What Is an RMA Return? How It Works and Top Tools

When customers return an item they purchased from your store, the process for handling that return is known as return merchandise authorization (RMA).

Creating a streamlined RMA process is important, and takes a lot of planning. You need to create a clear and fair policy for refunds, replacements, and repairs. You also need a robust tracking system to approve and process returns and keep everything running smoothly.

Get it right, and you’ll boost your customers’ shopping experience, leading to repeat purchases and brand loyalty. In fact, 96% of US shoppers admitted return policies influence buying decisions.

This guide breaks down the entire RMA process and shares tips and software tools to help you make returns hassle-free and improve customer satisfaction.

What is an RMA (return merchandise authorization) return?

An RMA, or return merchandise authorization, is a business’s formal approval for the repair, replacement, or refund of a product under warranty. It provides a numerical code that helps the vendor track and document the return in an inventory management system. 

Returns can be costly for vendors and a hassle for customers, so it’s best for everyone to try and prevent them. Issuing an RMA allows sellers to address the customer’s issue and ensure the return complies with their policies before processing it. 

Why is an RMA important?

• Operational efficiency
• Cost management
• Inventory control
• Customer relationship management
• Business intelligence

Operational efficiency

RMAs streamline returns with a structured approach, ensuring every return is documented, tracked, and managed efficiently. This reduces errors like lost returns or incorrect refunds. With fewer headaches, you can allocate resources more effectively, letting your logistics and customer service teams handle their workload better.

Around 50% of shoppers will ditch their carts if returns seem tricky or inconvenient. A structured RMA process, complete with clear guidelines and instructions, makes returns less daunting. This ensures a smoother return experience and eliminates frustrations.

Cost management

According to the National Retail Federation, US retailers lost a whopping $816 billion in revenue due to returns in 2022, which accounted for 16.5% of merchandise purchases. An effective RMA can cut these costs by resolving issues remotely, lowering the number of products that need to be shipped back. This saves on shipping, handling, and restocking expenses, and minimizes your losses from damaged returns.

Customers benefit from the cost management aspect of RMAs by avoiding the inconvenience and potential costs of shipping items back, especially those in remote locations or dealing with large or heavy products. 

Inventory control

Nearly a third of retailers struggle with inventory issues or return abuse. RMA-enabled tracking of returned items helps you maintain precise inventory levels, preventing discrepancies that could affect sales and operations. It also facilitates efficient restocking that ensures products are inspected, refurbished if necessary, and either restocked or disposed of appropriately. 

Effective inventory control means replacement items are always on hand, reducing wait times for customers. It also reassures customers that you’re handling their returns properly, leading to a seamless shopping experience.

Customer relationship management

Studies show that almost two-thirds of shoppers satisfied with the return process will shop with the retailer again. A well-designed RMA process provides a clear, organized return system and proactive support, boosting customer satisfaction and loyalty. This enhances your store’s reputation, ultimately leading to increased revenue.

Customers appreciate hassle-free returns with quick issue resolution. Clear communication and timely resolutions improve the overall brand experience, encouraging repeat purchases. Transparency and fairness in handling returns build trust in your store.

Business intelligence

Analyzing RMA data provides vendors with valuable insights. By tracking return rates and processing times, you can identify product issues, improve quality, and enhance returns management. This data-driven approach reduces returns and boosts product development and overall business performance.

Customers indirectly benefit from the business intelligence gathered through RMAs. As you improve products and processes based on RMA data, your customers enjoy higher-quality products and better service.

How does the RMA return process work?

1. Set your brand’s return policies
2. Customer initiates return request
3. Issue the RMA number
4. Provide return instructions
5. Customer ships the product
6. Receive and inspect the return
7. Process the return
8. Communicate with the customer
9. Update inventory and systems
10. Leverage return data for continuous improvement

1. Set your brand’s return policies

The first step in a return merchandise authorization process is to establish the return policies, rules, and any applicable fees. These policies form the framework for determining product eligibility for returns and guide shoppers on how to initiate this process. 

