What is an RMA system?

Definition: A return merchandise authorization (RMA) system is a strategy for managing product returns through your online store. It usually consists of a form that the customer submits with the reason for the return, which generates documentation (like a shipping label) to accelerate the customer’s return. An RMA system also helps you keep track of returns, reentering eligible items back into your inventory and helping you track the financial impact of the refund on your total sales.

Why do online stores need RMA systems?

Product returns might seem like a painful part of the ecommerce business, but they’re actually a crucial part of how your online store builds a strong, loyal customer base. Trying to manage returns manually on a case-by-case basis is nearly impossible without a formalized process to simplify management, which is exactly what an RMA system does.

How you handle returns can make or break your return business. Even long-time customers can have good reasons to return purchases. Even if they’ve been with you for years, one misstep in the return process could alienate them from your store forever.

RMA systems typically include the RMA itself (some form of documentation the customer fills out justifying the return), a printable return label sent to the customer, and a backend processing system that plugs into your inventory system. Whenever someone returns something, it needs to be logged into the system immediately so your books reflect the return. The best way to do this is to automate the entire process, allowing customers to initiate the return online so you can track it without having to change the numbers manually.

How do you set up an RMA system?

For most ecommerce software, a fully functional RMA system will be a built-in module or feature of the platform. You’ll need to set certain parameters for your returns like:

  • The number of days a product is eligible for return
  • Shopper refund choices (e.g. cash, exchange, or store credit)
  • Reasons the customer can choose for returning the item (broken, wrong size, etc.)

If you aren’t using a traditional ecommerce platform, you may have to dig through your CMS’ plug-in store to find what you’re looking for.

What happens when a customer initiates a return?

As soon as a return is initiated through a self-service RMA system, your customer should get a confirmation email with a printable return label so they can ship the item back to you within a designated period of time. Depending on your business model, you may either grant the refund immediately or wait until you receive the item. Once you receive the return, add it back to your inventory.

If everything goes smoothly, you may have earned yourself a return customer and avoided negative reviews!

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