How Retailers Can Reduce Return Expenses and Keep Customers Happy

Returns are occurring more often in the current omnichannel retail landscape. Customers are exercising their freedom to hit buy from anywhere at any time, leaving many retailers scrambling to address challenges associated with returns management. Having the right returns management technology solutions in place matters for two important reasons: customer returns can be costly for retail operations, and your returns process can be a make-or-break experience toward retaining customers and building customer loyalty.

Ensuring a seamless return experience for your customers is vital for repeat business, and the right unified returns management solutions can increase profits and improve customer satisfaction; the latter is critical in a social media-driven commerce and ecommerce world.

The Unified Commerce Benchmark for Specialty Retail—an evaluation of 124 global brands in 11 specialty retail segments covering 286 attributes which compiled research based on actual purchases, returns, and customer journeys across digital and physical channels—found that 41% of shoppers find the refund and returns process to be very time-consuming.

This research report highlights challenges many retailers are facing today from customer returns, including:

  • Refunds and exchange processes being too slow
  • Customers being unable to return retail orders online or unable to return an online order in-store
  • Customers having no access to an available printer
  • Customers experiencing difficulty in creating an online return or receiving a return label
  • No customer visibility provided throughout the return cycle
  • Manual processing of unexpected items for retailers
  • Customer service agents receiving too many “Where is my return?” calls

A cumbersome returns process that relies on disjointed or legacy systems wastes valuable time and money. To solve this problem, you must conduct returns in the most profitable manner possible while also allowing your customers to leave the reverse logistics process not only satisfied with the end result but having gone through the return on their end in an easy and stress-free way, building brand loyalty.

To accomplish this, you need the right returns management software ecosystem with unified solutions that connect all sales channels, customer touchpoints, and associate experiences. Solutions that sync backend supply chain processes with frontend customer-facing fulfillment. Further, with the right returns process implemented, you may not have to revert to charging customers for return shipping per return or chalking up returns as the sunk costs of doing business in today’s retail world.

Why Having the Right Returns Policy is Critical for Today’s Retailers

Retail returns management can be complex and burdensome for retailers, often seen as an unavoidable expense, which is why it is a historically underinvested endeavor. The recent challenges in returns management are not solely due to customers exercising the freedom to make impulse purchases and changing their minds after doing so more frequently—although that is a significant contributor.

Other factors also impacting retail returns include inefficient inventory forecasting and management, poor product design, mother nature, and even fraudulent returns. Returns are not showing any signs of slowing either, as the National Retail Federation reported that $743 billion in merchandise was returned in 2023. Now more than ever, customers need to leave the returns experience satisfied, and retailers need optimized returns management solutions.

Recent data from a Forrester consumer survey mentions, “U.S. consumers return a significant amount of retail merchandise each year, directly impacting retailers’ bottom lines. Some retailers manage increased returns with stricter return policies and additional fees, although Forrester’s consumer data reveals that this could have a potentially negative effect on their business.”

According to Forrester’s data, two-thirds of U.S. adults have returned an item in the store (and the option to return in the store is influential for online purchases) and 40% of U.S. adults prefer to purchase from brands or stores that offer generous return policies.

The right return policies can be paramount when building customer relationships. According to the survey, “When asked which return policy factors are most influential in deciding to shop at a specific retailer, U.S. online adults most often reported free return shipping, refund via original form of payment, and a convenient store location for in-store returns.”

For online purchases, “more than half of U.S. online adults said free return shipping is important; they also reported no restocking fees, a return period of at least 30 days, and an immediate refund when the retailer receives the item.”

Customers also want transparency throughout the returns process, as “36% of U.S. online adults said they would feel more positive and their willingness to shop with the retailer in the future would increase if they were provided a link or online access to track the shipment and status of a return.”

Today’s consumers have a plethora of options at their fingertips. If they do not find your returns policy reasonable, they will look to shop elsewhere. At the same time, there is a lack of consistency across retailers with return policies. Having the right returns management solutions in place can secure that return experience consistency for your brand while improving returns profitability. Manhattan can provide the tools you need to optimize returns management, resulting in increased profits and enhanced customer experiences.

