Returns Management Optimization

Last year I had a call with the VP of ecommerce of a $300M+ retail company who was convinced their 32% return rate was "just the cost of doing business" When I dug into their data I discovered that almost half of post-purchase revenue loss is preventable. This happens all the time, retailers are pouring their heart and budget into hitting sales targets, only to watch a third of that revenue disappear due to inefficiencies and refunds. It's demoralizing to be a retailer these days. It doesn't have to be this way! Here's the playbook we used to help that company recover over $6.8M in just 4 months: Most retailers focus on the wrong metrics, for example they celebrate $10M in sales while silently losing $3.2M to returns, and another $1M to operational inefficiency, plus $800K to return fraud and abuse. Quick observations: Your "best customers" are killing you! 37% of "VIP shoppers" are serial returners, they look great in your CRM but they're negative margin customers. We found one customer returning over $14K → this is totally preventable! This is our framework that we developed after working with hundreds of enterprise retailers in the past 5 years: Prevent returns Enable size/style swaps and allow for uneven exchanges (more expensive or cheaper options) Store credit options instead of refund Relevant product recommendations for exchange and upsell Analyze the return reasons by product - this can save you a lot of products from being returned! Results: Over 60% reduction in refunds b) Prevent fraud and abuse Fraud rules to prevent return abuse Automate policy enforcement and verification of product quality before the product is sent back Product inspection workflows at the warehouse level Results: the highest we seen last year for a customer was over 90% c) Streamline Operations Setup rules for returns routing to the closest warehouse or outlet stores Minimize clicks and enable a scan, scan, refund workflow Centralize all returns data and actions into one system, to prevent system switching Results: 42% faster processing Returns are not a cost of doing business. They're a goldmine of hidden opportunities. But here's the truth: Most retailers will read this and do nothing. They'll keep losing millions because "that's just ecommerce." The smart ones will see this as the competitive advantage it is. What side do you want to be on? P.S. If you're a retail executive seeing 20%+ return rates, DM me. I'll share our full framework as it’s way more detailed.

A former colleague in customer refunds and chargebacks was struggling with delayed and inaccurate refunds, leading to customer complaints and loss of trust. The finance team believed the issue was due to bank processing delays, but when we analyzed the data using SQL, we uncovered inefficiencies within the internal refund approval process. Streamlining Refund Processing with SQL 1️⃣ Finding Where Refunds Were Stuck We analyzed the average time spent at each stage of the refund process. SELECT refund_stage, AVG(time_spent) AS avg_time_spent FROM refund_tracking GROUP BY refund_stage ORDER BY avg_time_spent DESC; 🔹 Insight: Most delays weren’t from banks but from internal approvals taking too long. 2️⃣ Identifying High-Risk Refund Categories We looked at which types of refund requests faced the most issues. SELECT refund_reason, COUNT(refund_id) AS total_refunds, COUNT(CASE WHEN status = 'delayed' THEN refund_id END) AS delayed_refunds, (COUNT(CASE WHEN status = 'delayed' THEN refund_id END) * 100.0 / COUNT(refund_id)) AS delay_percentage FROM refunds GROUP BY refund_reason ORDER BY delay_percentage DESC; 🔹 Insight: Refunds due to damaged items had the highest delays because they required manual inspection approvals. 3️⃣ Prioritizing Faster Refund Processing We optimized the approval process by automating low-risk refunds. UPDATE refunds SET status = 'auto-approved' WHERE refund_reason IN ('payment error', 'duplicate charge') AND amount < 100; 🔹 Insight: Small, low-risk refunds were auto-approved, reducing workload on finance teams. Challenges Faced Manual Verification for Every Refund: Even clear-cut cases required manual approval, causing delays. Lack of Prioritization: Refunds were processed in order received, not based on customer urgency. Customer Trust Issues: Slow refunds led to negative reviews and increased support tickets. Business Impact ✔ Good % reduction in refund processing time by automating low-risk approvals. ✔ Fewer customer complaints by ensuring refunds were issued within 24 hours. ✔ Better fraud detection by flagging high-risk refund requests early. Key Takeaway: Refund processing isn’t just a finance task—it’s a data-driven process that can improve customer trust and operational efficiency. Have you optimized refunds using SQL? Let’s discuss!

