direct impact on how your brand is perceived and other important metrics, like customer loyalty and, ultimately, your bottom line.

The Hidden Costs of Inefficiency

While many organizations have efficient processes for processing orders and sending products out to customers, many lack efficiency in their returns management system. This can have a range of knock-on negative effects, like:

• More time and manpower dedicated to tedious tasks, like manual inspections of returned orders and data entry
• Delays that increase the wait times between a customer posting an item back and receiving the refund or store credit they’re entitled to
• Customers growing frustrated with the time taken to handle their returns, potentially leading to them leaving negative reviews or turning to alternative providers in the future
• Environmental impacts caused by the double handling of goods and inefficiencies in transporting returns from point A to B

Conversely, an effective returns management process can boost customer satisfaction, strengthen reputation, generate less waste in terms of time and resources, and even give organizations a competitive advantage over rivals.

8 Best Practices to Improve Your Returns Process

Given that up to 30% of all online purchases are returned nowadays (much higher than the almost 9% rate for brick-and-mortar stores), organizations need to implement best practices in their returns management strategy. 

Here are eight proven solutions for managing returns efficiently and intelligently:

1. Design a Clear, Customer-Friendly Return Policy
2. Simplify Return Initiation and Authorization
3. Offer Flexible and Cost-Efficient Return Options
4. Streamline Receiving, Inspection, and Triage at the Warehouse
5. Automate Refunds, Replacements, and Communication Workflows
6. Leverage Data to Drive Continuous Improvement
7. Measure and Monitor Reverse Logistics KPIs
8. Build a Scalable Returns Strategy for the Future

#1 - Design a Clear, Customer-Friendly Return Policy

This is step one if you want to streamline returns management, because every return begins with the customer. They need to know exactly what their rights are in relation to return requests and what they need to do to initiate a return. They might have to initiate a claim via their online account, for example, or print off and use specific return labels provided by the vendor.

Retailers, suppliers, and any other businesses that have to handle returns should devise a clear and accessible policy for customers to consult. It should set out the customers’ rights, return timelines, and rules, as well as other relevant terms and conditions. Make it easy to find online and use your policy as a tool to guide customers and prevent unnecessary shipments and wasted time.

#2 - Simplify Return Initiation and Authorization

The simpler you can make the returns process, the better. Simplification tends to reduce the risk of wasted time, making processes that are typically tedious more efficient. It’s especially recommended to find ways to make the initial stages of the returns process, like initiation and authorization, more straightforward.

You can implement a self-service return merchandise authorization system that will allow customers to initiate and manage their product returns online. Processes like label creation and return routing can also be automated with the aid of returns management software or new AI tools, further saving time. Consider also integrating real-time visibility across support, fulfillment, and inventory, so you can better track the progress of returns from start to finish.

#3 - Offer Flexible and Cost-Efficient Return Options

One of the big dilemmas many organizations face with returns is who should cover the shipping costs. On the one hand, many businesses opt for prepaid returns, saving their customers the fees when sending something back. Others, however, opt for customer-paid returns, and it’s important to find the approach that best fits your business philosophy.

If you want to keep customer satisfaction high, offering to cover most or all of the costs is the best approach. Customers also appreciate multiple return possibilities, like in-store returns, carrier drop-offs, and collection partners. Partner with 3PLs and proven carriers to make life easier for your customers and negotiate fair deals to suit your budget.

#4 - Streamline Receiving, Inspection, and Triage at the Warehouse

Returned orders re-entering the warehouse are when most of the delays and confusion tend to occur, as products may sit for some time before being processed or get mixed up with other deliveries. A smart way to fix most of these issues is to assign a specific area of your facility as a dedicated returns zone, where all return orders should be taken from the moment they enter.

With the help of barcodes and RFID scanners, workers can quickly acknowledge receipt of returns and begin processing them. It also helps to have standards in place regarding how orders should be checked and evaluated (e.g., resalable, repairable, etc.). If you deal with high volumes of returns, consider investment in automated conveyors or AI-powered routing to ease the burden on human teams.

#5 - Automate Refunds, Replacements, and Communication Workflows

Issues with returns management, like delays or miscommunications, often occur because the overall returns system lacks structure and uniformity. If returns are handled differently each time or require too much manual control and intervention, it’s easy for errors and inconsistencies to occur. Thus, the more you’re able to automate the process, the better.

Automation will help reduce errors and simply make life easier for staff, too. You can automate numerous stages of returns management. Inspection data, for example, can be automatically integrated into your WMS, and refund notifications can be issued automatically once quality checks have been confirmed, ensuring customers receive credit, refunds, or exchanges as soon as possible.

