Return Merchandise Authorization Types & Tips to Handle RMA Processes

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In a perfect world, ecommerce merchants would never need to think about returns. Unfortunately, the reality isn’t so, and returns come with their own nuances, workflows, and vocabulary. 

While returns have historically been bad news, they can provide incredibly valuable data to improve the entire customer journey, and it all starts with a returns merchandise authorization. 

What is return merchandise authorization?

Return Merchandise Authorization — or, RMA, commonly known as RA (Return Authorization) or RGA (Return Goods Authorization) — is the first step in receiving a return request and determining its path. This could mean it will become a refund, store credit, an exchange, or even a repair. 

In addition to the RMA serving as the initiation of the return on behalf of the shopper, it also provides data and visibility for the merchant as to why items are being returned, as well as a notification to the warehouse team to expect a return. 

How a return merchandise authorization works

Much like the purchase journey, no two returns processes are alike, and they can look totally different from vertical to vertical, and often vary between merchants within those verticals. 

Returns workflows can be as smooth and seamless or add as much friction as they desire based on the merchant’s policies and goals. At their most simple though, returns merchandise authorizations all follow a few main points. 

A return’s path back to the warehouse begins with a simple request from the shopper. Depending on the merchant’s return policy (which should be easily accessible in the ecommerce shop’s footer), shoppers will have an expectation of what the return process will look like. 

For some merchants, this means manually processing  returns with a form on their website, or having shoppers request a return via email. Other merchants implement a returns management solution such as ReturnLogic to automate the returns process. 

At this point, an ecommerce brand can request additional information to be filled out, such as why  the shopper is returning an item, as well as secondary information to dive deeper into why the shopper isn’t entirely happy with their purchase. 

Shoppers may also decide which path they’d like to take — would they like to exchange for a different size, variant, or a totally different item? Do they want a refund or store credit? Each option can have a different workflow, which is why it’s important for merchants to determine not only what options will be available, but which rules and automation will go along with each one. 

At the end of this initiation process, the shopper will either receive a shipping label and packing slip, or be prompted to provide their own. (Some merchants also offer printerless returns as well as the option to keep the item rather than sending it back, which works particularly well for beauty and other items that cannot be resold.) 

Next, the item arrives at the warehouse where it is dispositioned — meaning, the warehouse will determine if the item is in good condition to be restocked, if it is damaged, or if it needs to be cleaned, repaired, or donated. 

It is at this point that the return can be processed. What this means is that the customer service team can make the final decision on the return merchandise authorization and how the refund or exchange may proceed. 

They can finalise the transaction to provide funds back on the original method of payment, send over store credit, or send out an authorization for exchange. 

Seven main types of return merchandise authorizations

One of the best ways to keep customers happy (and coming back) is to provide options for them in the returns process. While they may not have been entirely satisfied with their original purchase, allowing flexibility as they request a return is a chance to win them back, and by providing different rules for each option, brands don’t have to worry about losing a lot of money in the process. 

1. Refund

One of the oldest methods in the book, a refund is just that — a repayment to the shopper’s original payment method. Depending on the price point of the items sold, the cash flow of the business, and the likelihood of fraud, merchants can decide to process the refund upon receipt of the item, or even before then, such as when it is marked in transit back to the warehouse. 

2. Store credit 

Store credit can be thought of as a safer option compared to a full refund, but still an option that allows the shopper to have more flexibility. 

Rather than being processed and repaid to the shopper’s credit card, they will receive store credit to be spent at the ecommerce shop where they purchased the item originally. It doesn’t necessarily save the sale, but it ensures their money will still be spent at that brand’s store. 

3. Exchange 

Very popular among apparel brands, an exchange allows shoppers to select a new size, variant (such as colour), or exchange for another item in the brand’s catalogueue. The benefit of allowing for or incentivizing exchanges is that the sale is not lost, and exchanges can offer a high-touch level of customer service while still being scalable. 

4. Warranty

Certain verticals need to allow shoppers to be able to send their item in to be replaced or repaired depending on the nature of the product, the return policy, and the brand’s goals. 

For example, this could include a longer return window for items that are under warranty, different options for shipping (e.g. free repairs if the shopper pays for return shipping), or less automation and more customised processing on behalf of customer service personnel.

5. Third-party warranty

For ecommerce merchants with an omnichannel presence, third-party warranties allow them to process RMAs for items purchased from retailers, such as marketplaces or even at a brick-and-mortar shop. 

Centralising these purchases allows for more data collection to iterate and improve not just the returns process but also the customer journey.

