4 strategies to optimize your returns processes: An expert guide from Trivial Co-Founder James Marks

Ecommerce brands once rushed to follow in Amazon’s footsteps, hoping to replicate its success among early online shoppers by adopting the same hyper-fast, customer-focused shipping model. But under the pressure of recent shifts in economic conditions and investor expectations, many scaling brands have started to realize that this approach leads to a lot of unprocessed returns — and a lot of burned cash. Now, these brands are putting fast shipping aside in favor of a new business model: immediate profitability by way of efficient returns management.

In fact, a brand’s ability to efficiently restock returned inventory is now a deciding factor in whether it thrives or falters. By ignoring returns, you essentially abandon an untapped profit center.

We spoke with ecommerce expert and co-founder of Trivial, James Marks, on why you can’t afford to sleep on returns and what a best-in-class returns process looks like.

1. Get resellable merchandise back on the shelf ASAP

Brands determined to offer their customers the very fastest shipping often find themselves with more returns than they can process. As a result, some are content to let millions of dollars worth of unprocessed returns simply languish in warehouses. James recommends setting a different priority: Get your returned items back in stock.

The faster you restock and resell returned items, the faster you re-capture their value. By limiting the amount of time an item spends in circulation, you reduce the risk of stockouts — which is especially essential if you’re offering seasonal items that can only be resold at full price for a short window.

Slow turnover rates and stockouts frustrate customers, but when you can get your inventory back up for sale as soon as possible, customers can find in-demand products faster. This gives you more happy shoppers and improves overall customer satisfaction.

“Inventory availability and customer satisfaction never go out of style,” James says. “The businesses that look at how those each impact cash flow and profitability will be the ones that still exist in 10 years.”

Take it from the footwear brand Clove. By adopting a new returns processing software that included a detailed SOP for grading returns, its 3PL partner could process returns more quickly and accurately. As a result, Clove increased its restocks by 500% while saving $10,000 a month.

2. Simplify warehouse operations with digital SOPs

Clear and concise SOPs lay the foundation for efficient returns. But, brands don’t always realize this — often providing 3PL operators with unwieldy stacks of documentation and no way to efficiently navigate them.

James’s solution? Digitizing your SOPs. Not only will this help operators adhere to brand guidelines, but it will equip them to accurately process every return, including the ones that require special attention. For instance, a perfectly usable ceramic pan with a few scratches on it might be initially earmarked for donation, but clear enough grading criteria could help an operator quickly and confidently determine if it qualifies for the secondhand market. By centralizing your processes in a single, user-friendly interface, digitized SOPs simplify your workers’ day-to-day and optimize returns processing. 

James says your SOPs should be intuitive enough that they become second nature to your employees. His gold standard is an SOP tool that’s accessible in multiple languages and only takes a matter of minutes to learn.

“Using an SOP shouldn’t feel like a chore,” James says. “It should make employees’ lives simpler by mapping complex details onto clear, step-by-step instructions.”

For instance, when the 3PL Ocean X needed a better way to serve their full range of brand partners, they adopted a new returns processing software (RPS) that offered digitized SOPs. As a result, Ocean X cut employee training times by 98%. Now, it only takes new employees 30 minutes to learn how to precisely evaluate any SKU — whether it’s a product like makeup that must be destroyed or a leather boot with restock potential.

3. Emphasize data in your decision-making

With your SOPs digitized, you can easily collect all your returns data in the same centralized system, which will open up a wealth of actionable insights you can use to improve operations and maximize revenue. James says that without a returns management platform, trends and opportunities in your returns process can easily go unnoticed.

Finding the returns with the greatest gains

James cautions against falling into what he calls a “first in, first out” returns cycle. Instead of processing returns in the order that they arrive, you should prioritize the ones that promise to drive the biggest revenue gains.

“Using data to cherry-pick your highest priority returns is the future,” James says. “It lets you leverage inventory at a much higher rate, getting in-demand items back in circulation and allowing you to deprioritize dead stock.”

That’s why he recommends using an analytics tool. Seeing which of your hundreds or thousands of incoming returns are in the highest demand helps you to tailor your marketing strategy to better align with consumer demands. What’s more, such insights can also be harnessed to continue learning more about customer preferences, leading to happier customers, fewer returns, and more revenue.

Preempting every issue from fraud to product defects

Because digitized SOPs are so efficient and transparent, they also make it easy to spot bottlenecks or delays in returns processes and share the insights with your 3PLs for targeted improvements. If you track how long a process takes at the unit level, you can accurately account for value-added services projects and establish a protocol for staffing accordingly. Of course, all operators already do this to an extent. But the very best ones don’t need to conduct tedious time studies or update clunky spreadsheets; they already have the tools and data at their fingertips.

Granular visibility into every returned item can likewise uncover gaps in quality control. Kane, a popular active recovery footwear brand, noticed a surprising uptick in shoe returns on its data dashboard. So their team investigated the issue and discovered that the culprit was actually the shoe boxes, which had been bleeding onto the shoes themselves. Catching the issue early enabled Kane to troubleshoot before the defective boxes yielded too many customer complaints and jeopardized its brand reputation.

With reliable analytics on your side, you can also fend off fraud. Just ask premium cookware brand Made In. After digitizing its SOPs and adopting an analytics dashboard, Made In caught $15,000 worth of fraudulent returns in just two months.

4. Build lifetime customer relationships through seamless returns

While a return isn’t the ideal beginning to a customer relationship, a seamless post-purchase experience can make the interaction more positive. Easy returns and responsive customer service are non-negotiables, of course. But the returns process also presents the perfect opportunity to campaign for customers’ continued business by going above and beyond their expectations.

James suggests offering potentially dissatisfied customers bonuses or perks. Although they may not seem like much, offers to waive shipping costs or send free replacements can go a long way. And the added cost will eventually bear fruit. As with marketing, James says, you may lose money on the customer in the beginning, but if you can offer them an experience that inspires them to keep coming back, the relationship will accrue real lifetime value.

“Customer support interactions offer countless chances to build more value for the customer and sustain a mutually beneficial, profitable, and enduring relationship,” James says.

For instance, James recommends working with a Return Merchandise Authorization (RMA) provider like Loop. An RMA automatically generates return labels, updates inventory systems, and provides real-time updates to customers and CX teams.

Using these platforms to initiate returns also builds trust between brands and customers. Loop, for example, conveys trust by letting brands issue refunds to customers before their returns are even inspected. Put simply, a thoughtful customer experience can be felt at every level of the supply chain.

Make returns management easier at every step with Two Boxes

Streamlined SOPs and enhanced data insights help you get more products back on shelves, deliver more value to your customers, and reduce waste to support a more sustainable future. If you want to enjoy all of these benefits in one easy-to-use returns management platform, look no further than Two Boxes.

“Two Boxes is just so powerful,” James says. “Anyone can improve SOPs, but they do it in a way that has huge implications for gross margins and sustainability, for ecommerce companies and for the world.”

Ready to let returns grow your business? Book a demo today and get started!