Return Merchandise Authorization Part I: What It Is and Common Policy Attributes

When expectations go unmet by merchants or buyers and returns occur – they then have to travel through the return process. All too commonly, the supply chain is full of orders requiring an RMA (return merchandise authorization). This authorization can encompass after-sale service aspects like replacements, return analysis, warranties, product service agreements, and managing vendors. RMA policy can vary widely, however, so we will explore the various functions of RMAs and cover a few common RMA policy examples.

RMA Functions

The existence of RMAs subsist of products and their reverse flow which are all handled within the industry of reverse logistics. RMA policies hinge upon two main functions: the prevention of incorrect returns and data collection for each return. Many owners hope to handle every individual return on-site. With the sheer complexity of this process, however, many companies find it impractical to do in-house.

Some storefronts sell thousands of items online and as much as one quarter of sale items get returned as result of manufacturing defects. To avoid 250 end users showing up at your door or mailing their defective products back to your business, companies instead often choose to encourage direct shipments back to the maker of the product for direct financial reimbursement.

Smaller businesses aren’t always equipped to cover the work hours and expense of defective product returns. This is where finding a logistics provider is necessary. The provision of reverse logistics by a third-party such as Flash Global quickly meets those needs becoming a crucial strategy in maintaining successful company operations.

Common Examples of RMA Policy

The bulk of requested RMAs are now fulfilled online. In the technology sphere, RMA processing has now become vital. Whether it is via an automated or live agent, requests start the process of data collection for products such as sale dates, orders and deliveries. More information such as the reason for and number of returns, payment method and channel are all gathered during this process as well.

Data Gathering

Data gathered according to an RMA policy needs to utilize three different courses and is explained in Reverse Logistics Magazine®. The three courses prioritize the relationships held by the supplier and channel of transport, the product quality, and consumer accommodation. Let’s take a close look at these areas.


Supplier and Channel Relationships

An undamaged product can be appropriated for restocking within stores, exchanged for a different item, sent to an outlet center or rotated into a different center’s inventory after it is received.

Product Quality

This area is dedicated to collecting data on the quality of each returned product. This includes whether items were opened or if any parts are misplaced or defective. If the customer simply doesn’t need the item, it can often also be repackaged if still in good working condition.

Customer Accommodation

RMA’s use customer accommodations to restore wholeness and satisfaction to consumers. Exchanges for correct or like products may be offered to satisfy the customer in general and often under a warranty policy.

Beyond data collection, an RMA’s second necessary phase is data verification.

Validating Information

Data can be considered as valid or invalid for a host of reasons such as the request for return not falling within the allowed time limit for refunds. Sometimes denying a return could permanently damage the trust of a customer or client, a fact many businesses often take into consideration when choosing whether to accept an invalid return. For example, a small value item return of $200 might preserve a larger order of $20,000 worth of orders. Take these simple steps to assist your returns process:

  1. Verify the terms of the return contract.
  2. Verify the existence of the purchase order.
  3. Verify the identity of the person returning the item.
  4. Verify the purchase price of the item, especially since items may have been on-sale when purchased.
  5. Did the buyer receive any additional discounts on other merchandise as part of a promotion?
  6. Should the consumer receive the RMA approval as part of guaranteeing customer satisfaction?

Next, an RMA policy will need to have a chain of events for reviewing the following:

  • Warranty policy
  • Buyer-Seller contract
  • Policy for customer service
  • Specification of RMA Type: Exchange, Refund, or Repair
  • User Expectations for the item
  • Product repairs

Also, the RMA policy needs to take into account how the buyer-seller relationship may change due to the return. For example, how will the return affect marketing strategy or does the item have additional use in the product lifecycle? How can such a return influence continued business with the consumer? After going through these processes and these variables, sellers can make an informed choice on whether to accept or reject a RMA.


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