FAQs About Return Merchandise Authorization
More than ever before, retailers are facing a rising number of returns. In fact, in 2022 alone American shoppers returned products worth approximately $816 billion. That said, managing returns and refunds isn’t a simple task. Among many other things, you need to understand what return merchandise authorization (RMA) is and how it works for an optimized returns process. So what exactly is RMA? Let’s examine what returns merchandise authorization is, how it works, and why it matters.
What is RMA?
RMA refers to the chain of steps and processes customers follow to return products to sellers for refunds, replacements, or repairs. If a customer receives a damaged, incorrect, or defective product or has other valid reasons for returning it, they use the returns merchandise authorization process.
The RMA process can vary with the company, but it generally involves the customer reporting the issue, communicating with the business to determine the validity of the issue and product, shipping the product, and receiving a replacement, refund, or repaired product.
Returns merchandise authorization systems provide an opportunity for you to understand customers’ issues and handle solvable ones like those arising from improper configuration or installation. This reduces the high cost of returns and prevents inconveniencing your customers with the returns process. RMA also filters out returns that go against your policy.
If you determine that the product is eligible for a return and issue an RMA number to the customer, the number helps you document, and track the return and process the refund, repair, or replacement quickly. The RMA is usually accompanied by instructions that ensure a smooth return process.
How Does It Work? The RMA Process
The RMA process involves several steps and varies from seller to seller. Nonetheless, here is a brief breakdown of a typical RMA process from the perspective of the customer and the company.
The RMA Process From the Customer’s Perspective
The RMA process from the customer’s perspective involves the four steps below:
- Contacting Support: If a customer has received a damaged, defective, or incorrect product or has other reasons to return it, they can initiate the returns process by contacting the seller. Most businesses communicate via several different channels, including emails, calls, and text messages. They may have to fill out an RMA form and provide proof of purchase.
- Determining the Issue: The technician asks the customer questions to understand the cause of the issue and to try and solve it before resorting to returns.
- Receiving the RMA: When the seller determines the product is defective, they issue an RMA that gives the customer the go-ahead to return the product. They also provide instructions on the packaging, shipping, and other relevant details. But the seller can also reject the request, forcing the customer to appeal the decision or use alternative options like repairs. But the customer may also lack recourse.
- Preparing the Return Shipment: Customers prepare the return shipment according to the seller’s instructions. The instructions typically include writing the RMA number on the box they use to ship the product.
- Shipping the Product: The customer ships the product to the address the company provided. Depending on the company’s return policy, either the company or consumer pay the shipping costs. But according to the 2022 US eCommerce returns study, more than half of customers expect the seller to pay for everything.
After shipping, the customer waits for the company to notify them that they have received it. The company may give periodic updates on their progress before issuing a refund, or replacing or repairing the product.
The RMA Process From the Company Perspective
From the company perspective, the RMA process typically involves the steps below.
- Receiving the RMA Request: Your company receives a returns merchandise authorization request from a customer that wants to return a product. It can come from various channels, such as calls and emails.
- Verifying Eligibility: Your company verifies the purchase, then works with the consumer to understand the issues to determine if it is eligible for a return. Eligibility depends on your return policy.
- Issuing the RMA and Instructions: Once your team approves the return, they give the consumer an RMA number and provide instructions for returning the product. Some businesses accept all returns, but some have criteria the product and customer must meet. If they don’t approve the return, they reject the RMA request.
- Receiving the Product: Your business gets the item, notifies the consumer they have received it, and verifies and records it. If the customer sent the wrong item, a used item, or they didn’t return in the specified time frame, you can notify them and close the RMA.
- Inspecting the Items: Your business inspects the product to verify the problems and records the findings.
- Settling with the Customer: After inspection, you can send a refund or ship a repaired or replaced product based on your policy.
- Restocking: If the product is in good condition, you can prepare it for sale and restock it.
The RMA process can be very long and complex from the company’s perspective, as it comprises managing customer expectations and handling shipping logistics while complying with return policies. But if you manage it well, it can benefit your bottom line by improving customer satisfaction, which boosts retention and lifetime value.
What is an RMA Number?
A returns merchandise authorization number is a number that businesses assign to a product return request after validating the purchase and authorizing the return.
The unique identifier of the return request helps you easily track the returned item as it arrives and is processed. When you receive the product, if you’re using inventory management or similar systems, they automatically update your inventory when you scan the RMA on the packaging.
Because you can have many simultaneous product returns, the unique RMA number assigned to each ensures products don’t get lost or mixed up and are processed promptly and without errors.
An RMA number also prevents fraudulent returns by ensuring you authorize all the returns you receive. According to a National Retail Federation (NRF) study, 20% of returned merchandise is attributed to returning fraud. And for every $100 of returned merchandise you accept, you lose $10.40 to return fraud.
