We are in an age where everything and anything can be ordered online and delivered right to your home. However, mistakes can happen at any stage of the procedure, such as delivering the incorrect product or buying the incorrect size. As a result, product returns are an unavoidable aspect of every ecommerce firm.
However, managing the whole returns procedure manually can be overwhelming and error-prone, especially due to the increasing number of customers and their orders. There is inbound inventory to manage, inventory adjustments, customer refunds, and RMAs to make. This may consume a lot of time and resources. Thus, having an automated Return Merchandise Authorization (RMA) process integrated with your inventory management software is crucial to manage your returns and refunds seamlessly.
In this article, we will discuss return merchandise authorization, how they work, and why your business should look for an inventory system that offers an automated RMA process.
What is an RMA (Return Merchandise Authorization) System?
Return Merchandise Authorization is the initial step in returning an item to a firm so that a consumer may obtain a repair, replacement, or refund. An RMA allows both the client and the firm to document and track the return. The return and refund procedure that an eCommerce company follows can vary, but normally, the customer requires contacting the company to initiate the RMA process.
Companies that employ a return merchandise authorization system are often ones that conduct business over long distances - mostly online businesses engaged in ecommerce. In an RMA system, the company and the consumer discuss the reason for returning the product, and the company decides whether it is legitimate. If the product is being returned after a specific period of time mentioned in the merchant's return policy or out of warranty period, the company can deny the return. On the contrary, if the product return is complying with all the merchant's policies, the return is accepted and provided return or store credit note.
Customers often need to provide proof of purchase, such as a receipt or order confirmation, in order to obtain a return merchandise authorization. The consumer can return the item in accordance with your instructions after receiving an RMA.
In order to deliver top-notch customer service and guarantee that items are returned quickly and effectively, it is essential for eCommerce businesses to comply with the return merchandise authorization process. Following a systematic RMA process also enables eCommerce companies to detect return frauds and minimize their future returns.
Throughout the procedure, the return is tracked using the RMA number. Additionally, the authorization itself may sometimes be referred to by one of these numbers. RMAs may be requested for several reasons, including getting a damaged product, having to replace it, or wanting a refund for something you no longer desire.
So, next, let us understand what an RMA number is and how it is used in the RMA process.
What is an RMA Number?
As stated above, a business will provide a return merchandise authorization (RMA) number to a consumer who requests to return an item they have bought from them. Following that, while the firm processes the specific product return, the RMA number is utilized to keep track of it. When the returned item is received, the warehouse can update its ERP system or inventory management software using this number.
Below is an example of an RMA number:
Businesses that provide return repair and maintenance services might benefit significantly from RMA numbers. The returns they handle must be handled both before and after they depart in the same manner. This suggests that tracking is essential to ensure nothing is lost and that things don't get mixed up with the delivery of new products.
Types of RMA
1. RMA for Refund
This type of RMA is issued when a customer wants to return an item they purchased and only needs a refund for their original payment. For numerous reasons, like obtaining a defective part or simply not liking the item after having a chance to see it, the client may have decided they want a refund.
2. RMA for Replacement
This kind of RMA is used when a consumer returns an item and asks for a replacement after the returned item has been received. It is a common procedure since a consumer requests a replacement after claiming that the initial item supplied was defective.
3. RMA for Cross-Shipment
With the exception of the fact that the consumer receives their new item before the vendor receives the original one back, this situation is identical to an RMA with Replacement. This RMA procedure is used when a customer needs a replacement as quickly as feasible. Customers often favor this kind of RMA, but if they don't return the faulty products, there is a greater risk to the vendor.
What is RMA Used For?
RMA is a significant process of the reverse logistics cycle and has various uses. If done systematically, RMA gives clients a way to inform your business of any issues with their orders. An automated RMA process can make inquiries on your behalf when clients seek returns about specific problems. This information allows you to determine the best course and improve customer experience, which eventually leads to a better reputation and profitability of the business.
Say, for instance, that a consumer is returning a pair of jeans. If the item appears to be in good shape, the RMA system routes it to the nearest retailer to rapidly modify the inventory count. However, if the zipper is damaged, you can return it to the main distribution point so that it may be sent back to the manufacturer along with other defective goods.
An inventory system integrated with RMA can help in keeping the warehouse staff updated with the RMA number and track the inventory accurately. Precisely, it allows streamlining the entire return process and enables smart decision-making in terms of restocking, recycling, and resale.
