What is Returns Optimization And How To Optimize Shopify Returns With Rich Returns?

What is Returns Optimization And How To Optimize Shopify Returns With Rich Returns?

Optimizing Shopify Returns

Shopify retailers tend to see high rates of returns—literally. The average rate of retail returns reached just over 16% in 2021, meaning that more than $761 billion of merchandise ended up back in stores and warehouses. Since the pandemic, consumers have been more likely to over-order items — and make more returns. 

Processing returned items can be time-consuming. Without the right reverse logistics solution, retailers may face high costs related to manually sorting items, sending refunds, and issuing replacements to be sent out. Returns can clog the supply chain and lead to unhappy customers. 

Fortunately, there are tools and strategies that can help companies better manage e-commerce returns. In this guide, we’ll show you how automating Shopify returns will make your operation run more efficiently and lead to higher customer retention. 

Importance of Managing Returns

Returns are an important part of the customer experience, and managing returns and exchanges effectively is key to unlocking profitability. However, many businesses often struggle with returns management, which can result in reduced margins and lower customer retention. 

Online retailers should approach returns management with the same consideration as traditional “forward” logistics—the customer service, shipping and handling, and inventory management required to send a product to their customer initially. Streamlining the way a product returns through your supply chain can lead to cost savings and improved sustainability, among other benefits. 

Here are a few key benefits that illustrate the importance of managing your e-commerce returns: 

  1. Improve your profit margins: You can recover value from returned items by reducing the transportation costs and reselling items that would have been a complete loss if disposed of upon return. Retailers that are able to regain value from recycled or resold items while simultaneously cutting costs will see profit margins improve. 
  2. Improve your customer satisfaction: Customers appreciate when e-commerce brands make it as easy as possible to return or exchange items. In practice, this means offering a full refund no matter the reason for a return, not requiring customers to use the original packaging, and other self-service options to help customers get the item back to you as quickly as possible. 
  3. More efficient operations: Managing your returns process with the right software can help your warehouse and logistics teams quickly identify what products need to be repaired, refurbished, or reused. This cuts down on the need to purchase new products and helps you serve customers faster.
  4. Better sustainability: Ideally, your returns management process reduces waste, too. Managing your returns allows you to identify ways to reuse, resell, or recycle materials instead of sending them to a landfill. This helps your sustainability—and your profit margins. 

Despite the clear benefits of managing returns, many online merchants still struggle to gain visibility into their returns process and optimize their reverse logistics. 

Challenges Online Retailers Face in E-Commerce 

Running an online business is challenging: there are sales to make, orders to fill, and payments to receive, not to mention demanding customers who expect a certain level of service and efficiency. While many retailers recognize the importance of returns management, not everyone is equipped to make the changes necessary to optimize this process. Here are a few challenges that online merchants face pertaining to customer returns—and how to overcome these obstacles. 

Returned inventory isn’t properly tracked

Warehouse management is a key element of the returns process. If the warehouse can’t correctly track or record the amount of procured, returned, and dead items, the resale and exchange processes become hopelessly complicated. Sellers need an inventory management system that categorizes items properly and provides visibility into fulfillment timing. 

Warranties aren’t updated throughout the returns process

For e-commerce brands selling electronics and appliances, the returns process must account for product warranties. This can quickly get complicated when a product is sent out, utilized by the buyer, and returned. These products’ warranty periods are then disturbed and must be reevaluated before the product can be resold. Merchants need an analytical approach to defining each product’s warranty, including those products that are returned after an indefinite period of use. 

Lack of coordination with the logistics team

Online retailers need to work closely with the logistics team—those in charge of shipping—to make sure returns are quickly recorded and processed. One way to better coordinate with your shipping partner is to implement returns management software that can help organize all these different workflows to help your team clearly see what’s going where. 

This software tracks which items are being sent out for different tasks, such as resale, exchange, or repair. Likewise, easy label tracking can show your shipping partner where each product needs to be shipped, where it is en route, and whether the item has been delivered. 

The returns policy isn’t clear or easy

According to one survey, more than 50% of respondents would avoid buying from a company with strict return policies. Empowering customers to quickly provide feedback, ask for a return or exchange, and get a prepaid label can dramatically increase customer satisfaction and retention. Likewise, if a customer is unhappy with a product they have purchased from your business, managing the return promptly and efficiently can go a long way in ensuring that they remain a customer.

Optimizing Returns in Shopify

With the right approach and software, online retailers can overcome these risks and optimize returns in Shopify. Automating returns with a tool like RichCommerce can help online retailers achieve the benefits of return management optimization without creating additional work for your warehouse and logistics teams (and avoiding higher labor costs). 

Adding the right platform to your returns strategy makes return optimization easy. RichCommerce is built exclusively for Shopify; the platform leverages Shopify’s native API to make it easy to offer an unparalleled returns experience for your customers. RichCommerce brings together your returns data in one unified dashboard to process returns within Shopify. It can be customized with your branding, including logo, colors, and style. And, RichCommerce works globally with multi-language and multi-currency support to help you get up and running quickly. 

With RichCommerce, the following steps can help you prepare to handle automated returns in Shopify. These best practices can help ensure you’ll soon start to see the benefits of revamping your reverse logistics process. 

Create Returns Management Workflow 

RichCommerce can streamline your returns management workflow. For example, RichCommerce will set up a self-service portal for your customers to initiate returns and get pre-paid shipping labels. Shoppers can track their returns, choose to get a store credit or gift card and take advantage of one-click exchanges.

Analyze The Data

Audit your returns data to find out where you may have vulnerabilities and where you need to focus on making improvements. This review should consider things which product has the highest return rate, the percentage of returns that can be sent out for resale/recycled, and areas in the returns process where there’s a breakdown or bottleneck. 

Utilize Technology

With RichCommerce, e-commerce brands can automate key pieces of the returns process. Use our API to fetch data, trigger automatic actions on returns and build integrations to transfer data seamlessly to your systems (ERP, CRM, 3PL, etc). Plus, the Auto-Approve function allows you to handle returns in minutes all within a single interface with all information at hand. 

Focus on Speed 

Automatic, prepaid return labels offered by RichCommrce mean zero manual work required from your team and make the returns process much faster. Plus, one-click exchanges give your team the tools to process exchange orders in real time. Eliminate manual mistakes, improve throughput and make fast exchanges a competitive advantage.

Refresh Your Business’s Return Policies

Overcommunicate your returns policy to add visibility to customers who are shopping on your site. Make sure shoppers are clear about whether you offer free returns, the steps in the returns process, and any deadlines (such as returns and exchanges are only available 30 days from the date of purchase). This can help prevent frustration from customers who aren’t clear on what your returns policy is. 

Conclusion

Optimizing returns can help you save money, run your e-commerce returns process more efficiently, and improve your customer satisfaction. Ultimately, the returns process is not something e-commerce brands can afford to ignore. Customers are quick to abandon online retailers that don’t make returns easy.

The right technology can help optimize e-commerce returns with little manual effort. RichCommerce integrates directly into your Shopify site and can enable customers to manage the shipping process independently. With Auto-Approve and one-click exchanges, RichCommerce streamlines workflows and helps warehouse teams focus on high-value tasks. 

Learn more about RichCommerce and try a risk-free trial to see how your reverse logistics process can improve your bottom line.