Are Labor Shortages Straining Your E-Commerce Business? Strengthen Operations with an Automated Returns Management System

These days, returns have become a non-negotiable standard part of the e-commerce experience for B2C and B2B customers alike and are a key factor for vendors looking to maintain customer satisfaction and increase loyalty. While they can be costly and laborious, successful returns processes can showcase customer service, achieve long-term consumer loyalty, and provide invaluable insights into behaviors and trends. 

The Problem

According to the Bureau of Labor Statistics, 4.4 million Americans quit their jobs in February 2022, with more than 11.3 million job openings that need to be filled. These labor shortages put a strain on companies still leveraging outdated manual returns processes, all while e-commerce sales boomed and product returns totaled more than 16.6% of U.S. retail sales. Without the necessary manpower, costs will inevitably rise, customer satisfaction will decrease, and even cases of fraudulent returns will increase. 

Recent data from the National Retail Federation show that 10.6% of online returns are fraudulent. The study also indicates that, at an average retail salary of $35,800 per year, return fraud costs American workers the equivalent of more than two million jobs and accounts for $5 billion in lost sales tax revenue in the United States.

Automation to Become the New Standard

Fully automated returns management solutions (RMS) are the key to successful and seamless returns; they provide data that tracks user-specific return patterns and help businesses understand consumer behavior. These patterns help determine which returns are caused by user error and which are issues that need to be corrected on the producer’s side.

Based on the patterns, they can distinguish these reasons from each other to determine which causes can be corrected at their end (sizing chart, more detailed descriptions, color representations, etc.) and which ones might require policy creation.

Once this actionable data is collected and stored in a centralized database, companies have a 360-degree understanding of the “why” behind these returns and are more empowered to make better, more informed business decisions. Some of the biggest challenges facing many companies include high return processing costs, large order volumes, and tight turnarounds.

Sometimes, it costs a company more money to process a return than to offer a refund, allow the customer to keep their product and send a replacement. These insights also reveal the costs of receiving, handling, repairing, replacing, and shipping: valuable information that can be used to identify unnecessarily high operating costs and specific areas that need extra support.   

In addition to understanding return patterns, these solutions conduct fraud checks and identify repeat offenders based on observed habits. Instead of changing the entire returns policy to prevent certain individuals from abusing the system (and potentially upsetting high-value customers), RMS analytics can identify and block these individuals—minimizing fraud and keeping loyal customers happy. 

Some businesses are even beginning to integrate AI and ML into their RMS, adding a deeper level of intelligence and data accumulation to the returns process. While these enhancements may be more of a futuristic goal for most, the solutions currently provided by automated returns management systems streamline logistics, increase productivity, and carve a pathway for further tech innovation. 

Implementing an RMS can immediately ease the stress of labor shortages as they provide a deeper look into the returns process and reduce the amount of necessary manual work. These innovative, advanced, and smart solutions can assist current employees, helping them work faster and more efficiently, maximizing time and logistics.

Gaurav Saran is CEO of ReverseLogix, a provider of end-to-end, centralized, and integrated returns management systems built for retail, e-commerce, manufacturing, and 3PL organizations.