In our last marketplaces post, we covered why many retailers are establishing marketplaces for third-party sellers to offer their products through. The opportunities for growth are undeniable, but there are challenges to overcome to maximize the marketplace approach. Foremost among them is the question of returns, and how they’ll be managed.

In this piece, we’ll cover the 5 key steps that retailers can take to prevent third-party marketplace returns becoming a major headache and drain on their bottom line.

1.      Protect the Brand

Customers expect clarity. They want to know what your policy is and how it applies to their specific purchase. 86% of shoppers say they check returns policies before purchasing. Make it easy for them with an easy-to-understand policy that incorporates the rules for your third-party vendors too. It may even be worth adding key returns messages to the product page itself, saving customers extra clicks to find out what they need to know.

Then, when it’s time for customers to actually make a return, they need a convenient returns journey, accessible from your site and retaining your branding throughout. Here, depending on the item they’re returning, you can tailor the options available for sending the item back, or dropping it off in a store. What’s important is that the customer has an easily accessible, digital experience with your branding that makes the process easy for them – just like the purchasing journey on your marketplace.

2.      Digitize

One way that some retailers running marketplaces currently handle returns is to use their existing customer support function to take returns inquires and issue authorizations – or point customers back to the seller and their customer support. Leaving aside the customer experience implications of making shoppers pick up the phone when something has gone wrong with their purchase, this is an unnecessary burden on your valuable resource.

A digital journey that allows customers to start the return themselves ensures that the right data is captured and only valid returns are authorized. So, if the retailer isn’t accepting marketplace returns from third-party sales, the customer can be routed to the right returns process immediately without a customer service contact.

Digitizing this initiation of the return also prevents ‘blind’ returns, as happens in the case where retailers ship items with return labels pre-printed in the package. These labels allow customers to return easily but give retailers no warning and little data about the return, with extra confusion added when the retailer is dealing with returns from multiple vendors.

3.      Empower Store Associates

Some retailers operating marketplaces have found it hard to manage an influx of marketplace purchases being returned to their stores. One way to ensure that all returns get treated efficiently and go through the same validation process is to give store staff access to a version of the same digital journey that customers use to initiate returns online. This means staff can easily log a return, capturing essential data quickly and allowing for intelligent processing to happen as part of the store process – or, in the case where third-party returns aren’t accepted, they can immediately tell the customer what to do next and why.

4.      Orchestrate Intelligently

Wherever a return comes from, a retailer operating a marketplace needs to be able to quickly decide what will happen with it, and how to most efficiently and profitably execute that decision.

Straight away, intelligently identifying the origin of the return and tailoring the right options for drop-off and shipping makes a big difference. If the retailer is accepting third party returns, flagging that an item is from a specific vendor and intelligently directing it back directly to that vendor (automatically changing the return address based on the SKU, for example) means that the retailer doesn’t have to manually check and separate out third-party returns from its own stocked inventory.

Alternatively, if the item is a SKU stocked in store and the return was made in store, it might be simpler and quicker for the retailer to issue the refund directly and simply replenish store stock with the return. Adapting intelligently to the specific circumstances of each return enables significant cost reductions, and can make the end-to-end process much simpler, ensuring that more returned goods end up resold.

5.      Process Consistently and Quickly

Whatever the decision, ensuring that returns are processed efficiently and consistently should be a major area of focus for a retailer looking to operate a marketplace. Both store staff and warehouse staff need a digitized system that makes their decision-making process clear and easy.

This process starts with the decision of whether or not to deal directly with third-party returns. With the ability to differentiate between different types of return and orchestrate based on custom rules, marketplace operators can opt to redirect third-party returns straight back to the seller. That can avoid some severe processing challenges both in stores and in warehouses with associates unprepared to deal with unfamiliar products, leading to delays, wasted warehouse and store space to store these items, and additional costs to transport them to the proper place.

Once the decision has been made as to whether or not to process marketplace returns from third party sellers, it’s still essential that retailers have a digitized and efficient system for returns processing.

That should include information about the incoming returns, to enable efficient resource management and planning, i.e. determining the right number of warehouse staff to be dedicated to returns in a given day based on the forecast volume. It also includes the specific return details, giving store or warehouse associates clarity about what’s supposed to be in the package and in what condition (drawn from the digital initiation of the return).

The next step is moving through a guided checklist (which can change depending on the type of item, e.g. to include checking clothing for stains or signs of wear) to determine that the expected condition and item are both accurate and that the return is valid. After those checks, the process culminates in a decision about the next step, based on the orchestration rules configured by the retailer, which is immediately communicated to the staff member.

6.      Communicate

Both customers and third-party sellers need to be kept informed about the status of their returns. Blue Yonder’s 2024 Returns Report found that 27% of US retailers do not always give customers basic tracking updates about their return, and fewer than half (44%) always include marketing or promotional messages in their communications around returns. Automating returns communications and tying them to critical events in the return journey helps to reassure customers (and third-party sellers awaiting the return of their products) that their return is being processed, and gives clarity about when to expect a refund, reducing customer support contacts, particularly so-called “WISMR” (where is my refund) calls.

Marketplace operations can complicate the already difficult elements of returns management, but sophisticated technology already exists to make the end-to-end journey of returns much more effective. Find out how Blue Yonder can help to support your marketplace operations and reduce returns complexities with our new eBook on Marketplace Returns.