13 Ecommerce Returns Management Strategies for 2026

For online businesses, the returns process can be a bit of a logistical nightmare. When customers return items they’ve bought from your store, the whole logistics process needs to be reversed. This is why you must define your return policy and better yet, automate your eCommerce returns process paying attention to the cost, management and the effectiveness.

This guide explores what returns management really means, the latest ecommerce returns statistics, and the strategies that top-performing retailers are adopting today.

What is returns management?

Returns management, often referred to as reverse logistics, is the process of handling goods that customers send back after purchase. It covers every stage from the customer’s initial request to the final resolution – whether that means restocking, recycling, reselling, or issuing a refund.

Unlike a returns policy (which communicates the rules to customers), returns management is the operational backbone. It includes:

• Processing the return request.
• Approving or declining based on rules.
• Creating shipping labels and managing couriers.
• Receiving and inspecting returned items.
• Updating inventory systems.
• Issuing refunds, exchanges, or credits.

For enterprise-level ecommerce managers, returns management is not just an operational necessity – it is a strategic function. Done well, it reduces costs, improves customer lifetime value (CLTV), and provides valuable data insights into why products are coming back.

The best ecommerce returns management strategies for 2026

Tiered return policies

Flexibility remains a key differentiator; however, unmanaged flexibility can become unsustainable. For experienced managers, implementing nuance is what separates cost-centred logistics from customer-centric strategy.

• Tiered return policies: For example, loyalty or VIP customers (repeat purchasers with high CLTV) may receive extended return windows or free return shipping; newer customers might have stricter windows or contribute towards return shipping. That ensures customer satisfaction where it pays off most, without exposing margins unduly.
• Returnless refunds for low-value items: When the cost of handling a return (logistics, inspection, restocking) approaches or exceeds the item’s margin, it may be more cost-effective to issue a refund without collecting the item. This can also reduce reverse-logistics complexity and warehouse clutter.
• Exchange or store-credit first model: Encouraging exchanges (size, colour, variant) or offering store credit shifts value retention inward rather than outward as cash refunds which impact cash flow and possibly margins. For example, a retailer might give an incentive (discount or loyalty points) to opt for exchange rather than refund.
  
  

Prevent returns

Preventing returns is often the least costly and most scalable lever. For enterprise businesses, the aim is to reduce return incidence through downstream improvements in product design, content, and user experience.

• Data-driven SKU risk profiling: Analyse historical returns data by SKU, customer cohort (e.g. new vs repeat, geography), and reason codes. By profiling, you can identify high-return SKUs and adjust fit, description, or image content proactively.
• Enhanced product visuals + AR / Virtual Try-On: Categories like fashion and furniture see disproportionately high returns due to fit and appearance. Leveraging AR-based try-on tools or 3D modelling can reduce uncertainty. A brand might integrate a virtual mirror or dimensions overlay, or use video content showing true-to-life proportions. These investments often pay back directly in fewer returns and reduced restocking costs.
• Quality control and defect prevention upstream: For industries where defects (even small ones) drive returns—electronics, homeware—you can establish inspection thresholds. For example, failure rates above a given % should trigger root cause investigations with suppliers. Minimising shipped defects reduces both customer dissatisfaction and the operational burden on returns handling.
• Clear, technical product specifications and filter tools: Use precise sizing guides (dimensions, fit, weight, material), true-colour images, video unboxing, and customer reviews with returns tags. Also, filtering tools (e.g. “fits true-to-size”, “runs small”, “runs large”) help set expectations before purchase.
  
  

Conditional and shared cost strategies

To protect margins while maintaining perceived fairness, many UK retailers are implementing shared cost or conditional policies.

• Selective return shipping fees: Apply return shipping charges only in certain cases—e.g. bulky, heavy or low margin items—or unless returns are dropped off at store or third-party location. This limits high-cost returns without a blanket fee that could alienate customers. Data suggests that six in ten UK shoppers might stop buying from retailers that charge for returns, so transparency is key. 
• Restocking fees for high-risk or high size/weight items: For items that incur considerable handling cost (e.g. large furniture, heavy electronics), a restocking fee can help cover handling, inspection, and possible refurbishing costs.
• RMA authorisation / conditional return approval: For certain SKUs, or certain customer segments, require Return Merchandise Authorisation (RMA), photograph evidence, or validation of order details before approving the return. This helps avoid unnecessary shipments and potential abuse.
  
  

Abuse and fraud prevention strategies

Fraud and serial misuse can erode margins severely. UK retailers already lose an estimated £1.3 billion annually to returns fraud.

• Serial returner monitoring (“bracketing”, “wardrobing”): For instance, research by ZigZag and Retail Economics estimates that 11% of shoppers are serial returners, responsible for c. £6.6 billion of returned goods annually in UK ecommerce. Develop models to flag customers who repeatedly order multiple variants (size/colour) then return most. Policies (tiered fees, stricter approvals) can be triggered for that segment.
• SKU-level risk scoring and geographic pattern detection: Some SKUs or regions may disproportionately show higher fraud or abuse. Using machine learning or rules to tag high-risk SKUs (e.g. limited-edition fashion, accessories) helps target inspection or require higher proof for returns.
• Verification technologies and proof requirements: Requiring photos, video, serial numbers or packaging evidence in specific cases (e.g. after 30 days, or for high value) can deter fake return claims. Some UK retailers deduct from refunds if wear or damage beyond “reasonable use” is visible.

