For any store, especially an e-Commerce store, returns are a part and parcel of the business. Product returns form a negative aspect of the business where there is not only confusion with regards to the flow of orders and invoicing, but also a large number of redundancies in the order management system. In a perfect scenario, an e-Commerce store should not have any returns for the products being sold – but in reality, the situation is vastly different. The entire merchandise return fraud and abuse cost American businesses nearly $10 billion in 2015 (NRF Study). However, you can mitigate your losses and reduce the chance for errors by using an order management system. One of the most effective order management systems is Pallet OMS, which has easy customization options to easily control the way you want to handle how returns are processed.
Order Management Flow and Product Returns
For any store, the order management flow is as follows:
The incoming orders can arrive from any source, including offline retail POS channels and online e-Commerce channels. After the order arrives, it needs to be mapped against the available inventory. For each item within the order, it should be subtracted from the holding inventory for the given product. The price of the order leads to the generation of the invoice. Post invoicing and packaging, the product is out for delivery. The system can work for almost any product – from pizzas, to T-shirts to industrial machinery.
Unfortunately for product returns, the aforementioned flow gets broken, when using returns. For each return, the item needs to be mapped to inventory; and the amount being added to the invoice needs to be removed from the cash flow. The following diagram shows the returns management process:
How to Leverage Returns for Your Business
The issue of returns have a greater harmful effect on your business than just being another chain in your order management and warehouse management process. According to market research firm Invesp, nearly 30% all products being sold, both online and offline are returned back to the seller due to the following factors:
- Nearly 30% of those returns are for damaged goods
- 20% of all returns occur due to the fact that wrong product was delivered
- An additional 20% of the products are returned due to the product looking different than the image being shown on the e-Commerce website.
Returns form one of the most negative aspects of your business. In addition to the fact that returns cost extra money from your end for reverse pickup, dropship and other details, it also creates a negative impact upon the mind of the consumer about your store.
However, there is a silver lining within the dark and murky clouds of product returns – most consumers prefer to buy online from stores that have an easy returns policy. As a double edged sword, you can use Pallet OMS as an order management tool that has customizable returns options, allowing you to create your product returns process flow with greater efficiency.
Returns Management and OMS Systems
An order management system such as Pallet OMS has a customizable section that deals with returns. The software can help you to:
- Map returned goods to inventory.
- Map damaged goods for damaged goods claims
- Link transactional flow systems to generate refund slips and claims
- Build accurate product movement maps for dispatch as well as returned goods
- Manage auto-shipment modules for direct returns mapping
In conclusion, it can be said that while returns are being considered as a negative aspect of business, and improper management of the same has the possibility of breaking up not just your revenue flow, but also wreak havoc on your inventory, the psychological advantage that easy returns give to consumers can be leveraged by your business by using improved tools such as the Pallet OMS system to mitigate their negative effects.