Integrate Smart Warehouse Control with Logix WCS

Automation is the backbone of an efficient returns process, and a Warehouse Control System (WCS) can make all the difference. Logix WCS™ by BoxLogix provides the real-time visibility, control, and adaptability modern fulfillment centers need to manage returns seamlessly.

With Logix WCS, you can:

• Monitor warehouse equipment in real time with live 3D visualizations of conveyors, sorters, and routing zones.
• Automatically route returned goods to designated inspection or refurbishment areas based on condition or SKU type.
• Connect your WMS, WES, and MHE (conveyors, AS/RS, pick-to-light, etc.) for unified control and reduced bottlenecks.
• Use predictive diagnostics to minimize downtime and ensure returned products are processed without delays.

By integrating Logix WCS into your reverse logistics strategy, your warehouse gains the ability to track, triage, and process returns faster. This turns what was once a pain point into a source of operational advantage.

Discover Logix WCS to see how it can enhance your returns management process with real-time control and automation.

#6 - Leverage Data to Drive Continuous Improvement

Organizations should always seek to improve core processes, like returns management. The best way to improve any process or workflow is with data. Data provides the backbone you need to make the right decisions moving forward. So, set up methods to gather data about how your returns process: what’s working well and where there’s room for improvement.

Ask for feedback from customers about why they’re returning an item and how they feel the returns process is handled. Use analytics or AI tools to identify trends or “hot spots,” i.e., the most common issues people have with the products, so you can take action to address them. If items keep arriving in less-than-perfect condition, for example, packaging improvements or better quality control should help.

#7 - Measure and Monitor Reverse Logistics KPIs

Your returns management process will likely require continuous tracking and iteration over time to improve its efficiency. Again, data plays a big part in this. Identify key performance indicators that help you see how well your returns are flowing, and track them with relevant tools. 

Some helpful KPIs to keep an eye on are:

• Return processing lead times
• Cost per return
• Inventory recovery rate (how much is resalable compared to how much is scrap)
• Customer satisfaction regarding returns
• Sustainability metrics (carbon emissions, reuse/recycle rates for returned goods, etc.)

Set goals or benchmarks for these metrics, and track them regularly. If you find standards slipping or see that you’re failing to hit targets, look at ways to change that. Poor sustainability metrics, for example, might be eased with more efficient returns routing to save on transport.

#8 - Build a Scalable Returns Strategy for the Future

Your organization will likely grow or change in the future, and you’ll need a returns system that is able to grow and adapt to those changes. So, when devising your strategy and workflows, don’t think only about the present; think ahead and try to put in place processes you can scale up in time to meet increasing needs.

Technological tools, like intelligent material handling solutions and optimized warehouse management software, help with this. Start small with the core tools you need to improve your next returns, but be ready to adapt your approach and gradually implement more automation and technology over time, so you’re ready for the challenges that might come.

How Returns Can Become a Competitive Advantage

Follow the above best practices, and you can not only make your returns process more seamless, straightforward, and expeditious, but also gain a valuable edge over your rivals. So many organizations struggle with returns, and those that get it right are much more likely to enjoy positive perceptions, more loyalty, and a better chance of repeat customers.

Want to See How BoxLogix Can Help? Contact Us Today for Personalized Guidance

While there are ways to improve your returns process purely by making some simple workflow adjustments, you’ll likely need new technology, like warehouse management systems and intelligent material handling solutions, to get the best results.

That’s where BoxLogix comes in. We can match your organization, warehouse, or distribution center with the technologies it needs to succeed, streamlining your returns and other aspects of your operations in an instant. 

Contact our team today to learn more.

Frequently Asked Questions (FAQs)

What is the returns management process in logistics?

The returns management process handles products moving backward through the supply chain, from the customer back to the retailer or manufacturer. It includes every step of receiving, inspecting, sorting, and restocking or disposing of returned goods. When managed efficiently, it minimizes waste, recovers value, and protects customer satisfaction.

What’s the difference between returns management and reverse logistics?

Reverse logistics is the broader term describing all product movements from the end customer back through the supply chain, including recycling and repairs. Returns management is one part of that system, focused specifically on how returned items are received, processed, and reconciled. In short, returns management is a core function within the larger reverse logistics strategy.

How can I make my returns process more efficient?

Start by simplifying how customers initiate returns, then streamline internal steps like inspection, routing, and refund approvals. Automation tools, such as warehouse control systems (WCS) and integrated data tracking, help reduce manual work and delays. A clearly defined, tech-enabled workflow ensures faster turnaround and greater consistency across every return.

What are the best KPIs to track for returns management?

Key metrics for returns management include return processing time, cost per return, and inventory recovery rate (the percentage of returned goods that can be resold or reused). Customer satisfaction scores and sustainability indicators, like carbon footprint and reuse rates, also provide valuable insight. Tracking these KPIs helps identify process bottlenecks and drive continuous improvement.