Returns are inevitable—but how you handle them can be the key to scaling your business.

For too many businesses, returns management is an afterthought. They focus on getting products out the door, but when something comes back, it creates a bottleneck. The truth is, returns are costly and time-consuming, and, if mishandled, they can lead to a loss of both revenue and customer satisfaction.

But what if your returns management didn’t just save you money, but actually helped you scale your business?

Returns: A Costly but Necessary Part of Business

The sheer volume of returns is staggering. In fact, according to data from the Reverse Logistics Association, approximately 30% of all e-commerce orders result in a return, compared to just 9% for brick-and-mortar retail.

Returns can account for up to 5-10% of a company’s operational costs, and handling them poorly can create friction points with customers, resulting in reduced satisfaction and repeat business.

But here’s the catch: if you’re strategic about it, returns can become a critical part of your overall business strategy. By handling returns efficiently, you can turn what is often seen as a cost center into an opportunity to improve your supply chain, recover revenue, and even build customer loyalty.

Step 1: Build a Seamless Returns Management Process

When it comes to scaling, one of the first areas companies need to look at is how their returns process can be improved. An unorganized or inefficient returns process will only grow more chaotic as you scale.

By building a clear, streamlined returns management process, you can minimize the operational headache while ensuring products are handled quickly and efficiently. This means:

• Creating an SOP for your 3PL: Your 3PL partner should have a step-by-step process to follow when handling returns. This includes guidelines for assessing returned products, re-bagging or re-tagging items, and documenting everything properly.
• Implementing returns software: Tools like Loop Returns or Returnly allow customers to easily initiate returns while providing you with real-time visibility into where the product is in the returns cycle.
• Using advanced shipping notices (ASNs): By integrating ASNs into your process, you can track returns as they move through the logistics chain, ensuring that they are processed quickly and efficiently.

Step 2: Simplify Decision-Making for Your Team

The more steps involved in the returns process, the greater the risk of error. By simplifying decision-making, you reduce errors and improve efficiency.

This is where a well-designed SOP comes in. It should provide clear instructions for common scenarios:

• Is the product unopened and in good condition? Restock it.
• Is it damaged or missing tags? Re-bag or discard it.

Your SOP should also include visual guides to help staff make quick, informed decisions, reducing the need for constant supervision.

Step 3: Reduce Fraud With Better Data

Returns fraud is an increasingly common problem. Customers may claim to return more items than they actually did or manipulate return policies to get refunds for damaged goods.

You can mitigate fraud by using data and technology to track returns in real-time. Return merchandise authorization numbers (RMAs) ensure that each return is logged and tracked from the moment the customer ships it to the time it’s processed. Adding photo documentation for higher-value items also helps prevent fraudulent claims.

At IDS, we’ve developed a system where every return is tracked and logged, and photos of returned goods are stored under their corresponding RMAs. This ensures transparency and minimizes the risk of fraud.

Step 4: Turn Returns Management Into a Revenue Opportunity

While returns may never become a true profit center, there are ways to minimize their impact on your bottom line. By integrating your returns process with secondary sales channels, you can recapture some of the value from products that can’t be restocked.

For example:

• Liquidation channels: Slightly damaged or opened items can be sold through secondary channels like eBay, liquidation sites, or even employee sales.
• Donations: Unsellable products can be donated, giving your brand a positive public image while minimizing waste.

By managing these processes efficiently, you can reduce the financial hit from returns and even recover some of the lost value.

Step 5: Plan for Growth

As your company scales, so will your volume of returns. If you don’t plan ahead, this can lead to bottlenecks, unhappy customers, and rising costs. But with a streamlined, scalable SOP in place, your returns process will grow alongside your business—without adding chaos.

At IDS, we work with our clients to develop returns processes that scale with their business. Whether you’re handling 100 returns a week or 1,000, having the right systems in place ensures that every return is handled quickly and efficiently.

Returns are a reality of doing business. But they don’t have to be a source of frustration. By building a scalable, efficient returns process, you can reduce costs, cut down on fraud, and even recover lost revenue.