April 21, 2021

How to process ecommerce returns

This article is an excerpt from our guide for ecommerce retailers: eCommerce Returns 101. The guide goes through every stage of the return process from policy to process, as well as covering customer experience and return rate reduction. Download your copy for free here.

Processing returns can be a complicated and costly operation, and the challenges of capturing data and efficiently getting items back on sale or into the right waste process are numerous. To get returns processing right, retailers need to map out a clear and positive direction of travel for the customer that is also fast and cost efficient to process.

Digital or physical?

Customers are largely familiar with the use of digital labels like QR codes or barcodes. That means you can reasonably expect them to be able to use those tools in a digital returns process – or leave them to just slap a label onto their parcel. By giving customers the digital option, you’re getting data that tells you why the return is being made in a little bit more detail. In turn, that means you can process it accordingly – why pay express rates to receive a faulty item, for example?

It means you also know exactly when to expect the item back and how quickly it can be ready for re-sale. On the customers’ side, booking their return with a digital platform means they have a clear understanding of when they’ll receive their refund and it allows your customer communications to truly tie into their habits. Every digital interaction you have with your customers adds another new detail to their marketing profile – even returns. Perhaps especially returns!

Keeping returns under lock and key?

Some believe that having to contact customer support for a returns authorisation is an effective way to limit return rates, but we would beg to differ. Our research revealed that 36% of customers specifically identified this as a frustration that would lead them to reconsider purchasing from the brand in future. Can you afford to lose that much business?

By setting out the steps in a digital journey, retailers can avoid the need for customers to call customer support for authorisation as well as keep their returns policy in their control. Out-of-policy items won’t even be selectable to return – no customer support contact and authorisation denial required.  Further down the line, the customer won’t need to make more calls to find out the status of refunds – the information is clearly surfaced in the digital returns portal. One thing is certain – the customer support team will absolutely thank you, as they can then get down to the important business of looking after customers, answering their queries and making sales – all the good stuff. Instead, returns will enter into a really efficient automated process based on what you’ve already set out in your returns policy.

Maybe you’ve gone for the Amazon approach and decided that customers can have free return shipping for faulty or late arriving goods only. You may not like the idea of footing the cost of customers changing their mind, or because the item is unsuitable. Like we’ve said before, as long as you’re clear at every stage and the numbers stack up, the decision is ultimately yours.

“Every digital interaction you have with your customers adds another new detail to their marketing profile – even returns.”

The long and winding road (to returns)

Let’s talk about shipping, where unexpected detours and bumps in the road can happen. And if there are a few of you deciding together how this is going to work for your ecommerce business, you may disagree. But never fear, we are here to give you the pros and cons of all the ways and means that your customers might get a return back to you. Ready?

Step 1: Preparing a return

“Here’s our address… good luck!”You don’t have to do anything. Just agree it’s ok to send the return and the customer does the rest.The customer won’t be happy to pay return shipping for late/faulty goods, and you might end up with returns sent without authorisation.
Pre-paid label provided in the packagingThe process is entirely in the hands of the customer with zero effort on your part. If the return is chargeable, you just deduct it from the refund.When the process is entirely in the hands of the customer, you don’t know if the goods are coming back or not. Plus, you’re paying the cost of printing labels for every sale, whether it’s returned or not.
Online booking with a labelThe return is authorised online, so you have visibility of what’s coming back and why. You can ‘habit gather’ to understand your customer better and automate the shipping label to match the reason for return.The customer may not have the facilities to print and this extra hassle can discourage them from shopping with you again. You will likely need to spend some time sorting out your digital process and tailoring it to your needs.
Online booking with a codeAll the benefits of above – speed, visibility, the ability to data capture, but without the need to print a label the customer experience is improved and you’re likely to get the goods back faster.Again, you may need to make an initial investment of time to take your returns digital. 

You can see that as we go down the list, the customer does less, but you, the retailer, get more. Now let’s take a look at what the customer does once they’ve got the package re-wrapped and ready to go.

