What is RMA? Return merchandise authorization for shipping
Kelli Trapnell
·November 22, 2023
If you’re an ecommerce brand, odds are good you’ll need to process returns at some point (especially since returns increase as sales increase). That’s why it’s important to know about the RMA process and what goes into ecommerce returns.
Learn more about how returns impact your brand’s growth in theFuture of Reverse Logistics
In this blog, we’ll cover:
- What is RMA?
- What happens during the RMA process
- Ways to save on refunds
- Integrations to boost RMA
Let’s start with the basics. What does RMA mean, anyway?
What is RMA?
A Return Merchandise Authorization (RMA), also known as return material authorization or RGA (Return Goods Authorization) is the first step of the return process for an ecommerce company. RMA is an important tool in reverse logistics. RMA allows your business to collect shopper information, personalize the process and gather info about any recurring product issues.
Your RMA will have a unique number for each returned order, which is issued by your customer support department. The RMA should list the conditions of the return authorization, including the product’s condition, how it is packaged, and shipping requirements. Your RMA may also require the customer to provide the reason for their return.
Issuing an RMA is an important part of the return process, as it lets you track each returned product individually through the reverse logistics process, including shipping and restocking. Items that are sent back without a prior RMA may not be eligible for a refund or credit, so it’s important to ensure that your customers follow your process in requesting an RMA in advance of sending back a product.
The RMA may include a printable reverse shipping label, or it may simply consist of an RMA number that the customer needs to write on the box when sending the package back. You may opt to grant the customer’s refund or store credit immediately upon issuing an RMA, with the option to charge the customer if the merchandise is not returned within the required time frame; or you may wait to provide the refund until the order has either been scanned in with a courier or has been received and inspected at your warehouse.
What happens during the RMA process
Once a buyer submits their information, the item acquires an RMA number, which helps track the package’s path.
Usually, an item will fall into one of three categories: a refund, replacement, or repair.
Most ecommerce brands use a returns management solution like Loop to handle their returns. Automating this step of the RMA process can help, because you can save time, money, and also gather data about each shopper.
Typically, an ecommerce RMA form will capture the following info:
- Personal information: This will include the shopper’s name, telephone number and address.
- Product data: This will be a request for the SKU, type of product, and quantity being returned.
- Reason for return: This will ask why the product is being returned.
- Return or refund: What the shopper prefers. You could offer store credit or exchange in lieu of a full-on return.
When collecting data at this stage of the return process, make sure your RMA system gathers as much info as possible. Was the shopper simply looking to make an exchange for a different size or color? Do they need a different item that will fit their needs better? Do they feel the pricing didn’t quite match the value? Gathering these returns metrics will help you collect data insights around product returns that you can use to optimize your processes and increase customer satisfaction.
Once the return request has been received and approved, a business will assign the item an RMA number to authorize a product return. The authorization number helps track the product as it’s processed. It also allows warehouses to update their inventory management software, otherwise known as an ERP (enterprise resource planning) solution, a management system that handles all activity and functions. The shopper will usually receive a shipping label or have the option to provide their own. In other cases, they may make use of offline returns to drop off the product at a point of sale, such as a retail location; or a drop-off center, where the returned items can be consolidated into a single package for bulk shipping rates.
The returned item will then ship back to the warehouse. Once it arrives, the item will go through a quality control inspection. If any repairs or replacements are necessary, this can incur restocking fees.
Controlling RMA costs
While offering free shipping on product returns is standard practice for many ecommerce businesses, if your items are large or bulky, it may make sense to charge customers return shipping and restocking fees for their returned items. This can help discourage shoppers from participating in “bracketing,” or buying multiple items with the intent of only choosing one. Weigh the trade-off between customer satisfaction and product return costs when evaluating whether to charge return shipping fees: While customers appreciate free returns, adding a little friction to the process may make them reconsider purchasing multiples of an item when they only need one.
You can also make use of in-store return centers. If you have retail locations as well as ecommerce, you can invite customers to buy online and return in store, where the items can be restocked with your existing inventory, or moved from one location to another using your own transportation network, rather than relying on courier services. Or, consider partnering with drop-off locations, where your customers’ returned items can be consolidated and shipped back in bulk.
And for certain items, such as beauty products or perishable items that can’t be resold, the simplest solution is a “no shipping” policy.
This simply means you offer an instant exchange and allow the shopper to keep the item. To avoid fraud, be sure to have shoppers submit a photo of the item. This allows your online store to provide them with an instant refund.
Virtual wallets have become a popular means of payment for online stores. For return requests, consider adding a virtual wallet feature. Firstly, it will make it easier to instantly refund the shopper vs. sending the money to their card or bank account. Secondly, this prevents your company from losing revenue despite the refund. This type of feature adds a section to every user account and holds equivalent cash value which they can use to pay for item purchases. Ultimately, it makes the entire checkout and returns process more efficient.
Integrations to boost RMA
Any ecommerce business looking to grow should remember that RMA is vital for a successful product return process. From the start, you should clearly communicate with the shopper to understand why they returned the item. Having an RMA number will help you keep track of where returned products are in the supply chain, and prevent revenue loss. Loop Returns offers several systems to keep everything running smoothly.
Our Full Circle integration includes an RMA feature, so you can easily authorize returns according to your merchant terms. Once the product has been received, and an item receipt is created within Full Circle, the integration again leverages the Warehouse API to trigger a process or flag event. Loop also has an RLM Apparel Software integration that requires no developer work on the merchant’s end.
Just because the buyer is returning the item, doesn’t mean they won’t want to shop with your brand again in the future. You can easily turn a return into another sale with upsells, personalized exchanges, or a bonus credit if they spend more on a higher-value item.
Be sure to review your return policy. A recent survey found that 96% of consumers regularly review a retailer’s return policies before making an online purchase. If your company lacks a well-thought-out plan, you might be losing out on new buyers, and dissuading existing shoppers from buying from you again.
A simple and easy returns process, along with high-end customer service, will ensure that shoppers return in the future. In that same survey, 87% said they would be more likely to buy again from a business if they know they would receive post-purchase incentives like discounts on future items or an unlimited return window.
Don’t forget to collect data about product returns. This will provide insight that can help you lower future return rates. If shoppers are frequently returning an item due to a sizing issue, make sure you note on your website that the product runs small. Allow shoppers to provide insight when they start the return process so you can understand trends across categories and reassess your strategy and RMA process.
Automating your RMA process
By using a returns management solution like Loop, you can easily automate every facet of the returns process, including your return merchandise authorization.
Loop enables customers to walk through the returns process using a self-service portal that shows them which of their products are within an eligible return window, immediately eliminating those that are past the point of return, are final sale products, or are otherwise ineligible.
For return-eligible products, your ecommerce shop can set up a series of questions about the item’s condition and the customer’s reason for returning the item — leading to the right solution. If a customer is returning an item due to a poor fit, your returns portal can offer an instant exchange to get them into the right size. If the customer didn’t like the product at all, your brand can offer them credit that they can apply to an entirely new item from your store.
Their answers will also help you automatically determine the right path for their return: If it is still in its original packaging and can easily be resold, you can route the return back to your warehouse for restocking and resale. On the other hand, if the item is already gently used, you can route the item to a recycling facility or encourage the customer to keep the item while giving them store credit or a refund.
By automating the RMA process, you can cut down on your customer support time spent dealing with returns, freeing up your team to handle more specialized questions. You’ll also be able to effortlessly transform more returns into exchanges: The average Loop merchant retains 40% of revenue from returns via exchanges and upsells.
Want to learn more about how Loop can help you optimize your RMA process? Get a demo today.
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