William K. Turner
William K. Turner

3PL Returns Processing - How it Works to Boost Your Business?

9 min read

Published on: Jan 8, 2024

Last updated on: Jan 27, 2024

3PL returns processing

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Ever wonder what happens after you return something you bought online? Well, it turns out that a whole process is at play, and it's more crucial than you might think. 

According to a report from the National Retail Federation and Appriss Retail, retailers are expecting $743 billion in merchandise returns from customers. That's about 14.5% of the entire U.S. retail sales in 2023! 

Managing these returns in-house can strain resources, inflate costs, and even harm customer satisfaction. Therefore knowing how to manage these returns effectively is highly important. 

Third-party logistics (3PL) handles these returns and can actually boost a business. This article will help you understand how 3PL returns processing works and what to expect.

Let’s go into detail to learn more!

What is 3PL Returns Management?

3PL returns management refers to the outsourcing of the process involving returned goods in the supply chain to a Third-Party Logistics provider. 

This service includes handling, processing, and managing returned products, ensuring efficient reverse logistics, inventory management, and customer satisfaction.

3PL Returns Processing Step-By-Step

Here are some practical steps to navigate the intricate world of 3PL returns processing, ensuring seamless logistics for your business:

3Pl Returns Process - 3PL Fulfillment Prep

Step 1. Generate Return Merchandise Authorization (RMA)

A 3PL initiates returns by creating a Return Merchandise Authorization (RMA). This includes gathering important details from customers looking to return products. Also known as return goods authorization (RGA) or return authorization (RA), an

RMA is issued based on set criteria, laying the foundation for the easy returns process.

This form, equivalent to an online shop's return section, expedites the process by providing key details. It includes customer information, customer return authorization date, order number, and carrier tracking number.

RMAs play a crucial role in speeding up returns. When the item reaches the warehouse, it's compared to the RMA for validation. The client is then promptly notified of the received return, ensuring a transparent and efficient returns process.

Step 2. Return Shipment to 3PL Facility

After creating the RMA, the 3PL team will get it to their special place called the 3PL facility. They make sure to give you clear instructions on the best way to send it back. 

This step makes sure that the returned stuff travels smoothly from the customer to the 3PL return management facility. It's like a smooth handover from the customer to the experts who know just what to do with it.

Step 3. Receiving and Inspection

At the 3PL facility, returned items undergo a thorough examination to assess their condition. When dealing with food returns, strict regulations necessitate immediate disposal without inspection. 

Simultaneously, the packaging is examined for any damage, considering the importance of presenting products in optimal condition to customers. 

Damaged packaging, including tears and dents, is carefully documented. This attention to detail ensures that customers consistently receive products in line with their expectations.

Step 4. Inventory Update

A really good 3PL makes sure they always know what they have in stock. The inventory is promptly updated with precise information regarding the received returns. 

This ensures a synchronized and up-to-date record of the existing stock, minimizing discrepancies in the overall inventory management system.

Step 5. Evaluate Items for Damage

In this step, the 3PL team carefully examines the returned items to see if they're damaged or not working properly. This check is essential because it helps decide what to do next. 

Imagine someone returns a blender with a cracked base or a non-functional button; these would be marked as damaged. It's important to note the difference: items that can't be fixed or are defective can't be sold again, even at a discount. 

However, things with minor issues might still be sold at a lower price by online retailers.

Step 6. Disposition Decision

With the evaluation results in hand, the 3PL provider makes important decisions about what to do with the returned items. This step is all about figuring out if the items can be restocked, fixed up, thrown away, or sent back to the manufacturer. 

Each decision is made to get the most value out of the returned products.

For instance, items in great shape but not what the customer wanted to go back on the shelf. Broken items are marked unsellable and responsibly disposed of. If something needs fixing, the 3PL refurbishes it. 

The goal is smart decisions: reselling good items and responsibly handling broken ones.

Step 7. Reintegrate ‘New’ Condition Products into Inventory

For items deemed to be in 'new' condition, the 3PL seamlessly reintegrates them into the inventory. This ensures that only products meeting strict quality control standards are made available for resale, maintaining customer satisfaction and brand integrity.

Returns processing can be slower than the order fulfillment process due to inspections. But the goal remains: get those 'new' condition products back on the shelves as soon as possible.

Step 8. Create New SKUs for Discounted Items

When items are set to be sold at a discounted price, the 3PL takes proactive steps to create fresh Stock Keeping Units (SKUs).  This facilitates clear categorization and pricing adjustments within the inventory system.

