Four Key Touchpoints of the Returns Lifecycle

Shopping is something that is both a necessity and a leisurely pastime. But, what happens when something we purchase isn’t quite right? We return it. 

It sounds simple, but returns have become a significant challenge for retailers, brands, and logistics providers over the last decade. One could argue returns have always been a drain for retailers with Gartner finding that 68% consider returns management a mere cost center for the business. 

Yet, with the surge in ecommerce and Amazon setting a high bar for convenient, free returns— the problem has become too costly to ignore— to the tune of $743B in 2023. 

But when talking about returns management, it is critical to understand (and assess) the full lifecycle of returns and implement a holistic strategy.

In this article, we’ll provide a comprehensive look at the returns lifecycle and how to navigate in a manner that can improve customer experience, boost loyalty, and improve profitability.

Why the returns lifecycle matters

Rightfully so, many retailers are focused on the buying experience. Yet, critical aspects of customer experience happen beyond the buy button. (Think: order management, inventory availability, reducing split shipments, the unboxing experience, and returns management). 

While returns avoidance seems appealing, returns will always be inevitable to some degree, so it is wise to apply the same strategic approach to curating the best returns experience. In fact, Statista found that 81 percent of shoppers said they would switch to a different retailer if they had a bad experience with returning goods.

What is the returns lifecycle?

The returns lifecycle refers to the entire process of handling returned goods, from the initial request from the customer to the final disposition of the product. The are four stages of the returns lifecycle where software comes into play:

1. Initiation
2. Return Methods
3. Processing
4. Resale / Recommerce

Initiation

In the initiation stage, a shopper requests a return. This stage can be executed in person at a store, via a returns portal on your ecommerce website, or made over the phone via customer service. It is during the initiation stage, that a return merchandise authorization (RMA) is created.

The initiation touchpoint sets the tone for the returns experience, so ideally it is self-service, convenient, and simple to follow. Additionally, providing shoppers alternative options to repurchase from you (via exchanges, store credit, or bonus credit to incentivize a future purchase) is a valuable way to save the sale and offset some of the cost of returns.

Return Methods

The next touchpoint of the returns lifecycle addresses the question: “how do we get this product back”? Again, customer convenience reigns supreme here, and offering a variety of return methods is a great way to expedite the returns lifecycle and get inventory back to stock as soon as possible for the next shopper. 

Some popular return methods:

• Store returns (BORIS)
• Third-party drop-off like Staples or UPS Store
• Doorstep pick-up
• Mail back returns

It’s worth noting that Optoro found that 71% of shoppers prefer to drop off a return at a physical location versus mailing it back, and 60% of shoppers say their top frustration with returns is paying for shipping, printing and packaging returns. 

At this touchpoint, retailers and brands also ask, “to fee or not to fee”? Amazon set the precedent for free returns, but now many brands are charging return or restocking fees, despite the fact that ~62% of shoppers say they won’t initially shop with a brand because they charge for return shipping.

Understanding your audience and providing them with a variety of return methods will help reduce friction in the returns experience. Additionally, while you don’t have to make all returns free, consider having at least one free return method to not deter price-sensitive shoppers.

Returns Processing

The third touchpoint in the returns lifecycle, and perhaps one of the most critical for profitability, is the processing of the return. In this stage, operators want to consider:

• First, is the returned item the correct item? If a luxury brand, is there a chance this is a knock-off version being returned? While most shoppers don’t have malicious intent, they can make mistakes too, like this one shopper that accidentally returned their cat.
• What is the condition of the item? Should it be available for resale? If so, what resale channel will yield the highest financial recovery? Does the product need some basic value-added services to get it to a “new” status like removing a scuff, steaming, or reapplying tags?
• Based on the condition, what is the best next destination for the item (i.e. disposition)? How can you optimize where returned items go so more product goes back “on the shelf” at full price and much less goes to landfills?

This touchpoint of the returns lifecycle can occur either in a store or in a warehouse, but most of the time, associates lack the right software that can help them do this efficiently and effectively— resulting in a backlog of returns, delayed customer refunds, exceptions, or worse, items merely marked for disposal. 

And it can be a challenging step to get right. In fact, 47% of global warehouse operations leaders cited returns management as a top operational challenge in 2023 (Zebra Technologies). That’s why many retailers and 3PLs are switching from using their WMS to process returns to a purpose-built returns management system that they can deploy in a store or a warehouse, and increasing processing efficiency by 2-3x (with less headcount) and improving financial recovery by up to 45% for returned merchandise.

Resale & Recommerce

The final touchpoint of the returns lifecycle is where the item can find a new, next-best home. While ideal state is returned inventory is returned to stock and sold at full price, having other high-margin secondary channels is critical for protecting profitability. 

When evaluating this stage of the returns lifecycle, consider the various resale and secondary channels that you can leverage to not only improve recovery, but to also keep valuable items out of landfills. Read more about how RMS powers circularity

Tackling Returns Cross-Functionally

A challenge of tackling the problem of returns, is that many organizations lack ownership of the problem holistically. In fact, Gartner found that, 97% of organizations did not have an identified executive owner responsible for returns. 

Yet recently, returns have jumped to a top priority for organizations looking to reduce their negative impact of profits, and have begun to form cross-functional teams aimed around returns. One large shoe retailer recently launched a Returns Action Team (RAT) 🐀, and a global 3PL is in the process of launching a dedicated line of business to returns.

Conclusion

While returns technology has become a must-have in recent years, many retailers and brands make the mistake of only considering one touchpoint of the returns lifecycle, and therefore (inadvertently) shifting the problem to another part of the business. 

The most effective returns software considers data from all four touchpoints in the returns lifecycle to help construct a holistic view of the impact of returns, and how to truly transform retail returns from a disappointment to a delight.