What is the returns lifecycle?
The returns lifecycle encompasses the entire process of handling returned goods, from the customer's initial request to the product's final destination. There are four stages of the returns lifecycle where software comes into play:
- 1. Initiation
- 2. Returns logistics
- 3. Processing
- 4. Final disposition
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 over the phone via customer service.
The initiation touchpoint sets the tone for the returns experience. The easier and simpler this is, the better for the customer. So, instead of having to access printers, contact customer service, or find their own way to ship parcels, using solutions like a self-service digital portal can provide customers with smooth, simple process while giving retailers complete visibility.
Additionally, providing shoppers with 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.
Returns logistics
The next touchpoint of the returns lifecycle addresses the question: “where and 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 streamline the process. By doing so, inventory is returned quickly to the location most likely to resell it, ensuring it’s ready as soon as possible for the next shopper.
Some popular return methods:
- Store returns (BORIS)
- Third-party drop-offs
- Doorstep pick-up
- Mail-back returns
It’s worth noting 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.
That’s why solutions like our self-service kiosks have achieved 93% customer satisfaction, allowing customers to return or send parcels in 60 seconds or less: label-free, package-free, and without needing a staff member to help.
In addition, using solutions like Blue Yonder’s intelligent reverse fulfillment decisioning will also help retailers route returns to their optimal destination using AI, using data like predicted resale value, carrier costs and more.
For example, if a high-value item is returned and a nearby store has a high stock turnover rate for that product, the AI will likely route the return directly to that store. This bypasses the distribution center, gets the product back on the shelf faster, and maximizes its resale value. This intelligent routing minimizes logistics costs, reduces the time an item spends in transit, and ultimately ensures that inventory is positioned where it has the highest probability of a quick and profitable sale.
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? Returns fraud is a growing problem for retailers, representing nearly $101 billion in returns value for 2023. 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? Does the product need basic re-processing services to reach “new” status, such as removing a scuff, steaming, or reapplying tags?
- What is the optimal disposition for the item? How can you prioritize outcomes that recover revenue while ensuring 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. 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.
Final disposition
The final touchpoint of the returns lifecycle is where the item can find a new, next-best home. While the ideal state is that 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.
Tackling returns cross-functionally
A challenge of tackling the problem of returns, is that many organizations lack ownership of the problem holistically.
Yet recently, returns have jumped to a top priority for organizations looking to reduce their negative impact on profits and have begun to form cross-functional teams focused on returns.
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.