You can verify the authenticity of the return request based on details like the customer’s identity, order history, and reasons for the return.
Many businesses don’t accept returns without an RMA number because they can’t identify the product or efficiently track and process it.
What is an RMA Form?
A returns merchandise authorization form is a document your customers fill out when they wish to return a product. It can be a physical document sent out on request or an online document, which is more convenient for eCommerce businesses. Some of the information it collects includes:
The customer information that the RMA form collects could include the name, address, email address, and phone number. It is up to you to decide how much customer information you should collect with yours. The details will help you verify their purchases and send them a replacement or repaired product if the need arises.
The RMA form provides fields for customers to fill in details about the product they’re returning. These details could include name, model number, quantity, and date of purchase. This information will help you with inventory management and tracking. It also enables you to verify the returned product was a valid purchase, saving you the cost of returning fraud.
Reason for Return
The form also collects reasons why the customer is returning the product. You can provide an area they can describe the reason, but if your product has common problems, a series of checkboxes or a drop-down list could be better. Pick the format that allows you to collect as many details as possible.
This information shows whether the customer complaint is legitimate. It also helps identify problem trends, so you can take proactive measures to lessen returns before they occur.
Return or Refund
If your return policy offers both refunds and returns, your RMA form can ask your customers which option they prefer. It will help you meet the customer’s needs and satisfy them.
Collecting information about the customer, the product, the return, and their preferred solution will help improve the efficiency and effectiveness of the returns process. An efficient and effective process results in a satisfactory experience for both you and your consumer.
Why Does RMA Matter?
A painless return policy can improve conversion rates, maximize customer lifetime value, and help your business stand out. 67% of shoppers check the returns page before making a purchase, and 92% will make a purchase again if the returns process is easy.
But returns involve a lengthy, cumbersome, and costly process that can impact your profits. So, the more customers you attract and returns you receive, the more resources you use and the lower your profits. That is where RMA comes in. It can minimize the cost of returns and enhance their benefits in the following ways:
- Ensures customer satisfaction by helping you provide a fast and easy return process no matter how many simultaneous returns you handle
- Minimizes errors and streamlines the returns process, reducing the resources you need to manage a growing number of returns
- Increases efficiency through automation
- Provides a centralized system of managing returns, improving your internal processes, and reducing the resources needed to manage the returns
- Provides a good customer experience and builds trust because your customers know can return an object that doesn’t meet their needs and you will provide a quick solution
- Prevents fraud by verifying return requests to prevent fraudulent returns
- Ensures you comply with your return policies, laws, and legal requirements
An RMA system also helps you identify and track trends in problems and issues so you can identify areas of improvement to reduce your rate of return and increase revenues.
Returns Merchandise Authorization FAQs
1. How Do I Handle a Rejected RMA Request?
If you reject an RMA request, explain to the customer why and recommend alternative options if they have any. You should also be clear if there is no way you can help them.
2. How Do I Prevent Fraudulent Returns?
Create stringent policies and procedures to verify the authenticity of a product return request before approving it. You can also allow returns for certain products and customers instead of accepting all customer returns. That is, every product and customer must meet specific conditions or criteria to approve the return.
3. How Can I Reduce the High Costs of Returns?
You can reduce the cost of returns by streamlining and optimizing the RMA process. You can achieve this by automating the returns process using returns management software. A tool like Elite EXTRA can automate reverse logistics, eliminating manual errors and improving the returns process’s efficiency.
4. Should I Accept Returns That Don’t Have an RMA Number?
That depends on your return policy. Some policies require RMA numbers for all returns, but some allow returns without an RMA number under certain circumstances, such as if the customer has proof of purchase. But you should not accept returns without RMA numbers if it complicates tracking during shipping and processing.
5. How Do I Communicate my RMA Process to Customers?
You can provide information about your return process by prominently displaying it on your website, terms and conditions, and customer service materials. The information should detail all the steps the customer can take to return products and customer support contacts if they have any questions or concerns.
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Optimize the RMA Process with Elite EXTRA
Returns merchandise authorization refers to the steps and processes customers use to return products. Although the RMA process can be long and complex from a business perspective, it can benefit your bottom line by improving customer satisfaction and retention, preventing fraud, and reducing costs.
You can optimize the RMA process by automating parts of the returns process. It improves efficiency, increases accuracy, provides greater visibility and control, reduces fraud, and enhances the customer experience.
Elite EXTRA’s Returns Automation software that can automate returns validation, returns policy enforcement, and product returns tracking. Since 2008, over 325,000 users have used it to streamline logistics operations. Request a demo today to see how it can optimize your RMA process.