Returns Process

A professional returns process is not a necessary evil, but a central part of the customer experience and profitability in e-commerce. In German online retail, return rates range from 15 to 50 percent depending on the industry – in fashion even higher. Those who structure, digitize and measure the workflow reduce costs, accelerate product availability and strengthen customer loyalty. This guide describes the complete returns process from a fulfillment perspective: from customer registration through to the decision on restocking, B-grade stock or disposal.

Why the Returns Process Is Strategically Important

Returns affect almost every department: customer service, IT, warehouse, finance and marketing. A fragmented process leads to duplicate work, lost items and frustrated customers. A seamless workflow, on the other hand, creates transparency for all stakeholders and delivers valuable data on product quality, sizing issues and shipping errors.

The key goals of an optimized returns process:

• Customer satisfaction: Easy returns, clear communication and fast refunds
• Inventory accuracy: Correct booking in the warehouse management system (WMS/ERP)
• Cost efficiency: Minimization of handling, transport and value loss costs
• Sustainability: Reuse instead of destruction, where possible
• Data quality: Analysis of return reasons for product and process improvement

The Six Phases of the Returns Process

A complete returns process in fulfillment can be divided into six consecutive phases. Each phase has defined responsibilities, system requirements and measurable KPIs.

Returns Process Fulfillment – Process Flow

Phase 1: Return Registration by the Customer

The process starts when a customer wants to initiate a return. Modern shops offer a Returns Portal in the customer account or on a dedicated returns page. The customer selects the affected items, states the return reason and receives a confirmation with next steps.

Typical requirements in this phase:

001. Authentication via order number and email or customer account
002. Selection of items to be returned (full or partial return)
003. Capture of return reason from predefined list
004. Display of valid deadlines according to right of withdrawal and shop policies
005. Generation of a return number (RMA – Return Merchandise Authorization)

Clean registration prevents unannounced parcels from arriving at the warehouse and having to be manually matched – a common cost driver.

Phase 2: Return Postage Label and Return Transport

After registration, the customer receives a return label – either as a PDF for self-printing, as a QR code for the parcel shop or pre-paid in the parcel (with proactive return label in outbound). Return transport is handled via the selected carrier, frequently DHL in the German market.

Important decisions in this phase:

• Who bears the return costs? Free returns, flat fee or deduction from refund
• Which carrier? Same carrier as outbound or specialized returns service provider
• Drop-off or pickup? Parcel shop, pack station or pickup by the carrier

Phase 3: Goods Receipt of the Return

Once arrived at the warehouse, each return goes through a structured goods receipt process. Unlike regular goods receipt from suppliers, the return must be matched to an existing order and return registration.

Standard workflow in returns goods receipt:

001. Scan of return label or tracking number
002. Opening and visual inspection of the parcel
003. Matching of contained items with return registration
004. Recording of discrepancies (missing parts, wrong items, damage)
005. Forwarding to quality inspection or quarantine zone

Phase 4: Inspection and Qualification

In the inspection phase, warehouse staff or an automated workflow decide on the further disposition of the goods. Qualification follows clear criteria that must be documented in advance.

Phase 5: Restocking and Inventory Booking

After qualification, the goods are physically stored and booked in the system. Synchronization between WMS and shop system is crucial: Only when inventory is correctly updated can the item be sold again.

Particular attention should be paid to:

• Batch and expiry date goods: Return booking only with correct batch number
• Serial number tracked items: Unique assignment and status change
• Fashion items: Ironing, folding or hanging before restocking
• Electronics: Function test and data erasure before resale

Phase 6: Refund and Process Completion

Parallel to or staggered with goods processing, the financial settlement takes place. The customer receives a refund to the original payment method, a voucher or an Exchange Request – depending on shop policy and return reason.

Target KPIs for this phase:

• Refund within 3–5 business days after goods receipt
• Automatic email notification at each status change
• Closure of return number in system with timestamp

Returns Process – Time Guidelines

Roles and Responsibilities

A smooth returns process requires clear responsibilities. The following overview shows which department carries main responsibility in which phase.

In-House Warehouse vs. 3PL: Differences in the Returns Process

Whether returns are processed in your own warehouse or by a fulfillment service provider (3PL) significantly affects the process.

