Returns and reverse logistics: protect your margin and keep customers loyal
Returns are a normal part of selling online, especially in categories such as fashion where customers cannot try products before buying. Handled well, a smooth return builds trust and brings customers back. Handled badly, returns eat into margin, tie up stock and cost you the customer. Reverse logistics is the process of getting products back, inspecting them and deciding what happens next.
This guide covers returns policy, the returns process, what to do with returned stock and how to reduce return rates.
Writing a clear returns policy
A good policy is easy to find and easy to understand. Include:
- The return window and when it starts.
- Condition requirements, such as unworn with tags.
- Who pays for return shipping.
- How refunds or exchanges are given and how long they take.
- Any items that cannot be returned, for example personalised or hygiene products.
In the UK, the Consumer Contracts Regulations generally give online shoppers 14 days to cancel after receiving goods and a further 14 days to send them back, with some exceptions. Your policy can be more generous than the legal minimum, but not less. Check current rules for each country you sell to.
The returns process
- Request: customers start a return through a self-service portal, giving a reason.
- Label: a prepaid label or QR code is issued, or customers are directed to a drop-off point.
- Receipt: the parcel is logged on arrival.
- Inspection: items are checked against the reason and the condition rules.
- Resolution: refund, exchange or store credit is issued promptly.
- Disposition: the item is restocked, refurbished, sold as seconds, recycled or written off.
Fast refunds are one of the biggest drivers of customer satisfaction after a return.
Encouraging exchanges and credit
Offering an instant exchange or store credit, sometimes with a small bonus, keeps revenue in the business. Make exchanges just as easy as refunds, and let customers choose the replacement while starting the return.
Getting value from returned stock
Inspect and restock sellable items quickly so they can be sold at full price again. Group items that need cleaning, repackaging or repair. For items that cannot be resold as new, consider outlet sales, marketplaces for used goods, liquidation partners or donation.
Reducing return rates
The best return is one that never happens. Use return reasons to find fixable problems:
- Improve size guides and fit notes for clothing and footwear.
- Use accurate photography and detailed descriptions; see Product Photography & Imaging.
- Show customer reviews that mention size and quality.
- Pack properly to prevent damage.
- Fix recurring quality issues with suppliers.
Metrics to track
Track return rate by product and category, top return reasons, time to refund, cost per return and the share of returns converted to exchanges or credit.
Returns connect operations, customer service and product decisions. See Customer Service & Support for handling return conversations and Inventory Management for getting returned stock back into circulation.
Part of: Operations & Fulfillment