Gathering significant data through RMAs is an additional, frequently overlooked use. You may use built-in analytics capabilities with the correct technology deployed to acquire insight into how a product or process modifications could lower future returns.
Regardless of the refund type you offer, there are strong customer expectations to compete with. Around 62% of buyers expect a return or exchange within 30 days of purchase. Thus, an automated RMA process helps provide faster return services and improves customer satisfaction.
Some Major Issues Relating to Returns and How Automated RMA can Help in Overcoming Them?
1. Economic Impact of Fraudulent Returns On Business
Due to the increased ratio of online shopping, customers sometimes tend to engage in fraudulent activities that might include ordering extra pairs just to try the best options and then returning them back, or claiming a refund for damages that occurred upon delivery. Vendors can use an RMA system to track product conditions and set standards for return and refund cases, and cut down on fraud. In order to determine if a product is suitable for resale or not, you can ask buyers to submit clear images of the item and save your business from potential losses.
2. Dissatisfied Customers Due to Denied Returns
Many times, customers are left with damaged or unwanted products due to the lack of return policies from ecommerce businesses. However, using an RMA system, it is easy to determine the products that can be returned and those that cannot. It allows you to take quick action and issue a refund or provide a replacement to the customers without any hassle, depending upon their reason for return. Having complete transparency in your returns procedure will win you the trust of new consumers as well as the loyalty of existing ones.
3. Complying with Return and Refund Laws
As per a recent report, a quarter of all consumers return between 5% and 15% of the items they buy online. Thus, to control the flow of returned items, a well-written return and refund policy is essential. This can be done easily with an automated RMA system, thus decreasing the quantity of customer care inquiries and improving customer satisfaction by having a clear and unambiguous policy. This helps in ensuring that your customers are able to return only those items that are returnable according to your company policies.
Now that the basics of the RMA Process are clear, let us have a look at how it works for better inventory management.
How Does an RMA Work for Inventory Management?
Step 1: Your company establishes its own return policies, rules, and fees: This creates a foundation upon which the RMA system may assess the suitability of a product for return. To provide a high-quality, individualized experience, stricter regulations might be implemented for certain product categories or client segments depending on the technology being utilized.
Step 2: Your customer initiates the return: A branded returns gateway on your website is the simplest approach to let clients initiate returns. At this point, clients should ideally be able to choose whether they want a refund, repair, exchange, or some other kind of compensation.
Step 3: The return request is approved or denied: An RMA will be granted if the product satisfies the requirements for returns set out by your business. An RMA number, an RMA form, or often both are given to the consumer along with instructions for returning the goods.
Step 4: Your customer returns the item: The consumer can be requested to drop the item off at a network return site or to ship the return on their own, depending on the capabilities of your ecommerce platform.
Step 5: Your company processes the return: The details included in the RMA allow warehouse workers to handle the product quickly once it gets to your facility. The customer's account may be reimbursed for the return money, a new order may be provided, or other follow-up actions may be made after you have ensured that everything with the return shipment is in order.
Below is a detailed flowchart explaining the process of RMA.
Both ecommerce companies and their customers benefit by incorporating the RMA module into inventory management. Customers are assured that they may receive post-sale service in case difficulties arise during the transaction, and store owners receive a source of information that helps in improving business performance. Below are some of the major benefits of an automated RMA process.
Benefits of an Automated RMA Process for Inventory Management
1. Better Return Management
There are several firms that permit product returns at any time. The majority of businesses, however, dislike these kinds of returns since they need to know the precise state of the goods in order to avoid falling victim to any fraudulent practices by consumers.
In order to determine if a product is suitable for resale or not, you can ask buyers to submit clear images of the item using an RMA system that is aligned with your warehouse management system. If the merchandise is damaged when returned to the warehouse, you can make a decision whether to file a claim for damages with the shipping company or refuse the return request done by the customer. Through RMA, return frauds can be detected and controlled, ultimately protecting your business from financial losses.
2. Faster Return Processing
After accepting the return or receiving the returned item, you must reimburse the purchased amount as soon as reasonably possible. An efficient RMA system can track each returned product and notify you of pending refunds. To speed up the process, the automated RMA process enables merchants to quickly reimburse the customer's account when the return is accepted.
