What is Returns Management & How Does it Work? [A Complete Guide]

Do you know customers do not like to shop with no return guarantee on it?  

According to PRNewswire, 77% of shoppers will shop again with the same brand only because they had a positive return experience. Yes, that much returns management impacts your business. 

Therefore, every company has a return process, but it is challenging to manage with increasing logistics. Thus, we have curated this blog to help you to understand returns management. Let’s discuss how you can optimize the returns management process.

What is Returns Management?

Returns management is a retail and e-commerce process of managing returned products. In this process, customers place a request to return their products, and later, if accepted by the seller, the item is either collected in the warehouse, recycled, or restocked for further customers. 

During the process, the manufacturer checks below factors why the customers return the product: 

  • Any product damages
  • Different sizes, colors, or fit
  • Received defective products
  • Or if they are simply not happy with the product

What are controllable and uncontrollable returns? 

The returns are further classified into two parts, which are controllable and uncontrollable items.

Controllable returns

Products that have been returned due to the seller’s mistake and which can be potentially controlled during the production process are controllable returns. They are the products that could have been handled better in inventory management or the storage of goods.

Uncontrollable returns

Return products that are out of control are called uncontrollable returns. Those are the items that cannot be returned or recycled; basically, they are of no use. For example, customers have ordered it multiple times but did not find their perfect one, so they return it with the intention of not purchasing that product again.

Now, let’s look at how returns management functions with a step-by-step process. 

What Are the 4 Steps Returns Management Process?

The returns management process is also sometimes referred to as reverse logistics. It is different in several cases, but most businesses follow the below steps for the process:

Step 1: Customer initiates the return process

The returns process starts when the customer decides to give the product or items. The process could be for an online store or offline shop. When the customer initiates to return the product, they will be asked for the reason behind the return. 

For example, a customer has purchased shoes from an eCommerce business. While trying, a customer finds the shoe does not fit well and wants to return it. They will go to the website where they have purchased and select the returned option.

While doing it, they will ask for reasons, such as the wrong size, defective item, wrong color, and more. When the person chooses the wrong size, the business will ask whether they want to exchange or return it. 

Note: Every business has a different return and exchange policy. 

Step 2: Approval or disapproval of returned products

Now, once the company has received the request for a return, they will verify the product. The company will determine whether to approve or not for the further process. Once they will find it genuine and right, they will move ahead with the process. 

Later, the companies partnered with a third-party logistics (3PL) provider which will help them to handle the supply chain process and return the product to an authorized warehouse. 

Step 3: Company receives products 

The third-party logistics provider will pick up the package from the customer’s place and deliver it to the retail center, fulfillment place, or authorized warehouse. Once the company receives the product, they will physically check it.

Let’s retake the shoe example; if the customer has chosen the exchange option, they will start looking for another pair of shoes. The company will send the shoes they have selected in the return policy offer.

Every company has a return policy and most will return the package within 10 working days. If anyone has selected the return, the company will go through that.

Step 4: Return requests 

Now, it is the company’s call on what to do with returned products. Few companies only give full money refund options, whereas the majority of them allow you to have a credit score. Moreover, a company may also decide whether to recycle, reuse, restock, repair, donate, or quarantine it. 

If the product is in a proper condition, it will be restocked on the warehouse shelves, added to the inventory count, and sold to a future customer.

5 Best Practices of Return and Exchange Policy

Here are 5 best practices that you need to provide adequate customer service and sufficient cost savings.

1. Gather data to improve services 

Try to find loopholes; understand why the customers are returning products. When they return products, get feedback from them. Moreover, you can conduct a survey that will help you to get an insight into the reason.

Ask your customer service team to follow up with customers who often return their products. While tracking information, you will find solutions to improve your service and build customer loyalty. 

2. Create a transparent refund policy

Returning policy is significant for businesses and should be uncomplicated and well-informed. It is also essential because a transparent refund policy will keep you and your customers on the same page. 

Moreover, customers will be clear regarding the exchange, the return deadlines, and the company’s return terms and conditions. Publish it on your website and make it easier for customers. 

Additionally, to make customer service better, provide a chatbox if customers have any queries regarding the policy. 

3. Adequate inventory management 

To lower the return packages, improve your inventory management system. Many times, packages are damaged during the storage of the item, so it is crucial to keep inventory management proper. 

