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What is RMA and Why Your Dropshipping Store Needs it?

Profile picture of Lilla Stefanovszky
Lilla Stefanovszky
19th July, 2021
8 minutes

As a store owner, whether of a brick-and-mortar, online, or dropshipping store, you are surely not a fan of returns as they are time-consuming, can be a result of customer dissatisfaction, and are costly for your business. But unfortunately, this is not something you can avoid as a retailer.

According to statistics, 30% of goods that are purchased online and 9% of those bought in a physical store end up being returned. A return can have many reasons, ranging from a faulty product to the customer purchasing more items than needed with the original intention of returning some pieces. But keep in mind - if your customers have a pleasant experience with your return process, 92% of them are likely to choose your store again in the future. This means that creating a smooth return process is key in order to stay alive in today's cut-throat competition in the retail market. When you are operating a brick-and-mortar store, handling the return process is rather straightforward. But in the case of an eCommerce store, having an RMA (Return Merchandise Authorization) system in place is an absolute necessity.

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What is an RMA system?

An RMA system helps you handle the return process from the moment you receive the claim from your customer until you replace the item or issue a refund. An RMA system provides you with an interface where you can receive and review your customer’s return requests. Based on your return policy, you can determine which product you accept as a return and issue a unique RMA number for them. An RMA number is crucial to your business as it can serve as a basis for analyzing the reasons for your returns and also it’ll hugely help with the logistics aspect of the process.

Why it’s good to have an RMA system in place?

When you have an RMA system in place, it encourages a dialogue with the customer and helps you to solve the return issue by investigating the situation further. If you decide to accept the return, you can proceed with issuing an RMA number or form to the customer that should be included in the return shipment. This RMA number will allow you to keep track of the reasons you are receiving returns, which will be a piece of valuable information to you at any point in time. It’ll allow you to filter out the main reasons for the return and take the appropriate actions such as changing your supplier, your packaging, or warehouse. Also, an RMA number or form will help you smooth out the logistics surrounding a return, as it facilitates better tracking of all stages of the return process until it is closed. So, let’s see how an RMA system can benefit you throughout the whole process.

RMA form for online return

Collecting information from your customer

In order to assess the condition of the product in question, you will need to collect adequate information from your customer first. If you do not accept a return in any situation or you are operating a dropshipping store and you need to align your return policy with your supplier’s, you need to know what your customers want to return and why.

In your RMA system, you can input a list of acceptable return reasons that your customer then can choose from and make sure that their claim is accompanied by images as well. This will not only help you to assess the exact condition of the item in question but you can also make sure that they do not fall prey to any fraudulent activities. Moreover, a clear image can also help you to file a claim at your courier partner if your customer received the goods damaged. Once you have all this information at your disposal, you can decide whether you want to accept the return or not and how you wish to handle the process going forward.

Make sure to be available for assistance

If you have decided to accept the return, expect your customer to be wanting to contact you until the process is closed. Customers usually like to check on how the process is progressing and when they can expect their money back or the replacement item you send them. When this happens, you would want to be able to answer their questions immediately to portray yourself as a serious business. Your RMA system will help you immensely when you receive an unexpected call from your customer as it’ll have all the necessary information such as tracking number, order value, refundable amount, and so on. This will allow you and your customer service team to always be on top of returns and keep your customers happy.

Issue your return label

Regardless of your customer getting a refund or a replacement item, they will have to return the original item first. Statistics show that 79% of customers are expecting their return to be free of charge. This means if you have a free return policy, you can easily gain a competitive advantage over your competition and win more purchases for your business. However, when managing a dropshipping store, your return policy is tightly connected with the return policy of your supplier, therefore the possibility for free returns would be a matter of further discussion – if and when these would be feasible.

In your RMA system, you can allow your customer to generate a return label automatically that will not only speed up the process but will also make it hustle-free. If you decide to offer a free return, you can make sure that the item is returned with the courier of your choice and that the package is packed. There is nothing more frustrating when a customer says that they posted the package but it never turns up at your doorway.

Inspect the returned item

At the moment when you have your returned item in your hands, you should be inspecting it throughout in order to be able to decide if and how you will compensate your customer for the product. If you are dropshipping high-ticket branded items, you would never want to miss this critical step. Making sure that the customer returned the exact item you have sold them in its original packaging and with original tags and not a cheaper copy of it is essential for your business and profit.

Allow your customer to pick a replacement item

The reasons for product returns vary widely, so you also need to be flexible with the options you offer to your customer when they want to return something. Do not assume that the reason for the return is a damaged product as it only is the case about 20% of the time. Your customer might just have ordered or received the wrong item and they still would like to have the item of their choice. In these cases, make sure that they can choose to have a replacement item instead of an automatic refund. This will not only keep your customer satisfied but also you would still be making a sale and hence a profit.

Process the refund or send a replacement as soon as possible

If you have found that everything is in order with the returned item, it is vital to process the refund as fast as possible to guarantee your customer’s satisfaction with your store. With an RMA system, you can easily track which customer is due to receive their refunds, so you can view and manage everything in an organized manner. In case you offer the possibility for store credit instead of a refund, your RMA system can automatically generate a code or a voucher that your customer can use for a future purchase. If you are providing a replacement product instead of issuing a refund or store credit, your RMA system can help you track the new shipment and make sure that the customer received the new item before you close the case.

Collect information on your return and identify areas for improvement

An RMA system also allows you to easily collect and analyze your return data and identify issues or areas for improvement. Listening to your customers is a must if you want to drive your business to success. See if it is a certain product or supplier you have issues with and make the changes needed. You might just need to change or extend the product description or upload better quality images of a certain product or at times, you might even have to change your supplier if you receive back numerous products that they supplied. Also, pay attention to broken and damaged items, as it might not be your courier’s fault but your packaging’s. If you manage to get down to the root cause of the problem and eliminate the issue, you will automatically see a drop in the number of returned products.

To sum up

Having an RMA system has many advantages that can come in handy and improve your business in the long run. Also, when you are having a streamlined and well-working return system your customer’s satisfaction will increase with your business. This can help you gain returning customers even when their first purchase resulted in a return. For this reason, make sure that you choose an online platform for your business that allows RMA integration or offers it as a default option. If you want to further improve your return system and increase customer satisfaction, read our previous article on how to deal with unhappy customers.

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