Critical elements to include in your return policy are: 

• Clear timeframes: Specify the window for returns, exchanges, or refunds (e.g., seven days from purchase).
• Condition requirements: Items should be returned unused and in their original packaging.
• Proof of purchase: Require a receipt or proof of purchase for all returns or exchanges.
• Eligible items: Clearly list which items can and cannot be returned or exchanged (e.g., sale items, personalized products).
• Refund method: State how refunds will be processed (e.g., original payment method, store credit).
• Shipping costs: Explain who covers return shipping costs and if pre-paid return labels are provided.
• Process steps: Offer a step-by-step guide for initiating and completing a return, exchange, or refund.
• Exceptions and special cases: Mention any exceptions (e.g., damaged or defective items) and how they are handled.
• Contact information: Provide contact details for customer service to help with any return-related questions.
• Restocking fees: If applicable, disclose any restocking fees and when they apply.

💡Top Tip: 86% of retailers agree that a lenient returns policy can increase revenue and share of wallet. So, keep your target audience front and center when writing your RMA returns policy. For instance, you can offer a generous return window, like 30 or 60 days. This gives customers enough time to decide if the product meets their needs.

2. Customer initiates return request

When a customer decides to return a product, they will contact your customer service team—either through your website, via email, or by phone. Ensure your RMA form includes a field for customers to specify the reason for the return and their preferred resolution, such as a refund, repair, or exchange.

3. Issue the RMA number

Once the RMA request is received, your customer service representative or delivery partner will assess the eligibility of the return based on your store’s return policy. They will check the item’s condition, the return reason, and whether it falls within the warranty period.

If the return is approved, you’ll issue an RMA number, unique to each request. This number is crucial for tracking the return, helping to identify and manage it throughout the entire process.

4. Provide return instructions

Along with the RMA number, provide the customer with detailed instructions on how to return the product. This should include:

• Packaging guidelines: How the product should be packaged to prevent damage during shipping.
• Shipping label: A prepaid return shipping label, if applicable, or instructions on how to obtain one.
• RMA form: A form to be included in the package, if applicable, with the RMA number and details about the return reason.

Clear instructions ensure the product is returned securely and correctly. Fashion Nova, for instance, includes clear return instructions and pre-paid labels, simplifying the process for customers and reducing the risk of errors.

5. Customer ships the product

Most customers prefer free return shipping for online purchases. However, they will also follow your packaging guidelines and ship the product back. Customers may use designated drop-off locations or a specified shipping carrier, with tracking information provided to monitor the shipment. 

💡Top Tip: Shopify’s integration with return management platforms like Return Prime helps automate this step, providing customers with multiple drop-off locations and tracking capabilities. It also offers automated order fulfillment based on customized rules.

6. Receive and inspect the return

Upon receiving the returned product at your facility, your returns team will:

1. Verify the RMA number: Check that the product is accompanied by the correct RMA number.
2. Inspect the product: Conduct a thorough inspection to determine the condition of the product and the validity of the return reason. Check for:
• Physical damage. Look for any signs of wear, tear, or damage.
• Original packaging. Ensure the product is returned in its original packaging with all accessories and documentation.
• Functionality. Test the product to confirm it functions as expected, especially for electronics or complex items.
3. Documentation: Document the condition of the product and any discrepancies or damage found during the inspection. 

7. Process the return

Post inspection, decide the appropriate course of action:

1. Refund: If the return meets all the criteria, process a refund to the customer’s original method of payment. Ensure that your accounting system accurately reflects this transaction.
2. Replacement: If the customer requested a replacement and the product is eligible, ship the replacement item promptly.
3. Repair: If the product requires repair, send it to the appropriate department or external service provider for fixing. Keep the customer informed about the status and expected timeline.
4. Decline: If the return does not meet your criteria (e.g., it is outside the return window, shows signs of excessive wear, or does not comply with your return policy), inform the customer of the reason. Offer alternative solutions, if possible, such as a partial refund, store credit, or return of the item.

