What is a Returns Management System?

There is an old saying that the UK is a nation of shopkeepers. 

However, in an age defined by online shopping, ever-increasing competition and increasingly demanding consumers, there is a lot more to the role today than there might historically have been. 

Retailers and brands across multiple sectors are increasingly understanding the importance of having a robust Returns Management System (RMS) in place as part of their overall sales strategy. 

An RMS is a system designed to streamline, manage, and optimize the process of handling product returns, typically within retail or e-commerce environments. It helps businesses manage returned products efficiently, improving customer satisfaction while minimizing costs and losses.

This analysis will focus on why an RMS is becoming an increasingly “must-have” item for many sectors to control their entire returns management process, what an efficient RMS platform should incorporate and the benefits that it will achieve. 

What are the current challenges of the returns process?

Many retailers and brands handle returns manually, often using cumbersome and manual tools such as email, paper forms and spreadsheets which are simply not designed for complex product claims and returns. 

This approach can lead to long resolution times, errors, and a lack of visibility into the status of customer issues. Problems include increased administrative workload, slower processing times, and potential loss of customer trust due to inefficiencies in managing returns and claims.

It is worth focusing on the baby and nursery sector which provides a useful example as a sector which handles an especially high number of returns and claims. This segment attracts an especially emotional shopping experience, be it online or in-store, meaning buyers will often look for specific colours, sizes and styles for baby and nursery equipment. As a result, there is a real risk that the parent, family member or a friend will change their mind once the item arrives, and they see it in person. 

Goods may also get damaged in transit, despite the best efforts of all parts of the supply chain, which will also involve the item needing to be returned. 

The baby and nursery sector – along with multiple other industries – are increasingly investing in their customer returns management processes and returns management systems. A poor experience can easily cause just as much reputational damage as a poor front-end sales function, especially in today’s technology enabled age where it takes just seconds to post a poor online review which can reach millions of potential customers. 

What features should a Returns Management System have?

There are many aspects of a good RMS. These include:

1. Return Authorization and Tracking: Provides a way for customers or businesses to initiate return requests, often using return authorization numbers (RA numbers), and helps track returns in real time.
2. Inventory Management: Handles the intake, assessment, and reintegration of returned products back into inventory or directs them to be refurbished, resold, or recycled.
3. Quality Control: Inspects and assesses the condition of returned products to determine next steps, such as restocking, repairing, or disposing.
4. Customer Communication: Keeps customers informed about the status of their return, refund, or exchange, improving transparency and customer experience.
5. Data Collection and Analysis: Collects data on returns to analyse patterns, identify common issues, and make data-driven improvements to reduce future returns.
6. Integration with Other Systems: Often integrates with ERP, CRM, or inventory management systems to improve operational efficiency.
7. The ability to be white-labelled: An RMS should be able to seamlessly integrate within the website of a retailer or brand, so it looks to be a core part of the overall website rather than an obvious “bolt-on”. 

Which industries use a Returns Management System?

An RMS is used across various industries where product returns and reverse logistics are common:

1. Retail and E-commerce: The most prominent industry for RMS, where high return rates are common, especially for fashion, electronics, and home goods. An RMS allows retailers to handle large volumes of returns efficiently, keeping customers satisfied with a seamless return experience.
2. Furniture, Home Goods and DIY: Large, bulky items can be costly to return, so an RMS optimizes the process, sometimes arranging for repairs or recycling rather than returns to inventory, reducing costs. It is worth focusing here on a Claimlane client, Cult Furniture, which provides a useful reference point. Cult Furniture has reported significant improvements in their returns and claims processes. They’ve highlighted reduced processing times, reduced costs, enhanced customer satisfaction, better operational efficiency, and accurate data reporting as key benefits of using Claimlane.
3. Apparel and Fashion: High return rates are standard in fashion, especially with online purchases. An RMS helps manage the return and restocking process, enabling reselling and minimizing waste.
4. Consumer Electronics: Electronics have high return rates due to quality issues, warranty claims, or buyer’s remorse. An RMS helps track returned items, assess faults, and either refurbish, recycle, or resell products when possible.
5. Automotive: With a complex supply chain and high-value parts, the automotive industry uses RMS to handle returns of spare parts, defective products, or warranty claims, reducing waste and ensuring quality control.
6. Manufacturing: In manufacturing, RMS helps manage returns of defective parts or products. It’s also useful for handling returns of leased or rented equipment, enabling manufacturers to refurbish and reuse components.
7. Pharmaceuticals and Healthcare: Returns are common in this sector due to expired or unsold products. RMS helps ensure these returns are handled safely and compliantly, with special care for recalls and hazardous waste disposal.

Benefits of a Returns Management System.

Implementing an RMS provides several significant benefits for businesses, especially those with high return rates or complex logistics. Here are some of the main advantages:

1. Cost Savings: By streamlining the return process, an RMS can reduce the costs associated with handling, restocking, refurbishing, or disposing of returned items. It also minimizes labour costs by automating parts of the process.
2. Improved Customer Satisfaction: A well-managed return process leads to higher customer satisfaction, as customers have a clear, efficient path for returns or exchanges. This transparency helps build customer loyalty and trust.
3. Efficient Inventory Management: An RMS helps businesses quickly reintegrate returned items into inventory, restocking them for resale or repurposing them. This improves inventory turnover and reduces the risk of stockouts or overstocking.
4. Enhanced Quality Control: By tracking return reasons and product defects, an RMS can provide insights into recurring quality issues, helping manufacturers or suppliers address product flaws and improve overall quality.
5. Faster Return Processing: Automated workflows in an RMS reduce the time needed to process returns, allowing for faster refunds, exchanges, or repairs. This agility improves customer satisfaction and operational efficiency.
6. Data Insights and Analytics: An RMS collects data on return rates, reasons, and customer behaviour, which can be analysed to understand return trends. This helps in making informed decisions about product improvements, marketing, and inventory management.
7. Sustainability and Waste Reduction: By efficiently handling returns, an RMS can help reduce waste through recycling, refurbishing, or reselling items that may otherwise be discarded. This contributes to a company’s sustainability goals and reduces environmental impact.
8. Better Fraud Prevention: RMS tools can flag suspicious return patterns, such as high-return customers or inconsistent return reasons, helping prevent fraudulent returns.
9. Regulatory Compliance: In industries with strict regulations, like pharmaceuticals or food, an RMS helps ensure that returns, recalls, and disposals are handled in compliance with health and safety laws.
10. Improved Supplier and Partner Relationships: An RMS often provides data on return trends and quality issues that can be shared with suppliers or partners. This fosters collaboration and helps in setting realistic product quality and return standards.

Request a demo with Claimlane.

This brief analysis has outlined the need for an efficient RMS, especially within the pressured trading landscape of today, one which is expected to get even more intense in the coming years. 

It has also outlined the many benefits of investing in a returns management platform which can be summarised by making the returns and exchanges process faster, more accurate, and customer-friendly, which ultimately boosts profitability and brand reputation.

To request a demonstration of the Claimlane returns management solution, or simply to receive further information, feel free to reach out.

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