International returns management: tips and risks

Handling returns across borders has always been more complex than domestic operations, but for UK retailers the challenge has intensified post-Brexit. Each return is not just a logistical event but also a compliance and cost management exercise. Duties, VAT refunds, and customs documentation add friction, while customer expectations for speed and transparency remain high.

Navigating regulatory frameworks

The UK’s regulatory environment diverges from the EU’s, creating inconsistencies in consumer rights and tax obligations. In the EU, customers benefit from the 14-day withdrawal period under consumer law, while UK rules are similar but enforced independently. The question for managers is whether to harmonise policy globally or adapt to each jurisdiction. Misalignment can create both reputational and legal risks.

Courier selection and customs handling

Courier strategy is critical. Returns often flow back through multi-leg logistics chains, which can increase both cost and damage risk.

Partnering with couriers that offer Delivered Duty Paid (DDP) return options reduces friction for customers but adds upfront cost. Conversely, Delivered Duty Unpaid (DDU) shifts complexity to the shopper and often leads to dissatisfaction. 

Meeting customer expectations

Cross-border customers expect the same level of convenience as domestic shoppers, but delays of even a few days can erode satisfaction. A dress returned from Milan to a UK hub may take 7–10 days to process, compared with 2–3 days for a domestic return.

Enterprises are responding by setting up regional return hubs—for instance, consolidating EU returns in Germany or the Netherlands before bulk shipping back to the UK. This reduces transit time and customs exposure, and it also enables faster refunds, which are directly linked to loyalty metrics such as NPS and repeat purchase rates.

Automation for international workflows

Manual handling of cross-border returns is unsustainable at enterprise scale. Leading retailers are investing in automated customs documentation, RMA workflows that trigger pre-filled CN22/CN23 forms, and API integrations with couriers to pre-calculate duties and VAT adjustments.

This not only reduces errors but also speeds up the customer journey: critical in markets where regulatory delays are common.

What are the challenges of eCommerce returns management?

High-volume workflows and scalability

As ecommerce operations mature, the scale of returns grows in a way that is anything but linear. A retailer processing 100,000 monthly orders will not face just five times the returns of one handling 20,000—it will face exponential pressure across its logistics stack.

Returns must be received, inspected, and either re-stocked, refurbished, or written off. Each step requires integration into ERP and WMS systems, plus accurate financial reconciliation. Without infrastructure such as dedicated inbound lanes, automated scanning stations, and real-time stock updates, warehouses quickly become bottlenecks.

International and cross-border complexities

International expansion is a growth driver, but it amplifies the difficulty of handling returns. Post-Brexit, UK retailers must manage customs duties, VAT, and additional paperwork, all of which extend turnaround times and inflate costs.

To cope, many retailers are trialling localised return hubs or working with reverse logistics providers to shorten loops. Yet this creates new issues: system integration, policy alignment, and cost balance. Should a German customer have the same return conditions as one in Manchester? If VAT refunds are processed manually, errors or delays risk both compliance fines and reputational damage.

Omnichannel returns and data fragmentation

Customers increasingly expect BORIS—buy online, return in store. While it enhances convenience, it fragments data flows. If an online purchase is returned in a physical store, the return must flow back into central systems to trigger refunds and update stock.

In practice, many retailers lack this visibility. Riskified highlights how fragmented data prevents fraud detection and distorts stock accuracy. The operational cost is significant: one channel refunds too late, another re-stocks too slowly, and the customer journey becomes inconsistent.

Managers must therefore harmonise policy language across channels and invest in advanced OMS platforms that unify data. Without this, retailers risk not only inefficiency but also lost trust.

Fraudulent returns and policy abuse

Fraud is no longer marginal—it is a structural cost. Common abuses include wardrobing (wearing then returning),  bracketing (ordering multiple variants), and false “item not received” claims.

Enterprises are responding with layered controls: machine-learning models to flag high-risk SKUs, photo or video proof before authorisation, and tiered policies—loyalty members receive leniency, high-risk customers face stricter rules.

The managerial challenge is delicate: how to protect margins without alienating legitimate customers. Over-policing can erode trust, while under-policing leaves millions lost to fraud. The answer lies in using granular data to strike a balance that preserves both profitability and long-term CLTV.

Why automate the returns process?

Automating returns is a great way to simplify the process for eCommerce businesses, and can transform a tedious workflow into something your business can use to its advantage. The returns workflow is full of manual interactions and repetitive tasks which can be easy to automate, but it’s important not just to automate for the sake of it.

Overall, improving automation for returns will increase customer satisfaction, reduce costs, increase efficiency and help maximise profitability and ROI through reduced fraud and errors. 