‼️Returns Are A Growing Problem -Returns now cost U.S. retailers over $743B annually, 14.5% of total retail sales -And customer expectations haven’t budged 🔊How retailers are responding: -REI is banning members who abuse its policy (returning 70%+ of purchases) -Amazon and Target are flagging serial returners, quietly denying or delaying refunds -Restocking fees and return policy changes are becoming more common Most returns don’t start at the register. They start earlier. When a product doesn’t fit, the details aren’t clear, or no one is available to help. Tightening return policies = short-term protection, long-term risk. -79% of customers say a difficult return experience makes them think twice about buying again -13.7% of returns are now flagged as fraudulent, but many more are preventable with better execution upstream, beginning with the fit! A smarter strategy looks like this: ➡️Make the purchase more accurate -Improve fit, size, and product detail clarity, online and in-store -Train associates to guide the purchase, not just ring it -Help customers understand what a product is, and isn’t ➡️Empower associates to prevent returns -Share return data with store teams, so they know what’s coming back and why -Improve Return codes to aid discovery of issues upstream  -Coach for “save-the-sale” behavior, offering better fit, alternatives, or added guidance during the purchase 👉Stores that invest in proactive service and guided selling tools have seen 12–18% fewer returns in high-risk categories like apparel and footwear 👉According to Salesforce, 52% of customers say they’ll stay loyal to a brand if their problem is solved clearly and quickly, often before it becomes a return -Recognize the right behaviors: not just speed, but the ability to guide a customer toward the right purchase 👉This might mean calling out an associate who saved a sale by solving a fit issue 👉Or rewarding someone who reduced returns by consistently educating customers, not just completing transactions ➡️Use returns as insight, not just loss -Identify patterns in what’s coming back and why -Loop return insights into merchandising, marketing, and product development -Separate regret-driven returns from those caused by product confusion, poor fit, or lack of support 🎯The goal isn’t zero returns. It’s fewer avoidable returns, and a customer experience that builds trust, not friction. Have you seen this done well? What are some return strategies that protect margin and build loyalty? I’d love to hear what’s working in your world. Kevin Finnegan kfinnegan@grnlowcountry.com kevin@finneganadvisory.com

Getting online returns back into the supply chain as quickly and efficiently as possible is a critical component to profitability and healthy working capital for retailers. In any given week, millions of unwanted online orders are sitting in car boots, hallways and gym bags, slowly winging their way back to retailers across the country, and every additional day is silently eroding profits. Indeed, £9.8bn worth of returns take over 10 days to be returned, in some cases missing peak resale windows, forcing markdowns, and adding to waste.   To put another way: 📉 15.5% of online consumers take more than 10 days to return items. 💸 That represents over a third (35.5%) of all returns, which are at risk of losing value.   Speed matters. The longer it takes, the less it’s worth. These delays pose significant risks for retailers, especially in fast-paced sectors like fashion, where item values decline if products miss peak sales periods during the returns process. Generational differences also affect return timings. Gen Z and Millennials take an average of seven days to return items, while Baby Boomers average within four days. Nearly half of Gen Z and Millennials place a high value on longer returns windows when selecting return methods for online orders. How can retailers fix this? ➡️ Optimise returns policies to encourage faster returns, addressing pain points for shoppers through streamlined processes. ➡️ Use AI to predict and manage return cycles. ➡️ Offer incentives for early returns to maximise resale value. With margins under so much pressure, addressing slow returns is not merely an operational challenge but a critical driver of financial performance and strategic agility. Products that miss peak resale windows experience accelerated markdowns, eroding margins and increasing inventory holding costs. More importantly, slow return cycles tie up working capital, limiting the ability to invest in growth. Leading retailers are reframing returns management as a strategic function. This transition not only minimises costs but also enhances customer experience by providing faster refunds and improved inventory availability. For those that get this right, it can become a competitive advantage. Those that fail to act risk falling behind in an increasingly dynamic and margin-sensitive market.   Download the Annual Returns Benchmark Report, conducted by Retail Economics in partnership with ZigZag Global, for full insights and strategies to reduce returns losses. >>📥 Click here to access free: https://lnkd.in/esPSSz9K   #Retail #Ecommerce #Returns #RetailTrends #CustomerExperience #ReverseLogistics #Sustainability #RetailEconomics

