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How Retailers Are Using Technology to Transform the Product Returns Process into a Customer-Centric Advantage As return rates escalate, the implementation of smart returns technology emerges as a vital strategy, offering a seamless, eco-friendly solution that enhances customer satisfaction while reducing costs and fostering a greener retail landscape.

By Gaurav Saran Edited by Chelsea Brown

Key Takeaways

  • How retailers are transforming the traditionally cumbersome returns process into a streamlined, customer-friendly experience that boosts profitability and promotes environmental sustainability.

Opinions expressed by Entrepreneur contributors are their own.

Imagine if 10-30% of all the items you gifted this holiday season came back to you because the recipient didn't want them. What would you do? Recycle them? Regift them? Trash them?

Retailers face this 365 days a year. In-store purchases have an average return rate of 8-10%, while ecommerce averages can reach 30% or more. If a retailer struggles to manage returns processing efficiently, high volumes can drain money and resources, as well as burden the environment with extra packaging waste and transportation emissions.

Returns management doesn't have to be expensive, difficult or wasteful. Supply chain technology has significantly matured to address reverse logistics processes. Rather than returns driven by manual tasks, today's tech-driven returns bring big gains in efficiency, profitability and customer satisfaction.

Related: The Secret to Long-Term Customer Loyalty Is an Easy Return Policy

Returns conundrum: A burden turned opportunity

When a return is made, it's usually seen as a negative experience for both the customer and the retailer. But technology can change this perception by making returns an opportunity to re-engage and delight the buyer.

Customers expect an online customer portal for initiating returns, but intelligent returns technology can take it a step further: It can automatically refund the customer if certain conditions are met or even incentivize them to make the return at the nearest store rather than ship it.

At the warehouse, returns technology automates tasks and helps the team process the return faster, which gets the customer their refund, credit or exchange sooner. Tech-driven returns are a win-win for all parties.

The impact of inefficient returns

A ReverseLogix study of eCommerce retailers found that 80% of respondents said the cost of managing returns is "significant to severe." Returns also have a staggering impact on the planet: In the U.S., return shipping transportation creates the equivalent emissions of +3 million cars annually, according to Gartner.

Return rates are growing faster than revenue rates for 91% of retailers, as reported by Appriss Retail. We're at the point where returns are either a threat to the bottom line and customer loyalty or a positive differentiator that keeps costs low and buyer happiness high. Technology will decide the difference.

Related: 4 Things to Know About Ecommerce Returns to Minimize Lost Profits and Keep Customers Happy

Rise of tech-driven returns

Retailers are already using technology to optimize warehousing, order management, transportation and every other part of the supply chain. Using tech to drive returns management, however, has mostly been overlooked. But with skyrocketing return volumes and customer demands for fast and easy (and free!) returns, new technology has burst onto the scene to address these specific issues.

When a product arrives at the store or warehouse, the team member scans in the return. A product image appears on the screen with important identifying details like the serial number, which is important for verifying it isn't a fraudulent return.

Depending on the item's condition, the software auto-routes the product to the store location with the highest predicted resale value. If it's gently used or damaged, it can be sent to a re-commerce site to recoup some of the value. The customer is automatically notified about the status of their return, eliminating the need for calls and emails about their refund, credit or exchange.

A fast and frictionless returns process is a game-changer for a retailer's operations and for turning a frustrating customer experience into one that builds loyalty.

Sustainable returns: A win-win for retailers and the environment

Returns technology addresses the huge environmental impact of returns. If a customer lives within five miles of a store, for instance, they can be incentivized to return the item there rather than through the mail and learn how this saves emissions and packaging. Returns technology can direct a damaged item to be recycled rather than landfilled or a gently used item to go to a secondhand re-commerce site.

Practical tips for retailers

Adopting returns technology can be challenging because returns don't usually fall under a single leader or pyramid. Instead, it's a patchwork of facility teams, supply chain leaders and customer experience leaders. So, if you're considering a returns technology project, form a team or name an individual to champion it. Ideally, organizations with high return volumes would create a Chief Returns Officer role to head this essential part of the supply chain.

Work with your returns technology partner to identify your business goals. Do you want to create an easier process for customers? Do you need more automation because of workforce constraints? Do you need to support corporate sustainability goals? Identifying goals will help you choose the right returns technology and ensure it has features that address your needs.

Understand your existing tech stack: What supply chain systems do you currently have? How easily can returns technology integrate with them?

Returns technology has a customer-centric advantage but also one that team members will adopt. It must be easy to train on and quick to learn, ultimately making their work faster and easier.

Related: 5 Easy Strategies to Prevent Costly Retail Returns

The future of tech-driven returns

As the challenges of returns management mount, the features and capabilities of technology are accelerating to anticipate what's next. AI is playing a big role in this.

Virtual dressing rooms help consumers make informed buying decisions so they can avoid buying many sizes and colors (only to return most of their orders). AI-powered return policies can be flexible based on the customer profile, such as giving high-value customers more return options or a more lenient returns policy.

For more sustainable returns, AI can compare a return's condition against geography, seasonality and other factors to determine the best location for routing the return and capturing the highest resale value.

The future of tech-driven returns is AI, and AI is happening now. Retailers that use returns technology are capitalizing on faster returns processing, lower costs, happier team members and customers who are delighted at every phase.

Gaurav Saran

Entrepreneur Leadership Network® Contributor

CEO of ReverseLogix

In 2014, Gaurav Saran founded ReverseLogix, a pioneering platform revolutionizing returns management in the supply chain industry, notably reducing waste and emissions. A former Microsoft executive, he is celebrated as a "Pro to Know" and holds a BS and MBA from California State University, Hayward.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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