6. No-shipping

Certain verticals (such as beauty or CPG) may not be able to restock items, and the return shipping (as well as the handling by the warehouse) can be more of a hassle and create undue friction and handling costs — it is for this reason that merchants can offer “no shipping” as an option. 

To safeguard against fraud, merchants can request images of the item that is being returned, and they can process the refund or exchange instantaneously.

7. Reject

If an item is past its return window or damaged beyond reasonable repair, a merchant may decide to reject the return. This may result in unhappy customers, which is why it’s important to have a clearly defined return policy that is easily searchable on the ecommerce shop’s site.

Why is it important to establish a solid RMA system?

Returns will always be a part of ecommerce, which is why even if reducing returns is a goal, a customer-centric returns policy should still be at the forefront. 

Some of the most successful ecommerce brands view their returns policy and the process used to enforce it as a crucial part of their customer journey and improving customer lifetime value.

Identify areas of improvement

As mentioned earlier, the returns process can be a goldmine of data. Asking for feedback on items and why they are being returned can provide visibility into issues across the entire customer journey. 

For example, is an item — or even a variant within an item — being returned because it is defective and there needs to be a conversation with the manufacturer to remedy it? Are items being returned because of a discrepancy such as sizing or even the colour in a photo on the item’s product detail page? 

Collecting primary return reasons (e.g., “too big”) as well as secondary (e.g., “sleeves too long,” or “torso too wide”) reasons can give brands insight as to how they might improve their product, their onsite optimisation, or even their acquisition strategy.

Reduce return rates

While returns are inevitable, merchants can still reduce returns. This can be done by adding more friction to the returns process (not recommended, as it results in unhappy customers who will be unlikely to return for a second purchase), or by taking lessons learned previously and applying them to new products. 

Are items being returned because they are not up to the shopper’s expectations? Perhaps consider optimising pricing to lower those expectations and not incur the additional costs associated with returns. When it comes to being creative to iterate and improve return rate in a way that will allow a merchant to scale, returns data is crucial.

Improve the customer experience

In the event that a customer is unhappy with their purchase, it does not necessarily mean that the customer is lost forever. A customer-centric returns policy and process creates a touchpoint in the customer journey to win back trust and provide a solution that will not just keep a shopper coming back, but also turn them into an evangelist for the brand. 

By integrating helpdesk tools such as Gorgias and ChatDesk into the returns process, brands can provide a personalised experience, and even allow for cross-selling or up-selling within the returns flow. First and foremost though, intelligent returns can empower customer service teams to provide a high level of support based on a shopper’s history and likelihood to purchase again. 

Best practices for handling returns

A seamless returns process will keep customers happy. In order to keep that process smooth, a good returns management platform will create visibility between the warehouse and the customer service teams, ensuring not just a positive customer experience, but an easy merchant experience as well.

Ensure all key authorization fields are filled out

The best way to mitigate the back-and-forth that would complicate the returns process is to request all the information the brand would need from the shopper up front. 

Customer info

First things first, customer information is necessary not just to gain visibility into historical data, but also to ensure that an exchange is going to the right place, and also that the brand has any necessary information to contact the customer should an issue or a question arise. This includes the customer’s name, address, and contact information.

Product info

A returns management platform will be able to access order history to populate items purchased and allow a shopper to select items to return from that. If manual processing is enabled, shoppers should be asked to provide information as to which item or items they are returning, quantity of each, and any other pertinent product details. This way, things such as shipping weight can be calculated.

Reason for return

As mentioned previously, merchants should be collecting as much data as possible when processing RMAs. It is beneficial to ask for the primary reason for returning (such as fit, colour, damage), but also the secondary reasons that will provide insight as to why some items or variants may be underperforming relative to others.

Return Type

Depending on the shop’s return policy, shoppers may be able to request a specific return type, such as “exchange,” “warranty,” “refund,” etc, as mentioned above. 

Declare a value for the returned package

In the event that a package gets lost on its way back to the warehouse and the returns management platform does not take the value of said item or items into account, shoppers should declare the value of the package so that the customer service team may be able to take the next steps to provide a proper refund or store credit.

Simplify shipment tracking

Visibility into tracking is helpful not just for the warehouse and customer service teams to be aware of when a package will be arriving, but also to give the shopper peace of mind in knowing that their item is on its way back to the warehouse. 

Returns management platforms such as ReturnLogic allow automatically triggered emails to be sent to the customer so they will be privy to key points along the package’s journey, such as when it is marked as officially in transit, and when it arrives at the warehouse to be scanned as received.

