Part 3.
Returns are costing you more than you think! Here’s what to do about it
Every return is a cost, but with the right systems, it doesn't have to be a loss.
Returns are inevitable in retail, but how you manage them determines their impact on your bottom line. Manual processes, vague policies and lack of coordination between systems lead to high operational costs, delayed refunds, and frustrated customers.
A modern Order Management System (OMS) like OIL turns returns from a liability into a manageable (even optimisable!) part of the retail journey.
Returns are inevitable in retail, but how you manage them determines their impact on your bottom line. Manual processes, vague policies and lack of coordination between systems lead to high operational costs, delayed refunds, and frustrated customers.
The hidden cost of returns
Retailers are rethinking their returns policies as operational costs soar. Over 50% of online fashion retailers now charge for postal returns, according to Which?. Brands like Zara, Next, and H&M are shifting toward paid returns in response to rising logistics costs, high return volumes, and sustainability concerns (Retail Gazette).
As noted by the BBC, return fees are also helping curb bracketing behaviour; where shoppers over-order with the intention to send most of it back. These changes reflect a growing recognition that returns are a strategic, not just operational, concern.
- Labour-intensive processing: Manually assessing, routing and refunding returns slows down operations and drains resources.
- Inventory delays: Returned stock often sits in limbo, unavailable for resale or restock.
- Customer dissatisfaction: Refund delays or errors undermine trust and hurt loyalty.
- Inconsistent policies: Lack of logic-based automation leads to subjective or inconsistent treatment across channels.
What an OMS like OIL does differently
OIL lets retailers take back control of returns through smart automation and clear business logic:
- Automated returns workflows: Configure return rules by product type, sales channel or reason for return.
- Dynamic refund logic: Choose when and how refunds are processed (e.g., gift card first, or post-inspection only).
- Intelligent routing: Send returned items to the optimal location (e.g., store or warehouse).
- Inventory sync: Immediately update available stock once an item is marked as restocked.
Real-world returns scenario
A customer returns two items bought online. One is faulty, and the other is simply the wrong size. OIL automatically triggers an immediate refund for the faulty item while initiating a restock process for the size swap. If either return falls outside your configured policy thresholds say, past the return window or flagged for repeat returns, OIL raises internal alerts for manual review. The process flows seamlessly, with no manual intervention, no double-handling and no delay for the customer.
Returns don’t have to be a black hole of cost and confusion.
With OIL, you can standardise return processes, protect your revenu, and improve customer confidence, without increasing team workload. With a true OMS, you don’t have to choose between great service and operational control. You can have both.
"Returns don’t have to be a drain on profit. With the right systems in place, they become a moment to recover cost, loyalty, and trust."
Find out how OIL connects orders, inventory and fullfilment across all channels so you can deliver what you promise, every time.
Want more ways to cut costs without compromise?
Read the other blogs in our OMS cost series for practical strategies retailers can use today.