"I’ll take this shirt in small, medium, large… in red, black, and mint green… and return whichever feels least like a hug." Ah yes, fashion eCommerce. Where 1 sale = 1 shipment = 9 variants = 7 returns = your margin crying in the corner 😅 But let’s be real: reducing return rate isn’t the goal. We want to grow return-adjusted profit. That’s where the magic is. Here’s how the smartest marketplace sellers on Zalando, ABOUT YOU & other fashion marketplaces are actually winning 👇 📦 Build a “RACM cube” Model every SKU × size × color × country × marketplace. Returns aren’t just percentages, they’re a predictable cost line. 🧤 Hide your heartbreak sizes Got size S in mint green with a 72 % return rate in Zalando DE? Pull it out of Zalando DE. Fix the PDP. Reload only when it earns its spot. 🧬 Train the marketplace’s algorithm to help you Zalando and ABOUT YOU already show sizing advice. You just need to feed them complete size charts and fit notes like “runs snug on the biceps 💪.” 🎯 Send ad money where returns don’t ruin the party ZMS lets you auto-pause ads on SKUs where returns destroy margin. Yes, your CPA should know how to count backwards from RACM. 🧾 Segment your serials, bracketers, and legends You don’t need to punish high-return shoppers, just understand them. Model their impact. Adjust your refund timing, ad targeting, or size availability. 🌍 Route returns smarter, not faster If DE returns cost €1.50 more per item than NL, palletize locally and bulk-ship weekly. Simple. Scalable. Sanity-saving. 🧘♀️ Final tip: returns are a strategy, not a shame spiral You’re not here to eliminate returns. You’re here to master them. The goal isn’t fewer returns. The goal is more profit per kept item and a lot less surprise crying in ops 🤝 #ecommerce #returns #marketplaces #fashiontech #zalando #aboutyou #racm #profitability #logistics #zms #marketplaceselling

With the festive season coming in, Returns are prone to rise across eCommerce. But forward-looking brands are turning them into a growth channel instead of a liability. For most brands, returns are seen as a cost center. But when managed well, they can actually drive higher revenue and retention. That’s exactly what ClickPost’s Returns & Exchanges Management Tool enables.   👉 Customers can choose between refunds, exchanges, or in-store credits   👉 Site-wide exchanges across the entire catalog, not just same product or size   👉 Easy to configure, quick to onboard, and designed for scale And the outcome? Instead of losing customers at the returns stage, brands turn them into repeat buyers. Here’s what our merchants have seen: 1. 54% of returns converted into exchanges 2. 39% higher value exchanges 3. 40% revenue retained via in-store credits Schedule an expert consultation: https://lnkd.in/gdaitm94 Returns are inevitable. But revenue loss doesn’t have to be. #D2C #ecommerce #returns

Balancing Profitability and Customer Satisfaction This is much easier said than done.  But, one way to get started is by handling your returns the RIGHT way.  These are 5 lessons I've learned from the returns process: Lesson 1: Customer Support and Communication Lesson: Proactive and excellent customer support can deter returns. Example: A customer expressed dissatisfaction with a product. Instead of processing an immediate return, our support team engaged the customer, offered solutions, and turned a potential return into a positive interaction. Lesson 2: Accurate Product Descriptions Lesson: Clear, detailed product descriptions reduce return rates. Example: By focusing on high-quality images, videos, and in-depth descriptions, we reduced our return rates by 15% within three months. Lesson 3: Incentives for Retention Lesson: Offering incentives can deter returns and promote customer loyalty. Example: We offered a dissatisfied customer a discount on their next purchase instead of processing a return. The customer agreed and has since become a regular shopper. Lesson 4: Cost-Effective Return Decisions Lesson: Sometimes, it's more cost-effective for customers to retain a product rather than return it. Example: Considering the high shipping costs, we offered a customer a partial refund to keep a low-value item. This saved us a loss, and the customer appreciated the gesture. Lesson 5: Analyze and Improve Lesson: Regular analysis of returns can provide insights for improvement. Example: We discovered a recurring issue with a product after seeing a pattern in the return reasons. We quickly rectified the problem, reducing future returns of that product. What strategies have you found effective in handling returns while balancing profitability and customer satisfaction?

