Competitive advantage returns management

Those who document their processes correctly can gain a decisive advantage over their competitors. I will discuss the topic of business process management in more detail here. I want to start by taking a look at returns management as part of the business processes in online retailing. This topic is a good place to start, because it can be expected to have a relatively high effect with manageable additional costs for the company.

Returns management is located between customer management and logistics and deals with the planning, management and control of returns. It is particularly important in the mail order business (whether offline or online) where there are traditionally many returns. For this reason, the goal here must be to keep the entire process as efficient, cost-effective and customer-oriented as possible and to ensure that as few goods as possible are returned as early as the sales stage. The bottom line is that customer satisfaction, customer loyalty and positive recommendation in the form of ratings can thus be ensured.

Reasons for return delivery

Controlling and analysis of returns is necessary in order to take the right strategic measures. Essentially, the following points can be responsible for a return delivery:

  • Material defects and quality defects
  • The customer did not intend the purchase and regrets it.
  • The customer no longer likes the product or it has not met his expectations.
  • The customer has found a comparable and cheaper item on the Internet or wants to use his money for something else.
  • The customer has not sufficiently informed himself about the features and functionality of the product before purchase
  • The customer just wants to try the product and has ordered several different variations.
  • The product poses a danger to the customer or others, or has been prohibited by law and possession cannot be concealed.
  • Legal ties are to be terminated.

There are certainly other reasons for a return. Here, a simple survey could be carried out in advance in the context of return coupons.

Quotients that must be monitored for returns management

Parallel to determining the reasons for returns, the introduction of controlling and the corresponding KPI values can begin. There are three ratios that should be monitored here:

  • Alpha return rate (number of returned packages / number of packages shipped) x 100
  • Beta return rate (number of returned items / number of shipped items) x 100
  • Gamma return rate (value of returned items / value of shipped items) x 100

The picture card method

In the third step, the individual processes in the returns management business process are identified and documented using the picture card method. A detailed description of this method can be found on the website of the HWK Bremen via with the keywords “document business processes correctly”.

This gives online retailers all the tools they need to develop their returns management strategy. Here, the strategies can be divided into two categories of preventive and reactive returns management.

Preventive and reactive returns management

Preventive returns management encompasses all measures that serve to avoid returns before or after the purchase. For example, this can be

  • be meaningful descriptions and further information offers, which are a better advice for the customer,
  • the avoidance of false statements in advertising,
  • virtual samples or representation if possible,
  • or genuine customer reviews and test reports from independent institutions.

Relative returns management includes all measures for efficient and effective processes and the return to the goods cycle. These include:

  • Return forms and services
  • Optimizations of logistics and transport processes and quality control
  • Adaptations in, respectively introduction of a customer management system and merchandise management system with warehouse management.
  • Quality control for return deliveries

Criticism and conclusion

Every year, environmental organizations criticize online retailing during the Christmas season. At Zalando, up to every second package is returned. Too high a rate of returns always means an unnecessary financial burden on the bottom line, environmental pollution and increased staff time. Your employees have to work more or under harsher conditions, which has a negative impact on the climate among employees. They may have to keep their employees’ wages at a low level or perhaps even cut them, which also has an impact on the company’s image.

Many measures can be implemented with the existing infrastructure in the company. This does not necessarily require the use of expensive software or drones for the last mile to the customer. External management consultants do not necessarily have to be commissioned with the documentation of business processes if the will and the understanding of the necessity is present among all parties involved. Please feel free to leave questions and comments in the comments section. We will gladly take up the suggestions and continue them here.

If you would like to receive further advice on the subject of returns management, send us an an inquiryand we will get back to you.

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