Why Your 3PL Should Include Returns Management

In a previous post, we discussed the top challenges merchants face when handling returns. Those include lack of infrastructure, inadequate tracking capability and a struggle to maintain a positive customer experience throughout the return process. As a 3PL, taking over your clients’ returns management solves all of those issues for them.

But should you?

Many 3PLs hesitate to take over the entire returns process for their clients, because handling returns across several large clients quickly becomes complex. If you don’t have the right technology backing you, it can also turn into a confusing mess.

The other side of that coin: taking over your clients’ returns processing offers plenty of benefits for you and them. Here’s why your 3PL should add or expand returns processing services for your merchant partners:

Why your 3pl should include returns management

It strengthens your partnerships with clients.

If you don’t have a strong bond with a client, they may give in to the temptation to price shop for another 3PL provider – or just find one who offers more of the services they need. That’s why being able to handle their entire logistics process, from fulfillment through returns, is so important. 

Offering an optimized returns process also helps you boost your client’s revenue, turning you into a hero instead of another expense. For a merchant, a smooth returns process is critical to improving their customers’ experience with their brand, boosting customer satisfaction and reducing customer acquisition costs over time. 

Because handling returns requires more space and manpower than many merchants can manage, you have a great opportunity as a 3PL to solve one of their biggest headaches – and strengthen the bond with valuable clients.

It helps you earn more money.

It’s not just your clients who benefit from your addition of return services. If you’re not already handling returns for your clients, it can give your revenue a serious boost. Shopify reports the average return rate for eCommerce at 20-30%. If you’re handling all of those returns, that’s a big percentage increase in your business.

With the addition of returns management, you’ll handle a larger volume of packages for each client – plus it gives you a competitive edge over 3PLs who may not offer this service. And while some merchants may not have approached you to take over their returns yet, you’ll likely be surprised how many of them hand over that task to you with relief.

You already have most of the infrastructure in place.

One big benefit to you when you add returns processing to your service menu: you don’t have to add a lot of extra infrastructure. You already offer your clients scalable logistics solutions; with the right returns management software integrated with your existing system, you can turn reverse logistics into a new revenue stream with a minimum of fuss.

The best part of adding that revenue stream? You don’t have to do a lot of marketing to new clients – you can leverage the relationships you have with existing clients in your portfolio. (Of course, you’ll want to gain new clients too – but you can start earning back the investment in your RMS right away.)

What does the returns management process involve?

A returned product goes through several steps before and after it reaches your warehouse, and these steps vary by client and the type of product they sell. Your RMS should automate most of these steps to optimize and speed up the return process.

First, you or your client generates a return merchandise authorization and, in the case of free returns, a prepaid shipping label. Next, your warehouse receives, inspects and sorts returns based on criteria provided by your client. They’ll determine whether an item is in resellable, repairable or damaged/unsellable condition and either put the item back in inventory or route it to an alternative solution according to the client’s preference. Your client gets a report for all returns, including their disposition, and processes refunds or exchanges to the end customer based on their policy.

Depending on the number and types of products each client sells, this process can quickly become unmanageable without the right software in place. A good RMS will automate many of these tasks, provide your client and their customer with return tracking and help save costs by optimizing the disposition of each return.

Adding returns management to your service mix helps you differentiate your 3PL from your competitors, offer a better customer experience that improves your client’s bottom line, and build your relationship with each client. If you’re ready to get started but just need that software component, get in touch today to see how Octolan’s RMS can help.

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