Don’t forget to factor in the customer’s initial request from Step 2. Remember, your main goal is to make returns seamless and transparent. Nearly 96% of customers would shop with you again if they have an “easy” or “very easy” return experience. 

8. Communicate with the customer

Keep the customer informed throughout the return with automated email or SMS updates. Provide updates on:

1. Receipt confirmation: Notify them when the return has been received and inspected.
2. Status updates: Inform them of the status of their refund, replacement, repair, or decline. For the latter, be specific and reference your return policy to help the customer understand why their request was not approved.
3. Completion notification: Confirm once the return process is complete, including when a refund has been issued or a replacement has been shipped.

Effective communication is key to maintaining customer trust, especially for merchandise returns. A study by Narvar found that 53% of customers want to be notified of each step in the return process.

9. Update inventory and systems

After processing the return, update your inventory to reflect the returned item. If the product is in resalable condition, restock it and log it back into your inventory management system to maintain accurate stock levels. 

If not, decide whether it should be repaired, refurbished, or disposed of. Make sure your inventory management system accurately reflects these changes to maintain proper stock levels.

10. Leverage return data for continuous improvement

Collect and analyze data from your store’s RMA returns to identify trends and areas for improvement. This includes:

• Common return reasons: Understand why products are being returned to address potential issues in product quality, description accuracy, or customer expectations.
• Return rates: Monitor return rates to gauge customer satisfaction and product performance. High return rates can indicate problems needing attention, while low return rates suggest products are meeting customer expectations.
• Process efficiency: Evaluate the efficiency of your store’s returns processes to identify bottlenecks and improve turnaround times.

Then, use the insights gained from return data analysis to make continuous improvements to your products and return process. This helps reduce return rates and enhance product quality, thereby improving customer satisfaction.

Outdoor Voices is one good example. The apparel brand uses return data to refine product quality and customer service practices. By analyzing return reasons and patterns, it makes informed decisions that continually enhance business strategies, leading to better products and happier customers.

Tips to manage RMA for your store

• Use predictive analytics for inventory management
• Automate returns workflows
• Use return reason codes for deep analysis
• Utilize integrated return management systems

Use predictive analytics for inventory management

Predictive analytics helps you forecast return rates and accordingly adjust your inventory management. As you analyze past return data and customer behavior, you can anticipate potential returns and manage your stock levels more efficiently. 

Let’s say a product has a history of high returns. You can keep your inventory lean by stocking fewer units of that item. Plus, you can get your warehouse ready by setting up dedicated areas and processes for handling those expected returns. 

Automate returns workflows

Implement automation tools to streamline your RMA process. Ideally, use tools like Loop Returns that can:

• Issue RMA numbers: Automatically generate and assign RMA numbers to each return request.
• Generate shipping labels: Create and send shipping labels to customers, simplifying the return process.
• Update inventory systems: Update your inventory in real-time as returns are processed.
• Send automated notifications: Automatically inform relevant departments about incoming returns.

Automating return workflows reduces manual effort and minimizes errors, speeding up the overall return process. 

Use return reason codes for deep analysis

Using detailed return reason codes helps you understand why products are returned. Analyzing this data regularly can reveal trends and root causes, leading to better product decisions and higher customer satisfaction.

For example, McKinsey found that 70% of returns were due to poor fit or style. This suggests that offering size guides, virtual try-ons, and detailed product descriptions can help customers choose the right products from the start, thereby preventing returns and improving satisfaction.

Utilize integrated return management systems

Consider investing in a return management system that integrates with your existing ecommerce platform, inventory management, and CRM systems. Such a system gives you real-time updates, automates return workflows, and boosts communication between departments. 

