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How to Manage Returns Efficiently while maintaining Profitability


Why is Managing Returns Important?

Returns can have a significant impact on your ROI (return on investment) if you do not manage them efficiently.

As of August 2024, the average eCommerce return rate was 26.4%, according to CapitalOne Research. Customers returned $248 billion in online sales in 2023. 

In this post, you will learn ways to manage returns efficiently while maintaining profitability and also how to turn this into a winning situation for your eCommerce company. How a company manages its returns immediately affects its relationship with its customers and can determine whether they become repeat customers or go somewhere else to buy. This is why customers return time and time again to companies like Amazon; because of their transparent return policies and strict adherence to them.

How Returns Affect ROI

Obviously you are looking at the profit lost on the item being immediately returned but you must also factor in all other related expenses such as return shipping, processing the return and the depletion of your inventory. Additionally, if your customer has a difficult or confusing time getting satisfaction, you can lose that customer in the long haul and that can have a significant effect on your profits. Now that we’ve taken a look at the downside, here are some steps you can take to manage returns efficiently.

An Ounce of Prevention is worth a Pound of Cure

  • Ensure that your product descriptions and pictures are an accurate representation of your actual  products. This will reduce the number of returns by ensuring that customer expectations are met when the product arrives.
  • If your products are of a technical nature at all, be sure that good tutorials and FAQ pages are easily accessible to the customer. A reliable, easy to access Help Desk will also ease customer frustrations and further reduce the return rate.
  • Use packaging that will provide adequate protection to the product during shipment. This will help to eliminate returns on items that arrive in a damaged condition.
  • Use data tracking on your returns. You might be able to identify patterns that could lead to a solution which would reduce certain kinds of returns.

Managing Returns Efficiently

  • Make sure that the return process is quick and hassle free for your customers. Provide clearly stated return policies and follow them. The experience your customers have with returning a purchase can determine whether or not they remain a customer or recommend your company to a friend. It is far more expensive to acquire new customers than it is to retain current customers.
  • Implement an exchange program. Offer your customers an attractive way to exchange items instead of getting refunds. You might, for example, offer a 14 day policy for refunds and a 30 day policy for exchanges. You can create other incentives for exchanges as well, such as discounts and free shipping. You can also offer store credits and gift coupons. Exchanges will reduce the amount of profit loss that you might incur when only offering refunds and they can also offer an opportunity to upsell.
  • Resell returned items. Inspect and refurbish returned items and offer these at a discounted price. Be transparent about the fact that they are refurbished items. These will likely prove attractive to bargain hunters and you will be able to get back some lost profit.
  • It is important to understand all of your overall costs involved with returns. Analyse every cost from processing the return to return shipping. Many eCommerce companies charge a fee for restocking large items and shipping over long distances. Make sure these are clearly stated in your return policies.
  • Track your return data overall to find trends that can show where problems lie that might have solutions.
  • Automate as much of the return process as possible.

The Five Rs of Reverse Logistics 

In summary, the five Rs of Reverse Logistics are returns, repairs, repackaging, reselling, and recycling. By addressing each of these areas strategically, you can manage returns efficiently without them taking a huge bite out of your ROI. 


Establish clear return policies and make the return process easy and quick for your customers. Offer attractive exchange programs as an alternative to refunds and refurbish the returned products for reselling.


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