How to Handle Product Ecommerce Returns Efficiently?

Updated on :June 19, 2024
By :Krishna Jani

What is E-commerce Returns Management?

E-commerce Returns Management is a process followed by the members of the supply chain to manage the sold products that are returned back from the customers. The process involves activities such as reverse logistics, restocking, refurbishing and gatekeeping.

Top Reasons Why Consumers Return Products

Source: Invespcro

Why Is E-commerce Returns Management Important?

In eCommerce, returns management is crucial since it is one of the determining factors for a person to buy products from a particular online shopping website. Easy returns and fast refund is helpful in winning customer loyalty in the eCommerce business.

Consumer won't make a purchase if:

Source: Narvar Consumer Report 2018

As per the research conducted by Narvar, 74% said that they would not make a purchase if there is a paid return shipping policy while 63% of US online shoppers don’t prefer to purchase from an online shopping website without a return policy. This clearly explains the importance of having a proper and thoughtful returns management policy in place.

Front-End Strategies for Effective E-commerce Returns Management

1. A lenient e-commerce return policy to retain customers

ecommerce return policy

The return policies must be mentioned on the online shopping portal in a simple language that the customer can understand easily. Also, the e-retailer must have a liberal returns policy since return policy is one of the major factors for a customer in determining whether to buy a product from a specific online shopping website or not. Most customers expect free shipping during product returns and the e-retailers must provide this to encourage more people to buy from their website.

2. Simple returns processes are always efficient ones

It is advisable to have a simple returns process wherein a customer can simply call to pick the product and it is shipped back to the e-retailer without any hassles. Provide the customer with easy to print a return shipping label or allow the customer to return the product at a nearby brand store where they can get an instant refund too.

3. Customer feedback should be a priority

Request your customer to fill in a detailed feedback form in which he/she can mention exactly what went wrong with the product. This will give you a fair idea of whether to stop selling that product entirely or to ask the supplier to fix the issues in the product.

4. Returns can be turned into a sales opportunity

You can turn returns into a sales opportunity by suggesting the buyer buy a product with a similar specification but of a different brand. You can suggest the customer shop another product at a special discount since they were not satisfied with their current order.

Back-End Strategies for Effective E-commerce Returns Management

A properly streamlined returns management process is essential for any eCommerce business to flourish. Implementing an automated returns process will allow you to improve your process while reducing your margins.

Generally, there are 2 kinds of returns that are offered by eCommerce companies.

Authorized returns - In which a customer needs to make a call or email to request a return of the product. This is a good practice for returns because you get to talk to the customer directly and there are chances that you can convince them to buy an alternative product after accepting their return request.

Automatic returns - In this type of return, the customer gets a return slip and free shipping labels along with the product so if in case he/she wishes to return the product, they can do so by themselves without giving you a call or email. This is a less preferred way since, as an e-retailer you are not aware of the product return until it arrives directly back to you.

So now, your returned goods will arrive in either one of the two methods mentioned above. It is now crucial to streamline the processes on how to handle the received goods. Time is a big determining factor in deciding the recoverable value of the returned goods and the retailer needs to process, sort and send items as soon as possible. For this reason, automated returns management software is ideal as it enables the retailer to streamline the entire process as well as synchronize it with inventory and accounts management.

1. Appropriate gatekeeping policies

Gatekeeping is the screening process in the reverse product flow from customer to e-retailer. A person evaluates how and which products enter the return stream. Gatekeeping is practiced to minimize the products return and keep a check on the return costs. It is advisable to vet the products received from the customer thoroughly so that a further decision of the return process can be taken accordingly.  

2. Handling the products

Once the goods are received, it becomes essential to check the quality of the returned product. If it is in a good working state then it can be ‘re-stocked’. If not, then, you need to either send it to the wholesaler/vendor. In the previous case, the inventory will be updated automatically by the software so that the product is available for others to buy while in the latter case the item will be written off in your inventory.

Once this is done, the system will automatically update the products in all the eCommerce channels and marketplaces and physical stores, if applicable.

3. Initiate refund process or Replacement of the product

First, the retailer needs to refer back to the refund policy for that specific product. If the customer needs a refund and is allowed under the policy then the process of refund is initiated. For this, the e-retailer needs to login to the issue and credit the customer’s account.

In many cases, the product is replaced with a newer or an alternative product as well. So the e-retailer starts processing refund or replacement depending on the policy.

4. Accounting

A lot of changes are to be made in the books of accounts. If the product is restocked, it is to be included in the inventory asset or if it is written off then it is part of the expenses. The credit balance of the customer is to be listed in the liabilities section of the balance sheet and the sales tax entry also needs to be reversed.

For Fast and Easy Returns, Automation Is the Way to Go


Let’s look at some interesting returns statistics by US online shoppers released by the Narvar research,

  • 42% of online shoppers in the US have returned an item in the last six months.
  • Almost 70% of online shoppers said that they had an “easy” or “very easy” return experience.
  • Nearly 96% said that they would buy from an e-retailer again based on the good return experience.

Such staggering figures indicate that it is essential to have an automated system in place to perform the product returns process efficiently in a timely manner and thereby gain customer loyalty.

Automation helps in generating and validating Return Material Authorization (RMA), generate shipping labels and documents in a quick and easy manner. Appropriately a labeled shipment along with proper documentation makes it possible to return the products with fewer delays and create an efficient inbound return process.  

Inventory management software these days are stacked with features that expedite the day-to-day functions like accounting, managing and maintaining stock, shipping, and billing, etc. However, automation is a unique feature that allows the user to add customized conditions; this is especially useful in managing the returns, for e.g. you can set a condition in your eCommerce software that if the product arrives in the broken stage then it should go straight away for refurbishing.


The proper implementation of the returns process management equips the company to manage reverse product flow efficiently. This article will help you in carrying out the front-end and back-end processes of returns management effectively and efficiently. The article also explains how automation can make your work faster and easier while minimizing any chances of making mistakes. Hence, it is always a good idea to invest in a good returns management system with automation capabilities that help in streamlining this process seamlessly.

Krishna Jani
Krishna Jani

Krishna Jani is a content specialist with 10+ years of experience in the field. Presently working as a professional writer for Orderhive, no.1 inventory management software that powers several businesses all across the world. She likes to keep an eye on the changing trends in eCommerce industry & write on it. She is an avid birder and nature lover who loves to explore national parks and wildlife sanctuaries during her leisure time.

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