Get the right ecommerce tools

Returns touch so many parts of the overall customer journey, it only makes sense that a returns tool is integrated with key points within the overall tech stack.

Handheld scanners

For merchants with a high volume of returns, it helps to have an inventory scanner to capture all RMA data with a simple scan. Often, the packing slip provides a barcode that will give warehouse teams access to an RMA and visibility into what is being returned and why, that way they can provide accurate dispositions back to the customer service team and allow a seamless process for the shopper.

Accounting system 

As if returns themselves are already a hassle, there is, of course, the accounting aspect as well. An accounting system that updates  inventory and refunds needing to be on the books is essential. To keep these reconciliations from getting out of control, returns should be tracked in a retailer’s accounting software or ERP along with sales. 

Helpdesk

One way to keep customers happy and increase visibility is to integrate a helpdesk such as Gorgias or Zendesk into the returns process. This gives shoppers the ability to ask questions about their product return (including troubleshooting, which can reduce returns in the case of user error) or just get updates.

Inventory management system

In order to track inventory, returns should be tracked in a merchant’s IMS. If an item has been received and is ready for resale, it should be restocked in order to make sure it does not get forgotten and create more lost revenue for the merchant. Additionally, if an item cannot be resold, inventory should be updated to prevent over-selling.

Automate error-prone processes

Like all customer journeys, the automation vs. manual processing aspect can vary from brand to brand. The best brands automate key activities while allowing for some manual interaction in order to create a scalable but high-touch journey. 

In the case of returns, it’s possible to have an automated process that still allows for more manual moments in which the merchant may infuse their own brand story and service. 

By investing in a returns management software that can automate workflows based on return type, customer service resources are saved, and that time can be spent on providing a personalised level of service for customers requiring it. 

To determine which portions of the returns process should be automated and which ones should be manual, brands should consider where bottlenecks are occurring, particularly those which would create a negative customer experience. 

Often this occurs at the point at which the RMA is created — implementing software to capture customer data, automatically populate order history, and allowing shoppers to decide which type of return they’d like to make can save a lot of time and tons of resources. 

For how the RMA is processed and the refund is given, exchange is sent out, or repair is made, brands may prefer to allow customer service to make that decision and personalise the experience to the shopper.

At the end of the day, brands should always decide what’s best for them and their customers, with a returns solution that allows flexibility to how returns are handled, to automate them accordingly, to provide visibility between customer service and operations, and to provide data and insights to iterate and make the process even better. 

ShipBob’s streamlines the RMA process 

ShipBob can support returns across our fulfilment network, and we requite an identification of a return order when sending returns to ShipBob fulfilment centres: you must submit an RMA and tracking ID, so our team can identify the return. Note: You can’t use ShipBob return labels outside of the country of origin; We can only create return labels that ship within the same country. The Returns page in the ShipBob dashboard shows all returns created, so you can easily view and track your returned orders and get the most updated information on their status.

In addition to return platform integrations, ShipBob has a Developer API , allowing you to build custom integrations and workflows that feed into ShipBob dashboard for ultimate control over the returns process.

For reverse logistics, we have been leveraging ShipBob’s Returns API to automate and streamline our routine RMA processes.

Having ShipBob handle our returns has been a huge help in reducing our daily workload, and the ability to drive this process via API is wonderful.

– Waveform Lighting team

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Return merchandise authorization FAQs

Below are answers to the most common questions about RMAs. 

What is a return authorization number?

A Return Authorization Number is a unique number given by the brand to organise and internally track an RMA as it progresses along the post-purchase/post-fulfillment journey. Think of it as an order number, but for reverse logistics. 

What is a return authorization number used for?

A Return Authorization Number is used to provide both the warehouse and customer service teams with a reference and to keep RMAs organised. By providing an RMA number to the shopper, customer service teams can quickly and easily look up an RMA to answer any questions the shopper may have in regard to their return, its whereabouts, and its progress.

What is an RMA slip?

An RMA slip is similar to a packing slip, in that it contains all the information needed for the warehouse to receive the returned item and send it on its way, while providing visibility to the customer service team as to its status and where it could be in the warehouse. The RMA slip often contains a barcode that the warehouse team may scan to mark the package as received. It will also contain customer information, order information, return type and reason, as well as any other notes the brand deems important to have available at a glance.

Written By:

E.M. is building the Partnerships team at ReturnLogic, an operations and data-focused returns management platform. When she's not working with partners to unlock shared values for DTC merchants, she's shopping online.

Read all posts written by E.M. Ricchini