Returns automation can help in each step of the returns process, including:

• Initiating the returns process
• Approving or rejecting returns requests
• Generate returns labels
• Real Time tracking and visibility
• Notifying customers
• Verifying returns
• Issuing store credit or refunds
• Gathering data to optimise processes
  
  

Best ways to implement e-commerce returns automation

So how do you go about automating the returns process for your online business?

Automated returns initiation

The first step in automating ecommerce returns is to streamline the initial returns request process. When a customer wishes to return an item, they can do so easily via a form on your website or app. This means you won’t receive email requests or phone calls regarding returns, and makes it easier for your customer to initiate the process themselves.

It’s also key to design a clear and customer-friendly returns policy that outlines eligibility criteria, timeframes and your process for returns. Display this policy somewhere prominent on your website to set customer expectations.

Approving or rejecting returns requests

Once the return request form has been filled out it can be automatically validated using integrated returns management software (such as ShippyPro Easy Return). One of the things the software will do is align the customer’s request with your returns policy and then approve it. This means you don’t have to do this manually. The result is a streamlined approval process that saves time. 

Automate courier selection and label creation

Use rules that factor weight, value, distance, pickup vs drop-off, and promised SLA. Generate labels and customs docs (CN22/CN23) server-side via carrier APIs and return the artefacts to the portal in real time. For cross-border, prefer DDP return options on customer-friendly journeys; if you must use DDU, declare it upfront to avoid basket-level trust erosion (UK shoppers react strongly to perceived friction on returns).

Generate returns labels 

Label generation is one of the most labour-intensive parts of eCommerce returns, so it's key that the process is made as simple as possible for your customers. Return software will also automate the creation and delivery of return shipping labels that your customers can print out and attach easily. Some online businesses include the return label with the order to make the process even more convenient. Streamline eCommerce returns further by integrating various popular shipping couriers for seamless label generation.

You could also include return packaging in the box with a return label already attached. This kind of convenience makes it even easier for customers to return items quickly and in your specified timeframe, which will increase customer satisfaction.

Tracking and visibility through automation

By leveraging technology to automate parts of your reverse logistics processes you can enhance transparency through tracking and visibility – which is very valuable for tracking returns. Providing real-time updates keeps your customers engaged in their requests and improves customer satisfaction. 

Automate refunds and exchanges

Your customers want to make sure they’re refunded efficiently once an item has been returned and it’s been received back into your inventory. Automating refund calculations or credit will help streamline the refunds and returns process 

Using analytics for continuous improvement (and risk control)

Logistics KPIs to monitor: Return Rate by SKU/Category, Time to Refund, Cost per Return, First-time vs Repeat Returner mix, Paid vs Free return ratio, Inbound damage rate, and International vs Domestic cycle times.

A/B test “paid vs free return” by segment and category; measure sales conversion, return incidence, and net margin together.

As your business grows, so will the complexity of your operations – including returns management. Once you have implemented your returns process you can start to optimise based on learning you’ll receive over time. You can start to identify items with higher churn rates and work on them to reduce the percentage. You can also use predictive analytics based on your customers’ behaviours to make decisions; for example, when to restock a particular item or update your returns policy. 

Read more: Shipping analytics plaftorm: top 12 softwares for UK

Are you ready to automate the return process? 

If your ecommerce sales increase you will have to deal with an increasing number of returns. 

The most effective way to offer a unique experience to your customers, even capable of improving their opinion towards your brand and generating new sales, is to use ShippyPro Easy Return.

With this feature you’re able to:

• Manage returns in a fast and error-proof way thanks to a customised portal to integrate on your website. 
• Reassure your customers with a clear return policy and provide a process made up of simple steps (eg, printing of the return label in just one click).
• Monitor your return statistics and filtering data; for example by the reason for the return or product type. 

Focus on selling your products and forget once and for all the emails of those wanting to make a return but not knowing where to start. 

With ShippyPro Easy Return online returns are no longer a complex and cumbersome issue! Try it now for free

Ecommerce returns management: FAQs

What legal rights do UK customers have for online returns?

UK consumers get 14 days to cancel under the Consumer Contracts Regulations and full refunds for faulty goods. 

Can retailers require proof of fault to accept a return?

Yes—after 30 days, proof may be required. Retailers can request photos or other evidence. 

Is a receipt necessary for a refund of faulty goods?

Not always. A bank statement usually suffices as proof when the receipt is lost. 

Do UK retailers have to offer free returns shipping?

No. Free returns are optional except for faulty items — policy must clearly state who pays return shipping.

What items are excluded from online returns by law?

Custom-made, personalised, perishable items, sealed hygiene products and software once unsealed. 

Can online retailers refuse returns if a customer changes their mind?

They can refuse only outside cooling-off period; change-of-mind returns aren’t legally required for in-store purchases. 

What metrics should ecommerce managers track for returns?

Return rate by SKU, time to refund, repeat returner ratio, cost per return, inbound damage rate.