A Step-by-Step Guide to Streamlining eCommerce Returns Process

eCommerce retailers live in a paradox. You want every order to find it’s forever home—only to watch some boomerang right back to your warehouse. Returns sting. 

Returns burn a hole in your profitability, skew sales forecasts, drain your operational team, and strain reverse logistics. And yet—they are unavoidable. 

There is no choice but to master eCommerce returns—particularly when the volume of returns is growing, reaching $890 billion in 2024, according to NRF. 

In this guide, we will cover all the pain points in managing returns and how you can overcome them with the best practices. By the end of this, you will find concrete ways to keep up your conversion and retention rates. Let’s begin!

The Impact of Returns for eCommerce Businesses

Returns are now a defining feature of the online shopping experience, driven by high customer expectations. Brands like Zappos and Amazon rewired the industry by turning generous return policies into a loyalty engine. Since then, returns have become a strategic pillar in the marketing playbook of every successful eCommerce brand.

On the positive front returns management—

• Build customer trust: Being able to return a product bolsters their purchase decisions. For example, a return policy assures customers of a streamlined returns process. It gives customers peace of mind—and that matters, since 67% of shoppers say they won’t return to a brand after a single bad return experience. 

• Revenue retention: It doubles down as a revenue retention strategy with exchanges and store-credits as the refund option. When each return can cost you $25 to $30 and increase your staff hiring for warehouses and support during holidays, exchanges become a necessary step to arrest revenue drop. 

However, there are serious consequences of returns:

• Return Fraud: Shoppers ordering multiple items with plans to return most, claiming shipments never arrived, or even sending back empty boxes have become alarmingly common. As a result, there is a staggering cost that retailers have to bear, estimated to be $109 billion in 2024. 

• Operational Overload: Processing unaccounted returns eats into margins through shipping costs, more staff required for inspections/restocking, and potential inventory loss. The operational overload dramatically increases during peak return reasons.

Understanding the Various Reasons for Returns

Customers return products for a variety of reasons but it’s easy to categorize them into 5 types: 

1. Item was damaged or defective: accounting for 52% of returns. 
2. Items didn’t fit or sizing was wrong: especially in fashion, making up 50-75% of returns.
3. Product not as expected or as described: composes 42–56% of returns.
4. Wrong item delivered: logistics problems account for nearly 37% of returns. 
5. The customer changed their mind or didn’t like the item: roughly 30032% of returns.

A Step-by-Step Guide to Streamlining the eCommerce Return Process

Having a clearly defined process streamlined by automation is the best solution to mitigate the less savoury effects of customer returns. Below we discuss 10 ways you can optimize the returns process:

1. Create a Transparent Return Policy

If shoppers can’t easily find or understand your return terms, they may fear getting stuck with an unwanted product. 46% of consumers abandoned a purchase because the return process was inconvenient in 2024. Moreover, overly strict policies, like short return windows, restocking fees, etc. can deter initial sales and enable some to return after the return window. Surprisingly, 46% of GenZ and 39% of millennial customers have done so in the past year. 

Best practices to draft a transparent return policy that builds trust:

• Publish Clear and Easy-to-Find Terms: Write your return policy in a plain language and display it prominently across all customer touchpoints—product pages, FAQ section, checkout page, and checkout page.
• Specify Your Return Window: Clearly highlight your return period, whether it’s 30 days or 60 days. Ensure that customers don’t have to hunt for eligible/ineligible items and the expected conditions for return or exchange. 
• Highlight Any Costs or Free Returns: Be upfront about who covers return shipping or if you offer free return shipping—76% of shoppers say free returns influence where they shop. If you charge a fee, ensure it’s stated clearly. 
• Set Expectations on Refund Timing: Let customers know how quickly they’ll get their money back. Being transparent about this timeline manages anxiety and reduces “Where’s my refund?” queries. 

2. Automate RMA with Intuitive Returns Portal

A cumbersome returns initiation process is frustrating for customers and expensive for retailers. If customers must call or email support to get a Return Merchandise Authorization (RMA), it creates delays and extra workload on your service team. Without an online returns portal, you also miss the chance to systematically capture return reasons and monitor return patterns. The pain is twofold: customers lack visibility and ease, and retailers deal with more support tickets and less insight.

Best practices:

• Easy Online Return Initiation:  Allow customers to initiate returns 24/7 through your website or app. A good portal lets them search their order, select the item(s) to return, and choose the reason from a dropdown. 
• Instant RMA & Label Generation: The portal should automatically generate an RMA number and a prepaid return shipping label or QR code. Some solutions even offer printerless QR code. In fact, 65% of consumers prefer in-person, label-free return drop-offs for convenience. 
• Integrated Communication & Updates: Once customers initiate a return/exchange, the system should send a confirmation email and provide status updates. This transparency reassures customers and reduces support tickets. 
• Capture Return Reasons and Enforce Rules: Once the system configures your return policy, it automatically implements them. In addition, it can set additional guardrails to prevent policy abuse with image validation. 