3. Easier Tracking of Return Status
Customers prefer to track the return process when they are returning goods. As a result, they'll probably give you a call or send you an email to see how things are going. The RMA links the return to the initial transaction in order to provide accurate and prompt answers to any questions.
When a customer asks for a refund or exchange, the RMA process flow will connect all the details of the customer’s original order to the return and centralize all that data in your system. RMA makes it possible for you and your clients to more easily monitor and assess the status of returns in real-time, including location, shipping method, and time to complete returns or refunds.
4. Insights About Customer Behavior
84% of online shoppers would say goodbye to a retailer after a bad return experience. Using an RMA system, you can provide customers the option to select from a number of return reasons. Customers will have the opportunity to mention their dissatisfaction, and you'll know precisely why your customers are returning the products and making required improvements.
Additionally, the data you gather and conversations with your customers relating to returns and refunds will ultimately help your business to improvise and streamline your processes. For example, you can use the information acquired through RMA processes to increase your percentage of faultless orders.
5. Record Product Returns
Let's say you sell your products on Shopify, Etsy, eBay, and Amazon. If any of these channels get return requests, you will need to modify the stock for each one manually. This procedure might take a while. However, every time a return request comes in, you may record a sales return against an order using RMA integration with various ecommerce platforms.
6. Accuracy in Stock Management
Using an RMA, you can indicate the number of products that are returned but resalable and damaged products separately in the sales returns. While resalable items can be added back to your stock, the damaged products are supposed to be sent to the supplier or the manufacturer. This helps in improving the accuracy of returns, reduces wastage, and provides financial benefits to the business. Accuracy in updating stocks also enables you to mitigate low stock or overstocking issues and ensure customer satisfaction.
7. Configure Products That can be Returned
Based on your return policies, RMA allows you to configure the products that are meant to be returned and those that are not. This helps in ensuring that your customers are able to return only those items that are returnable according to your company policies. By properly configuring the returnable products in RMA, mistakes in sales returns can be avoided, ultimately ensuring no disputes and discrepancies with the customers.
To make sure that you enjoy all the benefits of an automated RMA process, it is essential that the system comprises the following elements -
What Elements Does a Good RMA System Include?
1. Return and Refund Policy
To control the flow of returned items, a well-written return and refund policy is essential. You can decrease the quantity of customer care inquiries and improve customer satisfaction by having a clear and unambiguous policy.
2. List of Refundable and Non-Refundable Products
It's critical to understand that not all goods are eligible for refunds or returns. You should ideally explain to your consumers why you don't offer refunds or accept returns for some of your products. Certain product categories may occasionally be returnable, but only with a restocking charge. In any case, the buyer has to be aware of these factors beforehand before making a purchase.
Without requiring manual intervention, your inventory management system with the RMA module can process the return request automatically and email the consumers with an acceptance or rejection message. This helps in managing your refunds round-the-clock and decreases the total turnaround time while simultaneously boosting client loyalty and satisfaction.
4. Virtual Wallet Feature
A virtual wallet is a feature of the shop that adds a section to each user account that functions to contain an amount of money that may be used to make purchases in the future. Refunding to the virtual wallet is simpler than processing refunds to bank credit/debit cards. Also, revenue is not lost as the customers are likely to purchase from your store only if they have a balance amount left in your store's virtual wallet.
5. Return Labels
Your consumers must use a return label when they need to return an item they've bought. This label includes all relevant details on the goods and returns, including the package ID number, product name, category, rates, dates, pricing, and addresses. Customers may download and print return labels from RMA systems. This makes it simple to affix the label on the box before giving it back to the seller.
6. Trackable Returns and Refunds
The consumer should be able to easily monitor the status of their refund and return request. Retailers may improve customer satisfaction and promote repeat business by developing trackable shipping and returns processes. It can be done more effectively by using shipping software that helps in managing a large number of orders at a faster rate.
7. Tax and Coupon Code Management
If a consumer returns an item purchased using a discount code, the return and refund policy must state whether the coupon code will also be reimbursed. Any tax or discount code reimbursements should be automatically determined by the software used to process returns.
8. Allows Partial Returns
If a customer has ordered multiple products together and wants to return or replace only a part of the order, the RMA process should allow them to do so. It can be a frustrating experience if the customers have to cancel the whole order, and they might not consider your products for future purchases. The option to cancel certain goods from an order is now available from several online stores. In this manner, customers can acquire what they originally wanted without having to deal with the trouble of returning the entire package.