Step 2: Handing it over

Mail itPost offices are abundant so it’s pretty straightforward for a customer to take it there.Unless you pay extra for tracking, once the item is with the postal service, everything goes dark until it arrives at your warehouse.
Arrange a collection  This is just so incredibly convenient for the customer. Especially for heavy or unwieldy items. Expensive/luxury items also benefit from this level of attention and the peace of mind it brings.This is likely to cost you more – unless you’re passing the cost on to the customer, which may upset them.
Use a drop-off point (locker bank, parcel shop or convenience store)This is a great option for round-the-clock convenience that fits in with customer’s lives. It’s also a really ‘green’ way of operating returns, as many parcels are collected and shipped simultaneously.Drop-off just isn’t a viable option for large/bulky/heavy items. Reliant upon the availability of local drop-off points.
Return in-storeIf you have outlets, this is the dream – customers can potentially make exchanges and often browse to buy more when they come to make a return. Returns are dealt with exclusively by you and there are no nasty surprises.Not an option for purely online retailers. Staff require training and systems must be put in place to process returns.

In a nutshell, it’s easy to overlook the hidden of costs of leaving returns in the hands of the customer. Prepaid labels seem like the simplest solution, but over the long-term they stack up to be surprisingly costly. The key takeaway here is that customers want to make returns without hassle, so it’s important to offer them both simplicity and plenty of options. Focusing on a customer journey that is essentially a minute or two to generate a return code, followed by multiple options for locations to drop off their item (or arranging collection for large or luxury items) offers you:

  • Control over and visibility of your shipping costs
  • A big long-term saving in printing costs
  • Swifter returns, which means faster resale
  • Repeat business from happy and loyal customers
  • A great reputation because you’re easy to shop with

“When your customer books a digital return, you might discover some difficult but helpful truths about your website that may reduce your overall returns rate.”

Welcome to the warehouse

This bit is kind of dependent on how big your operation is, but we’re going to assume that you will be working with a sizeable warehouse that ships your products and receives returns. As time goes on, you may need to scale this up and have your returns ship to an entirely different and dedicated location. However, the principles are largely the same, even if the square metres aren’t.


When goods come back to the warehouse, they need to be immediately separated into ‘re-saleable’, ‘broken’ and ‘faulty’, so you have immediate access to products that can be resold.


By integrating your digital returns into your internal systems, you are already aware of what’s coming back to your warehouse, so you’ll be able to take receipt of re-saleable items, quickly separate them from the others, and repackage them for the next shipping. Hopefully the item will then head back out to the next shopper quickly and seamlessly. The remaining items then receive their own treatment, as set out below.


As goods come in, your inventory management system needs to be updated, either by manual data entry or code scanning. That lets your system know what’s in stock and what condition all of your stock is in. This can also be used to trigger the process of refunding your customer.

The other thing that might need to be updated is your website. With a paper slip and a sticky label, it’s really hard to immediately identify issues of presentation, customer perception, fit, colour and more. When your customer books a digital return, they can give a little more detail about their reasons and you might discover some difficult but helpful truths about your site that may reduce your overall returns rate.


Irreparably damaged goods need to be addressed in the least wasteful and most sustainable way possible. As a responsible retailer, landfill or incineration are the last resorts for products that can demonstrably be recycled. Perhaps you have an arrangement with a fabric recycling organisation? Or can partner with a business that can introduce your products into the circular economy? Either way, you’ll be looking to ship these out quickly and cheaply.


The fact your items have been sent via a digital returns portal also means you can also quickly spot what hasn’t arrived – meaning you can investigate and make claims for any losses.

Digital returns make it easier to look into problems with faulty goods too, as it can flag recurring issues. A consistent problem may mean that this product requires removing from inventory. If it’s key to your ranges, then you can start to understand how to change its design, if you own the product IP, or work with the manufacturer to fix it.

Stay connected

You’ll notice that there’s a lot of emphasis here on the information that your customer can share with you, that can ultimately improve the way you operate. This is no accident. Staying connected with the customer, learning from them and making sure they are well-informed are absolutely key to maintaining their loyalty. Let’s move on to the communications around returns.

Download the full copy of eCommerce Returns 101 here.

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