Streamline the process, so there has been no issue during delivery. Moreover, keep it transparent that you do not have to witness lost items. Also, returned or lost items may impact the company’s financial plan. 

4. Optimize the returns process

To minimize returns costs, businesses require to optimize the returns process. The method is different in every company; some businesses offer free returns to increase customer satisfaction. On the other hand, few useful tools offer better customer service. 

Following is the list of tools and processes to optimize the returns process:

  • Return Merchandise Authorization (RMA)- The RMA numbers help to identify incoming returns easily. 
  • Wearable technology- Adopt an advanced technology such as a barcode or scanner to track return or replacement products. 
  • Inventory Management system- It helps to ensure quality control and increase the productivity of the operations. Also, it will help to manage records of returned data. 

As a result, optimizing the returns process will give you benefits such as happier customers, order fulfillment, and cost-effectiveness.

5. Develop customer-first approach

To boost customer satisfaction, you need to understand their needs first. What issues they are dealing with, are they having quality assurance, do they like company service? Managing returns is easy to tackle when you know what the customer wants.

Let’s take an example of a famous USA company- American Eagle’s return policy: 

American Eagle- a USA-based clothing company that sells clothes locally and internationally. If you check their return and exchange policy, you will notice how well-informed and clear it is. 

They have classified policy into two sections: in-store and mail order. They have provided an email address. contact number, and a live chat box to solve any doubt regarding the policy or anything related to shopping.

Also, American Eagle mentioned a few offers, such as a full refund, chargeback on a credit card, and issuing an AE gift card. Moreover, the website has mentioned that if the customer has been charged more than the advertised price, then they will have to refund the difference.

However, the company has not forgotten the most essential part- proof of purchase. Items can only be exchanged or returned when there is proof that they have purchased that item and there is no defect in it.

​​Returns Management Vs. Reverse Logistics: What’s the Difference?

Reverse logistics is the process of products being returned from customers to suppliers or manufacturers. In simpler words, it is the opposite process of the traditional process. Reverse logistics is the primary part of returns management.

Both reverse logistics and returns management indicates the return process but reverse logistics is limited to the returned items only. In returns management, companies can take preventative measures, optimize the return process, and choose whether to recycle or reuse the product.

Optimize Routes for Your Returns Process Using Upper

When the product is returned to the customer, you will require efficient delivery that sent packages to the customers on time. Upper Route Planner helps you to improve your returns management process by allowing you to plan optimized routes. 

Since eCommerce businesses like yours have multiple orders to return or deliver for the first time, Upper helps you schedule unlimited routes for numerous orders. Moreover, you do not have to spend much time writing addresses manually, you can directly import multiple addresses.

Whether you have 100 or more delivery stops, you can dispatch drives in just a single click. Hence, from planning delivery routes to capturing proof of delivery; Upper ensures your talisman delivers the return product at the right location in a minimum time.

Upgrade to Upper for Best Routes

Simplify your process and boost your productivity with a perfectly planned routes. Let Upper sets you free from calculating routes manually.


You can handle customer returns by keeping track of all records of returns, analyzing the data, and following up with customers in return management.

No, the returns management process usually takes 10 days to complete the process. However, it depends on the package and shipping address.

Returns management can help you identify to recycle, restock, or resell items. It is important because it helps to improve the profit margin, fulfill customer requests, and boost the brand’s reputation for being a social and environmental responsibility.

The three pillars that helps you understand the flow of returned products and their stocks are stated below

  • Speed
  • Visibility
  • Control


Nowadays, every business has started adopting returns management in its purchase policy. To be among them, the above points will help you get the returns management process started. However, to make your operations more effortless, try Upper Route Planner. 

The route planner comes with multiple routing features like a plan and optimizing routes for your returns management business in a few clicks. It aims to boost your business productivity and offers a better user experience. Sign up for a 7-day FREE trial to explore its benefits.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel is the founder and CEO of Upper Route Planner. A subject matter expert in building simple solutions for day-to-day problems, Rakesh has been involved in technology for 30+ years. Looking to help delivery businesses eliminate on-field delivery challenges, Rakesh started Upper Route Planner with the ultimate goal of simplistic operations in mind.