It is pointless to have an RMA mechanism in place if it is not used the right way. To make your business operations more adept, you must be able to use it effectively. Some of the actions you can take to achieve this include:
Best Practices for Your RMA Process
1. Give Customers an Option to Pick Exchange Items
Give customers the option to choose a different product when they request a return. This is a feature that might be a vital component of your RMA system. Additionally, a lot of customers will value it. They could still desire their first selection if a minor error resulted in the wrong item being ordered or delivered. You will ultimately benefit more from a simple exchange than issuing a refund.
2. Efficient Product Tracking
To conveniently monitor the serial number of the product that was previously sold and is being returned, your RMA system has to be updated. Your RMA system must be able to create a return label for the product and arrange for a pickup of the returned product from the customer's doorstep after the product has been located using the serial number.
3. Keep Room for Manual Intervention
Although most of the RMA process is automated, you must advise your personnel to avoid being completely dependent on the RMA system. To ensure there are no disparities at the end of the day, they must carefully manage all returns and constantly check the warehouse inventory.
4. Provide an Option to Settle Price Differences Online
When products are exchanged, a price discrepancy occasionally occurs. If the swapped item is less expensive than the original, the e-commerce platform must offer the choice to pay the difference, refund it, or give store credit. If your company does not provide such features, you will have to contact the buyer and work out the differences, which can cause significant delays.
5. Expect RMA Merchandise Prior To Arrival
Your in-house staff must get ready for the delivery of a specific product after it has been informed and confirmed that it will be received as part of the return procedure. For instance, even before the returned item arrives, your staff might track the goods' RFID (Radio Frequency Identification) code and submit it into the RMA system. In this way, a lot of time and items may be prevented from being lost in transit.
6. Equip your Inventory Management System with Latest and High-Quality Hardware
Though the process is automated, the physical handling of the returned products is often completed using some equipment and management systems. For example, handheld scanners or automated scanning systems will help identify items when the receiving facility gets multiple returns at any given time. Also, an interface with a warehouse management system automatically triggers the subsequent events when an item arrives.
7. Implement User-Friendly Automated RMA Process
The inventory management system that integrates with your RMA system should be user-friendly. It must comprise clear instructions and the steps that need to be followed for returning a product. The process should be clearly explained, and customers must be provided with an option to track the status of their return or refund. This will minimize the hassle of the return process and keep their shoppers coming back.
Examples of RMA Integrated Inventory Management Software
Orderhive is an ecommerce automation platform that enables online businesses to automate tasks within their operations. It offers features such as order management, inventory control, shipping management, purchase management, return management, and manufacturing management. It provides access to reports and analytics with insights into inventory and orders, enabling you to make actionable data-driven decisions. Along with faster returns processing and real-time return tracking, it also lets you sort returns as refurbished, resaleable, or unsaleable items and disperse them in the value chain accordingly.
Zoho Inventory is software that enables you to manage orders, track inventory, handle GST billing, and oversee warehouses from a single platform. It easily integrates with major marketplaces and lets you manage all online orders together. It offers insightful reports to study the sales trend, know the best performing item, and find out the most returned products. Also, it has specific versions for each country, which gives more convenience to companies across the globe.
Oracle Fusion Cloud ERP is a core suite of Oracle Cloud SaaS applications. Its core features include inventory management, order management, operations management, supply chain management, and warehouse management. Using this software, you can ensure rapid order fulfillment, get real-time visibility into inventory across internal and external locations, and precisely determine the required inventory investments. It also helps optimize your stock levels by determining optimal inventory levels and replenishment policies for each product.
Companies must provide the opportunity to return or replace the items in order to remain competitive and maintain high standards of order management. Considering the volume of online purchases and returns these days, an automated RMA process is advantageous for any online business.
Additionally, customers prefer buying from online stores that not only have easy return and refund policies but actually implement them. In case you are into Omni channel selling and managing your online and physical stores' inventory simultaneously, an automated RMA process becomes a must-have requirement to streamline your entire stock management, order fulfillment, and return & refund procedures accurately. The next-generation AI-based inventory management tools come with integrated RMA features. Thus, look for the best solution that offers an automated RMA process to manage your orders, stocks, and returns like an absolute pro and take your business to the next level.