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Efficient Returns Management in Online Commerce and Logistics

The optimal shipping and returns management in e-commerce would be the one that prevents returns from arising in the first place. However, this is an unattainable ideal in online commerce: Some products simply do not meet customers' expectations once they are able to feel and see them, and shoes might not fit comfortably. Nevertheless, preventive returns management can lower the return rate. This article helps you learn more about the characteristics of a good returns management.

Returns Management: Definition

Returns management in logistics and e-commerce involves the planning and control of returns. Thus, returns management is the central task of reverse logistics. Reverse specifically means organizing the flow of goods, information, and potentially finances in the opposite direction of the supply chain.

Since active communication takes place between shipment senders and customers in returns management, it is also a crucial aspect of customer management and customer service. Hence, processes in returns management must be customer-oriented. In online commerce, with its challenging high return rates, returns management is pivotal for customer satisfaction and loyalty.

The goals of effective and efficient returns management are:

  • Promoting customer satisfaction, customer loyalty, and likelihood of recommendations
  • Reducing costs in handling returns
  • Avoiding costs by preventing returns altogether

Strategies to avoid returns beforehand and the handling of actual returns are fundamentally different processes. This is why returns management distinguishes between preventive and reactive returns management.

Reactive Returns Management

The reactive aspect encompasses all returns management processes for efficient handling of returned goods. The goal of reactive returns management is to satisfy customers, reuse goods, and ideally reintegrate them into the goods cycle.

Reactive Returns Management: Step-by-Step Tasks

EU regulations obligate every retailer – online and brick-and-mortar – to accept returns within two weeks without specifying reasons. In e-commerce, the processing of returns includes:

  • Providing a return label prior to shipping
  • Processing the incoming goods, including quality checks and documentation Responsibility must be determined for damages (manufacturer, logistics provider, customer)
  • Refurbishing goods for resale (A- or B-grade) through repackaging or alternative utilization methods (donations, recycling, upcycling)
  • Customer communication and customer service: refunds, replacements, exchanges, vouchers

Preventive Returns Management

Preventive returns management encompasses all measures to avoid returns. Preventive management occurs before customer orders and during processing and delivery.

Returns in online commerce lead to increased costs and negative environmental impacts: Additional transport routes are generated through returns, and the worst-case scenario is that returned items may have to be discarded. This generates additional CO2 emissions and consumes resources. Therefore, efficient preventive returns management is an economic and ecological win-win factor.

Lowering Return Rate with Preventive Returns Management

The key performance indicator (KPI) in returns management is the return rate. The lower it is, the more the returns management is able to contribute to the company’s success.

Retailers have no control over products with production defects, mistaken orders, or a customer’s change of mind. However, return reasons like discrepancies in product color compared to online presentation or incompatibility of technical devices can be eliminated by implementing a high-quality preventive returns management. This includes an optimized and clear presentation and communication for offers on retailer websites.

Essential aspects include:

  • Comprehensive product information with descriptive details, accurate images, or clear size charts
  • Individual guidance (personal, informative FAQs, or through AI tools)
  • Avoidance of misleading or overly promising advertising
  • Effective integration of customer reviews or product testing

Returns Management and Logistics

Transport logistics also significantly contribute to reduced returns by providing high-quality services.

Transport Safety: Fewer Returns Thanks to Fewer Transport Damages

Logisticians must ensure transport safety at all times to prevent damage to the cargo in the vehicle and ensure that end customers receive their orders intact. Transport safety includes careful cargo planning⁠⁠—fragile and very heavy goods are not a suitable combination on a shared loading area. Cargo securing, to prevent tipping or shifting, is another step. Particularly with valuable goods, theft prevention measures are essential.

Route planning also enhances safety. Talking about valuable freight: Even with optimal theft protection, unattended rest stops should be avoided. When transporting fragile goods, logisticians should steer clear of routes with road damage, such as due to construction work. Driver training and comprehensive security concepts offer additional safety.

On-Time Delivery: Fewer Returns Thanks to Fewer Dissatisfied Customers

Today's online customers often have high demands regarding delivery times. A slight delay can lead to the customer ordering elsewhere, rendering the needed product unnecessary—an avoidable reason for returns.

During times of labor shortages in logistics centers and a shortage of truck drivers, punctual delivery can become a challenge for transport logisticians. Nevertheless, they should do everything in their power—through intelligent planning of needs, cargo, and routes—to ensure that delivery deadlines are met. Good communication and integration between sender, transport logistics, and recipient also contribute to ensuring goods reach their destination on time.

Conclusion

Reactive returns management requires effective coordination of individual process steps to keep costs low for companies and customer satisfaction high. Targeted measures within the framework of preventive returns management may not prevent returns entirely, but they can significantly reduce the return rate. As an experienced logistics service provider, DHL Freight contributes to minimizing the overall number of returns through high service quality and strong collaboration. We strive to continuously improve this effort—ensuring shipments reach their destination securely, swiftly, and sustainably.

Frequently Asked Questions

  • What is returns management?
    Returns management involves the planning and control of returns. It organizes the flow of goods, information, and finances within the process of returning goods. Returns management is a central task of reverse logistics. As part of customer management, returns management is crucial for customer satisfaction and loyalty.
  • What is reactive returns management?
    Reactive returns management includes all processes for efficient handling of returns. Its task is to satisfy customers and ideally reintegrate goods into the goods cycle.
  • What is preventive returns management?
    Preventive returns management encompasses all measures to avoid returns. Returns lead to increased costs and additional environmental impact. Effective preventive returns management lowers the return rate, for example through good product information and customer communication.
  • How does logistics contribute to optimizing returns management?
    Experienced transport logistics service providers contribute to reducing the return rate by providing good service quality, particularly in transport safety and on-time delivery—resulting in fewer reasons for complaints and returns.

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26. February 2016 / Reading time: ~ 0 Min.