The Impact of AI and Automation on Returns Management in E-commerce

We have established how returns are inevitable in e-commerce. But how businesses handle these requests or manage the process has been evolving year on year. From receiving requests, approving them, triggering returns, updating inventory, and issuing refunds - what was once all handled manually and took weeks to complete, now takes only a few days.

In this post, we’re going to talk about the impact of AI and automation on returns management in e-commerce. 

How AI and automation are helping e-commerce businesses manage returns

Here’s how we have seen brands optimize their returns with intelligent workflows and automations: 

1. Automated return request submission 

Traditionally, requesting returns would require customers to reach out to the brand through emails or phone calls. They’d have to wait for the customer support teams to revert and define the next steps for them before the product is sent back.

The entire process would result in longer wait times, which disgruntled the already dissatisfied customers. With self-service portals and automations, customers today can submit and trigger return requests in minutes. This has also helped businesses reduce the workload on customer support teams. 

2. Faster return authorization 

Return authorization initially involved manual approvals which led to delays and errors in responding to requests. 

AI-powered systems can now automate the process by setting predefined rules and criteria on return requests. This helps the brand approve or reject return requests instantly based on return reason, product type, customer purchase history, and other parameters. 

3. Efficient return label generation 

AI-powered authorization can trigger automated return label generation when a request is approved. This helps integrate a part of the reverse logistics process into the self-service portal, letting customers generate, download, and print labels instantly without having to wait to receive them from the brand. The process now helps save time and also streamline the entire returns process. 

4. Advanced fraud detection 

AI-powered returns systems can monitor requests in real-time to analyze patterns and identify fraudulent activities. For example, frequent returns on high-value items or mismatched purchases from a specific customer segment or demographic. 

AI models can also continually learn from return requests, becoming better at identifying and mitigating fraud through robust approval processes. 

5. Improved customer communication 

Automations can help keep customers informed throughout the returns process - from the moment a request is submitted to the point of resolution. 

Businesses can automate notifications/ updates through channels like email, SMS, or WhatsApp to ease customer anxiety, and also use chatbots to address any further concerns about timelines and return policies. 

6. Timely inventory restocking 

Once a return is initiated, automated systems can notify warehouses or fulfillment centers to enable faster inspection and restocking. 

AI can then also help predict whether a returned item can be resold and its value or if it needs refurbishment, helping businesses make informed decisions. This helps reduce inventory lag and ensures the availability of products for potential buyers. 

7. Dynamic policy adjustments 

AI can analyze historical data to suggest return policy adjustments to benefit both the business and the customer. For example, it can monitor the average return windows and recommend an extension to the one defined by you, or set tighter controls around high-value products that could potentially be eating into your revenue. 

Businesses can also use automations to set up and manage rules for processing return requests more efficiently. 

8. Personalized recommendations 

AI can help businesses monitor customer conversations and return reasons more proactively to find opportunities to retain revenue. 

For example, if a customer is seen returning a product due to sizing issues, the system can suggest a better alternative - an exchange or a similar product from the collection. This also opens new upsell and cross-sell opportunities, driving additional sales while processing return requests. 

9. Reverse logistics cost optimization 

Businesses incur the most amount of damage in reverse logistics. AI and automation can optimize routing for returned products, selecting the most cost-effective and efficient paths. The workflow can also help select the right logistics partners, helping the business reduce transportation costs and environmental impact. 

10. Predictive analytics for return reduction 

While most know about the benefits of AI and automation for managing returns, these systems can also help prevent them. By analyzing return reasons, product reviews, customer feedback, and other data, AI can pinpoint common issues that lead to returns. 

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For example, if customers are continually requesting returns due to sizing inconsistencies, it requires the business to update sizing charts or add additional how-tos to help customers choose the right variants. 

11. Bulk returns management 

Managing bulk returns can be challenging. Automation helps simplify the process by centralizing the requests and initiating and tracking the returns simultaneously based on predefined rules. In addition, AI can also help ensure each bulk returned item gets accounted for and categorized correctly, reducing manual errors. 

12. Supports sustainability initiatives 

AI can help businesses support sustainability efforts by reducing waste throughout the returns process. For example, it can help the business determine which returned items are suitable for resale, donation, or recycling, moving them through the process more efficiently. Brands can also use AI to get eco-friendly packaging recommendations for return shipments, aligning with consumer demand for greener practices.  

Conclusion 

The rise of AI and automation is redefining how e-commerce businesses manage return requests. 

The technology is not just helping businesses streamline return processes for efficiency, but also turning them into opportunities to improve customer satisfaction, generate more revenue, and drive higher customer loyalty in competitive markets. 

Want to know how AI and automation can turn returns into business growth opportunities? 

Book a demo of Return Prime today. 

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