In your own warehouse you have full control over quality criteria and speed, but bear all fixed costs and staffing risks yourself. The process must be documented and trained internally.

With a 3PL partner returns are processed according to agreed SLAs. Transparent interfaces, uniform quality standards in the contract and regular reporting are crucial. Many 3PL providers offer dedicated returns areas with their own staff and technology.

Returns: In-House Warehouse vs. 3PL Comparison

KPIs and Success Measurement

What is not measured cannot be improved. These metrics should be continuously tracked in the returns process:

001. Return rate: Share of returned orders of total orders
002. Return rate per SKU: Identification of problematic items
003. Return cycle time: From registration to refund (target: under 7 days)
004. A-grade rate: Share of resalable returns of total returns
005. Cost per return: Transport, handling, packaging, value loss
006. Refund rate: Share of fully refunded returns vs. rejections
007. Unannounced return rate: Indicator for process gaps

Industry Benchmark Return Rate

Return rates have risen slightly since 2020 – continuous monitoring and prevention measures are therefore all the more important.

Checklist: Setting Up the Returns Process

Use this checklist to systematically build or review your returns process:

• Return policies defined in writing and published in the shop
• Legal obligations (right of withdrawal, information requirements) implemented
• Self-service returns portal integrated in shop or OMS
• Return reasons as mandatory field with analysis capability
• Carrier integration for return labels set up
• Dedicated goods receipt area for returns in warehouse
• Qualification criteria (A/B/C-grade) documented and trained
• WMS workflow for return booking configured
• Quarantine zone for unclear cases set up
• Automatic customer notifications on status changes
• SLA for refund duration defined internally
• KPI dashboard for return metrics available
• Regular return analysis (monthly/quarterly) established

Common Mistakes and How to Avoid Them

The most common pitfalls in the returns process:

1. Missing RMA numbers: Returns without registration cause high manual effort
2. Unclear quality criteria: Staff evaluate goods inconsistently
3. Delayed inventory booking: Items are physically present but shown as sold out in the shop
4. No return reason analysis: Same mistakes repeat with products and shipping
5. Insufficient outbound packaging: Damaged returns due to poor original packaging
6. Insufficient training: New staff do not know the process

Digitalization and System Integration

A modern returns process is hardly scalable without system integration. The central data source is the Order Management System (OMS), which connects shop, WMS and carrier.

Important integrations:

• Shop system ↔ Returns portal (registration, status)
• OMS ↔ Carrier API (label generation, tracking)
• WMS ↔ ERP (inventory booking, B-grade management)
• Payment provider ↔ Shop (automatic refund)

Returns System Integration – Workflow

Industry-Specific Particularities

The returns process varies considerably depending on product category:

Fashion and textiles: Offer size exchange as an alternative to return; observe hygiene seals for underwear and swimwear; plan ironing and preparation before restocking.

Electronics: Function test and data erasure are mandatory; serial numbers must be matched; original packaging often decisive for A-grade status.

Food and cosmetics: Opened products are generally not resalable; strict quarantine rules and documentation required.

Furniture and bulky goods: Return transport organizationally complex; often external freight forwarders and appointment coordination required.

Optimization Potential

Returns cannot be completely eliminated, but the process can be continuously improved:

• Prevention: Better product photos, size advisors, detailed descriptions
• Alternative to return: Exchange, voucher with bonus, repair offer
• B-grade channels: Outlet shops, marketplaces for B-grade, second-life programs
• Refurbishment: Preparation of used electronics for resale
• Packaging optimization: Reusable packaging for frequently returned items

Frequently Asked Questions About the Returns Process

How long may a customer return goods?

Depending on right of withdrawal and shop policy, typically 14–30 days.

Must I accept every return?

No, exceptions are possible for hygiene items or customized products.

Who pays the return costs?

Retailer decision, no legal obligation for free returns (except in case of defects).

What happens to damaged return goods?

Qualification as B/C-grade, possibly deduction from refund.

How quickly must a refund be issued?

Common: 3–14 days after goods receipt, legally 14 days for withdrawal.

Related Topics

• Returns Basics
• Return Rate and Reasons
• Defining Return Policies
• Storing Returned Goods and B-Grade Stock
• Return Label and Return Shipment

Last updated: July 7, 2026