3. Streamline the Reverse Logistics Processes

The reverse journey of the product – from customer back to warehouse and into inventory – is often riddled with inefficiencies. Returned items can take too long to be shipped back, checked for quality issues, and sorted either to be restocked, repaired, or liquidated. Lack of coordination with inventory systems or warehouse systems and high transportation costs bloat the cost involved in managing return shipments. The experience worsens during peak seasons like the holidays. 

Best practices to optimize reverse logistics:

• Encourage Local/In-Store Returns: If you have physical stores, leverage them as return hubs. In-store returns eliminate return mail time and get the item back in stock immediately. Many retailers now incentivize buy-online, return in-store (BORIS) by offering it free.

• Use Smart Order Routing: Rather than funneling all returns to a single distant warehouse, use an intelligent order routing system to distribute the return shipments to the nearest warehouse or fulfillment center. This not only saves every dollar wasted on fuel but also gives you a headstart in restocking.

• Implement Faster Quality Inspection: Set up a dedicated zone in your warehouse or integrate with 3Pls to immediately process incoming returns.  Inspect it and decide how to handle it ideally between 24 to 48 hours.  Use technology like RFID or scanners to verify item condition quickly.

• No-Box, No-Label Returns: Simplify logistics by letting customers drop off items unpackaged. Following Amazon’s model, retailers aggregate these returns for bulk shipping—cutting packaging waste and improving reverse logistics efficiency.

4. Notify Customers with Real-Time Tracking Updates

91% of online shoppers actively track their outbound deliveries with nearly 40% checking daily, it’s no wonder that customers crave visibility and constant updates. Keeping customers in the loop with return tracking can turn a potentially negative experience into a positive, trust-building interaction. Moreover, a well-communicated returns process can even boost retention.

Best practices to end-to-end tracking experience:

• Return Shipment Tracking: Offer your customers real-time tracking for returns and exchanges. A branded tracking page on your site is the best way to show the return journey in a user-friendly way with familiar milestones they can track. 
• Email/SMS Notifications at Key Stages: Push updates to customers without them having to check. Notify them when the return is received and inspected, and when the refund or exchange is processed. Automate these triggers across multiple channels.
• Personalize Customer Notifications: Use pre-built templates or LLM-generated hyper-personalized notifications to engage with customers and quickly trigger notifications.

5. Issue Refunds or Exchanges Without Delays

From the customer’s perspective, the refund is the most important part of their return journey. As soon as they’ve sent the product back, they eagerly await their money or replacement item. Any unnecessary delay here severely damages customer goodwill.  84% of customers who receive immediate refunds reconsider buying from the brand again. 

Best practices to set up a smooth refund and exchange process:

• Speed up the Refund Process: Consider offering instant refunds upon proof of return drop-off or carrier scan. Automatically trigger refunds at set milestones rather than waiting for the item to fully process in your warehouse. For higher value items, enable manual approvals to prevent any fraud.
• Fast-Forward Exchanges: To soothe customers, consider shipping the replacement product as soon as the return is in motion—or even immediately upon return request for loyal customers. Waiting until the original item comes back can lead to stockouts, so keeping inventory on hold is also a good way to ensure on-time fulfillment. 
• Offer Site-Wide Exchanges: Enable customers to swap unwanted items for anything across your catalog—not just direct replacements. This retains revenue and boosts satisfaction. Use a returns management platform that auto-re reconciles price differences for a smooth, hassle-free exchange experience.

6. Analyze Return Data for Actionable Insights

Returns aren’t just a cost center – they’re a valuable feedback channel. Every return has a story but without a proper returns analysis you miss it entirely. The problem of data gaps is two fold: unable to fix the root cause of repeated returns that undermine your profitability and skewing inventory planning. You might keep reordering a product that half of customers ultimately send back.

Best practices to leverage return data and drive continuous improvements:

• Track and Categorize Return Reasons: Ensure your returns portal or RMA process captures a reason for every return. Regularly aggregate this data to see patterns in customer returns. Knowing such stats for your catalog is even more powerful – it turns returns into a to-do list for improvements.
• Identify Problem Areas: Look for outliers in return rates. For example, if you notice a particular SKU has a higher return rate than others, returns analysis may reveal if the problem lies in defective manufacturing or handling. You can use return data to cull low-performing products or change your supplier. 
• Use Analytics Tools and AI: At scale, consider using advanced tools to analyze return trends. There are SaaS platforms that use AI to deep dive into large data sets and pull out actionable insights quickly. It also generates more subtler insights that would otherwise be missed. 

7. Use Customer Segmentation to Power Returns Personalization

Taking the right approach to customer segmentation boosts profitability and customer satisfaction simultaneously. A “one-size-fits-all” return policy can end up alienating loyal, high-value customers who deserve your special attention. Conversely, serial returners or refund abusers exploit lenient policies continuously. Failing to segment means you can’t tailor the returns process or policy to different risk/reward profiles.

Best practices to segment your return policy:

• Segment by Customer Return History: Leverage your data to flag different return behaviors. For customers with minimal return history, you can afford to reward them with perls like free returns.  But, for customers with high return rates, consider deploying interventions like exchange-only or levy return fees. 