#Returns and #RMAs. Let's get this party started. 🎉 Not returns software, I’m talking about the actual product movement. Start with a flow chart. Document the process steps and how each action or decision can flow. Determine at what point a handoff is made from one department to another. Now review to see if any parts can be merged or eliminated. The more manual processes that your company follows, the less scalable it is. • Identify how your #inventory tools will be impacted as any replacement units that can’t be repaired come out of new inventory. •What is the #warranty % for each product. •How will #integration work to ensure the data is being synced properly? Otherwise, financial reports will be incorrect and so will the demand plan. #Automate: 1) Refunding the order - a part is scanned and then automation will generate the refund. Communication with the customer is complete, but there are still internal steps. 2) Repair/Refurbish - This is where both the repaired items and the determination of whether any parts can be cannibalized will happen. Automation includes having barcode stickers on hand for any parts that can be reused. Each part needs it's own #SKU and #barcode. As they are placed on the warehouse rack they can be scanned again which will automatically enter that SKU and quantity. The same can be said in reverse, if parts are used to build another unit, scan them and mark their new status. It may seem like effort to label and scan but keep in mind that every part is an asset, every broken part is a loss and anytime parts are unaccounted for, that is lost profits. 3) Warranty - Track the return reason code so you know which parts need to have manufacturer's claims made. The hidden cost to warranty claims: $ Staff time, (how much per hour?). $$ Additional product if it's a replacement. $$$ Lost customer acquisition cost of product not being available to sell to new customers - CAC is a real number so you need to make sure it's applied here when that happens. $$$$ Reverse logistics of shipping the product back to you. $$$$$ Repair and diagnostic time. $$$$$$ Shipping the customer a new order. $$$$$$$ Customer service time (again). $$$$$$$$ Management time to negotiate with factory on warranty reduction. Think of time ⏰ as a financial asset and any excess time used on a task is a loss. 📄 The better your documentation the more efficient your processes will be. It's critical to have fresh training on this quarterly to keep the existing employees from getting complacent and taking shortcuts and to give any new staff time to adapt. On Sept 27th, tune in here for a webinar with me and Mark Yeramian, CEO of Moast for some great tips on how to avoid returns in the first place and improve customer confidence. On Sept 28th, join me along with Bailey N. of Frate Returns, Jake Disraeli of Treet, and Shakarah Dean of Kirrin Finch to delve deeper into How to Reduce Black Friday Returns

Most brands don't have a good returns process. The right technology makes it seamless. I have been in countless warehouses where the returned items are received at the furthest dock. Then put in the back of the building...in a pile...sorted through and processed over several days. Even to my surprise we did a project in the past where the customer said, “I don’t want the returns near the front of the building. It’s dirty and a mess.” (that statement started my mission to improve returns within the warehouse) Now with a combination of robotics and the right software, returns can be handled efficiently. It can become an asset to the fulfillment operation and the brand. 💰I did a study for an apparel brand which identified they could reduce inventory on hand by 10% resulting in a $5MM savings. They averaged 48 hours for processing returns. A shelf to person system like the one shown in the video incorporates all parts of the fulfillment operation. Inbound items are processed then put directly into the pickable location. The item is not touched again until an order is placed for it. The right software can work wonders. If a returned package enters the building that is currently out of stock or low on stock, it is given a high priority and routed by system directly to processing. A worker validates and processes the return then puts it into the pickable location. This puts the product back up on the storefront quickly for re-ordering. In stock items mean more sales for the brand and happier customers. Build a fulfillment system that works for every part of the operation, not just a happy path. Leave a comment or repost if you found this useful! ♻️ Q: Have you ever scrambled to find a product in a pile of returns?