Case in point: Easy Returns Management System. This Shopify app automates return approvals, generates shipping labels, and provides detailed return analytics. This makes the whole RMA process more efficient and hassle-free.

Examples of return policies

Phenom Boxing

Phenom Boxing keeps RMA straightforward and fair. It offers returns within 30 days of purchase, provided the products are unused and in their original packaging. Refunds are processed after the items are inspected and approved. While customers handle return shipping costs, the clear and simple terms ensure transparency. 

For a deeper dive, visit its refund policy page.

Kith

Kith’s return policy is great for shoppers wanting a transparent and concise return process. It accepts returns and exchanges within 14 days of purchase, provided items are new, unworn, and have their original tags. Final sale items are excluded, maintaining clarity and simplicity. 

For more information, head over to its returns and exchanges page.

Brooklinen

Brooklinen sets a high bar with its shopper-first approach. It allows returns and exchanges within a generous 365-day window for any reason. Shoppers also get free return shipping and a refund after deducting a small return fee, as long as the items are in good condition.

Check out its returns page for more details.

💡Top Tip: Take a cue from Brooklinen and add clickable return categories for different types of customers on your Returns & Exchanges web page. This organization lets shoppers find the information they need easily and quickly, enhancing their overall brand experience.

RMA return processing software

Return Prime

Return Prime streamlines return management for Shopify merchants. It offers a user-friendly interface and comprehensive features to simplify returns, exchanges, and store credits, making it a robust tool for boosting both operational efficiency and customer happiness.

Why you’ll love it:

Return Prime is a standout for its simplicity and automation. The self-service portal lets customers initiate returns on their own, easing the load on your support team. Meanwhile, you can automate approvals, refunds, and exchanges with minimal fuss. Detailed analytics give you insights into return trends, helping you refine policies and improve products.

AfterShip Returns Center

AfterShip Returns Center provides a centralized platform for managing returns and exchanges, perfect for enhancing the post-purchase experience. It integrates seamlessly with Shopify, automating RMA returns, and offers robust tracking abilities.

Why you’ll love it:

AfterShip Returns Center brings all your return requests together in one place, making management and tracking a breeze. It even auto-generates return shipping labels, saving you time and cutting down on mistakes. Plus, you can customize your return policies to set specific criteria, and the automated notifications keep your customers informed, reducing inquiries and boosting satisfaction.

ReturnLogic

ReturnLogic is a high-tech returns management platform that handles complex RMA processes. It offers advanced analytics and automation to ease the burden of returns handling and boost efficiency.

Why you’ll love it:

ReturnLogic’s customizable and automated workflows significantly cut down on manual processing time. Its deep analytics provide valuable insights into return data and trends, helping you make informed decisions on product improvements and RMA policies. In addition, seamless integrations with ecommerce platforms and other tools streamline operations, ensuring a smooth returns process.

Narvar

Narvar is a leading post-purchase platform offering a comprehensive suite of tools for managing returns and enhancing the customer experience. It’s designed to ensure a seamless and efficient returns process, thanks to intelligent routing and multi-label and multi-destination features.

Why you’ll love it:

Narvar is all about a branded, seamless return experience. The customizable portal keeps your brand front and center with an intuitive interface for shoppers. Real-time tracking and automated approvals make the return process efficient and transparent. Moreover, Narvar’s integration with customer feedback systems allows you to collect insights and continuously improve your return policies and product quality.

Establish an RMA return process for your store

Creating a customer-friendly returns process is your ticket to happier customers and smoother operations. When customers know they can return items hassle-free, their trust in your brand grows.

Start by designing a clear, easy-to-follow return policy. Spell out all the steps and requirements. Ensure your team is trained and ready to conduct meticulous inspections and document each returned item’s condition accurately. Additionally, use technology to your advantage. Implement robust systems to track returns and provide real-time updates to customers.

A seamless return or exchange process isn’t just about handling products—it’s about showing you care. By showing you value their satisfaction, you build customer loyalty and encourage repeat business.