• Use AI for Personalized Customer Categories:  AI to segment customers based on behavior, purchase history, and return patterns—enabling dynamic return rules, tailored product recommendations, and proactive retention strategies that reduce churn.

8. Add Fraud Detection Controls and Smart Workflows to Stop Policy Abuse

Did you know that 51% of GenZ shoppers have engaged in policy abuse like bracketing? Unfortunately, there will always be customers who take unfair advantage of your return policy. Return fraud and abuse come in many forms: wardrobing (buying an item, using it once, then returning), returning items that are not the original product, claiming false “item not received” to get a refund while keeping the product. Without dedicated controls, high-risk sectors like apparel and  electronics lose their profit margins.  

Best practices to detect fraud and safeguard your profit margins:

• Leverage Fraud Detection Technology: Identify suspicious patterns comparing every return against historical data and known fraud markers, assigning a risk score. Use AI-driven models to compare behavior to normative patterns and flag anomalies. A good returns management software can flag repetitive customer behaviors to decline or close examine a refund request. 
• Smart Workflows for Suspicious Returns: Develop internal protocols for how to handle flagged returns. For example, issue only store credits or lesser refunds for customers returning too many high-value items. While you must exercise caution not to upset genuine customers, most serial abusers back off when checks are in place. 
• Set Thresholds and Alerts: Define thresholds that trigger action. Mark SKUs that are not returnable or exchangeable and restrict the number of returns/exchanges one can make in one flow. With alerts, your team can proactively reach out or monitor those accounts that exploit free returns. 

9. Optimize Product Descriptions and Visuals 

If descriptions are vague, inaccurate, or missing crucial details (dimensions, materials, features), customers may buy something that doesn’t fit their needs. Optimizing product content, you align customer expectations with reality. This is particularly helpful in slashing the “item not as described” category of returns. 

Best practices to improve product descriptions:

• Provide Detailed, Accurate Descriptions: Include concrete details at the get go that anticipate common customer questions. Mention dimensions, weight, materials/fabric, functionality, what’s included in the box, and any limitations or precautions for best care. Make sure the description matches the product exactly.
• Use High-Quality Images and Videos: Provide multiple images that capture texture and product details. Ensure color accuracy so customers and embed product videos, especially showing someone using the product. This helps customers to visually inspect the product and align their expectations. 
• Include Size Guides and Comparison Info: For wearable products like apparel, shoes, accessories, and even things like appliances, provide detailed sizing guides. Include measurements (length, width, height) to eliminate guesswork. Incorporate smart assistants that give shoppers a correct size recommendation from their previous purchase history and reduce bracketing. 
• Leverage Customer Reviews and Q&A: Nudge customers to share their experiences on the product page. Often, reviews will highlight things like fit, quality, or usage tips. This user-generated content can fill gaps in your description and set more accurate expectations for new buyers.

10. Use AR and 3D to Reduce Product Uncertainty

One of the inherent challenges of eCommerce is that customers can’t physically interact with products before buying. The best way to overcome this is to give customers a way to virtually try the product. Augmented Reality (AR) and 3D visualization technologies are key in this.

Best practices to utilize AR and 3D tools:

• AR “Try Before You Buy” for Physical Fit: Implement AR apps or web-based AR that allow customers to see products in their real environment at true scale. AR has already transformed customers’ shopping experience for furniture and home goods. They point their phone at their living room and virtually place a 3D model of a chair or table to see how it fits size-wise and style-wise. 
• Virtual Try-On for Apparel & Accessories: For fashion and accessories, AR can be used to let customers virtually try on products. 56% of customers feel more confident about product fit when real-time try-on interfaces are available. 
• 3D Product Visualizations for Detail: Even when full AR isn’t used, having 3D models that customers can rotate and zoom in 360° on your product page can help. It gives a better sense of the product than static images.

Setup a Frictionless Returns Experience with ClickPost 

Don’t lose a customer because your returns management couldn’t live up to their expectations. ClickPost’s personalized and AI-powered returns optimization handles both your customer experience and reverse logistics. Here’s a glimpse of what it offers:

• Configures your return rules and eligibility criteria and automates return approvals.
• Puts manual overrides when refunding a high-value product and auto-retries when a transaction fails.
• Ensures site-wide exchanges and variant swaps with automated price difference reconciliation.
• Offers personalized nudges for returns to exchange conversion.
• Triggers refunds at designated milestones and offers gift cards and discounts as alternatives.
• Keeps inventory on hold to prevent premature fulfillment and SKU exceptions. 
• Provides real-time tracking across all key milestones and LLM-generated personalized emails.

ClickPost transforms bad returns into growth opportunities. Ready to take a look? Then book a demo today!

Final Takeaway 

When done thoughtfully, returns can become your growth launcher. Though customer returns cannot be completely eliminated, their downsides can be mitigated and even turned into positives. This is why understanding the true impact of returns (both good and bad) and the best ways to solve common return reasons is essential to unlock higher customer loyalty, lower return rates, and improved profitability.