How Manhattan Can Optimize Your Returns Experience and Solve Challenges Associated With Returns

Manhattan can equip your business with the right technology to drive shoppers back to the store, deliver exceptional customer experiences, and offer enhanced transparency throughout the entire returns process. Manhattan Active® Omni leverages advanced, industry-leading order management capabilities with unified omnichannel solutions to provide best-in-class post-purchase experiences for customers and associates, all while elevating your brand to differentiating heights in the modern omnichannel retail landscape.

Expediting Refunds Improves Customer Satisfaction

Manhattan Active Omni’s expedited returns and exchanges allow you to drastically reduce the time it takes to carry out the reverse logistics process. Manhattan’s “Carrier Scanned” status enables agents and customers to have increased visibility of the return’s life cycle by subscribing to that first scan the moment the carrier picks up the product. This allows you to refund or process exchange items sooner instead of waiting to have the product verified and received at the warehouse. By removing this dependency on carrier transit times and distribution center processing times, we can refund customers 3-5 days sooner, greatly improving the customer experience.

Our chargeback functionality allows you to mitigate instances where the customer returned the wrong item, returned the wrong quantity of items, or returned damaged items, and the system’s configuration indicates which payment types support chargebacks, holding those refunds that do not support chargebacks until the product is received. These capabilities not only build customer loyalty and satisfaction with faster returns but simultaneously remove the risk you take with trusting customers to initiate the return on their end. The faster and more accurately you can process a return, the quicker the returned items get placed back into available inventory circulation.

Self-Service Returns Increases Customer Loyalty and Retention

Manhattan Active® Customer Service & Engagement’s Digital Self-Service empowers customers to initiate returns and exchanges and receive order update notifications throughout the order lifecycle. Self-service returns enable box-less and printer-less returns and exchanges through branded, post-purchase experiences that simplify the entire process. Customers can initiate returns, select items, view the nearest store location for BORIS (buy online, return in-store), and receive a barcode to present to store associates—reducing the time it takes to process the transaction.

Customers can choose which option is most convenient for them—whether it be mail-in return, box-less and printer-less QR code return, or return to store. This seamless customer-initiated return process reduces administrative burdens, increases brand loyalty, and lowers call volumes with transparent customer tracking of refunds and exchanges digitally.

Omni Returns Reduces Shipping and Handling Costs and Drives Store Traffic

Customers get “buy anywhere, return anywhere” flexibility with BORIS and buy in-store, return online (BISRO) capabilities available out of the box. This saves you expenses on shipping and handling costs, drives shoppers to the store where associates can execute upsell/cross-sell opportunities or educate shoppers on sales/promotions, increases the number of resold returns, and converts returns into exchanges.

Return Routing Optimization Reduces Carbon Footprint and Increases Sell-Through Rate

When a customer ships items back for a return, Manhattan Active Omni automatically determines the optimal location for returns with sophisticated algorithms that evaluate factors such as assortment, depth of inventory, selling price, shipping and handling costs, geographic proximity, and more. Reduced resource expenditure means less carbon footprint produced in the reverse logistic process, which, in turn, means less shipping costs and fewer opportunities for Mother Nature to get in the way. It also helps you circumvent cross-border shipping, optimizes inventory placement, reduces refund wait times, and increases the sell-through rate of returns, all working to help you achieve your sustainability goals.

Automated Returns Resolution Reduces Manual Work

Associates can spend more time selling and less time processing returns with automated returns resolution capabilities that eliminate the need for associates to manually conduct a returns process that otherwise may consume time or provide room for error-prone returns processing. It automatically generates and sends a return shipping label to customers; compares expected return items with actual items received to systematically handle variances; and calculates return credit based on what the customer originally paid, including taxes, charges, and discounts, providing differentiating faster return payment for customers.  

To gain more insights about how you can provide exceptional customer experiences with Manhattan’s efficient return management optimization, click here.