Determining when to add a new SKU depends on your returns processing and e-commerce fulfillment center. For precise tracking, accurate inventory management, like what 3PL Fulfillment and Prep provides, ensures you know exactly how many of a particular SKU are in stock.

Step 9. Reporting and Analytics

Emphasizing continuous improvement, a forward-thinking 3PL generates comprehensive reports on returns trends, reasons, and processing times.

Leveraging analytics, the provider identifies areas for enhancement, contributing to the optimization of the returns process.

Considering these reports and using analytics tools, the 3PL provider figures out where things can be improved. Maybe they notice a trend in the types of products being returned or identify areas where the process could be faster or more efficient. 

It's all about making the returns process better over time, ensuring that lessons from each return contribute to an even smoother system in the future.

Step 10. Customer Communication

This step is all about putting the customer first. The 3PL doesn't just handle returns; they make sure customers are in the loop. They communicate openly and promptly, keeping customers informed about what's happening with their returns.

Imagine sending something back and not knowing what's going on. That can be frustrating. But with a customer-centric approach, the 3PL ensures customers get updates on the status of their returns.

Why Opt for a 3PL Warehouse to Manage Your Product Returns?

Handling product returns in-house can present various challenges for e-commerce businesses. Here's a closer look at some of these challenges and why choosing 3PL companies for return processes is the best decision:

Resource Intensity

In-house returns management system requires significant human resources for processing, inspecting, and restocking returned items.

Outsourcing to a 3PL reduces the strain on internal resources, allowing the business to focus on core activities.

Expertise and Training

Employees need specific expertise and training to handle returns efficiently. 3PL providers bring specialized expertise and trained staff, ensuring proficient handling of returns.

Scalability Issues

In-house systems may struggle to scale effectively to accommodate higher return rates. 3PLs are designed to scale with business needs, providing flexibility without compromising efficiency.

Technology Requirements

Efficient returns management often requires specialized technology, which can be complex and costly to implement and maintain in-house.

The technology enabled 3PLs use advanced tools and software for inventory management and returns processing, ensuring accuracy and streamlined processes.

Examples of 3PL Returns Processes at 3PL Fulfillment and Prep

Here are instances showcasing how our 3PL company manages returns for your business:

Example 1: Handling Damaged Packaging for Heavy and Bulky Products

3PL Fulfillment and Prep deals with partners selling heavy and bulky products with lower return rates but often damaged packaging.


  • Damaged packages are opened, and undamaged products/components are collected.
  • A new SKU is created for discounted bulk packages of the item.
  • Bulk products are bagged and sold in a plain box, bypassing the original packaging.
  • Enables the client to recover revenue from products in excellent condition but without the original packaging.

Example 2: Customized Returns Processing Based on Client Instructions

Returns at 3PL Fulfillment and Prep are processed according to client specifications.


  • Clear client instructions are followed for returns processing.
  • If instructions are unclear, the team checks with the client before proceeding.

Example 3: Adapting Returns for Online Resale

Emphasis on maximizing online resale of returned merchandise.


  • A successful reverse supply chain strategy is implemented.
  • Returned merchandise is placed for sale online whenever possible.
  • Focus on recovering value from returned items and reducing losses.

Why it's Important to Manage Returns Effectively

Here are some compelling reasons why effective e-commerce returns management is crucial for your business:

  • Customer Satisfaction: Efficient returns build trust and enhance customer satisfaction.
  • Brand Reputation: Well-handled returns preserve and strengthen your brand reputation.
  • Cost Control: Effective returns management minimizes operational costs associated with returns processing.
  • Maximized Value: Proper handling allows for the resale of returned items, maximizing recovered value.
  • Operational Efficiency: Streamlined processes reduce the impact of returns on overall operations.
  • Regulatory Compliance: Adhering to return policies ensures compliance with regulations, avoiding legal issues.
  • Data Insights: Effective returns management provides valuable data for inventory planning and product improvement.

How To Improve 3PL Returns Processing

Here are some practical strategies for enhancing your 3PL returns processing capabilities.

  • Enhance Communication: Foster clear communication channels with clients to understand their specific return requirements.
  • Implement Efficient Sorting: Streamline the returns sorting process to expedite the identification of reusable and damaged items.
  • Optimize Inventory Management: Regularly update inventory systems to track returned items, minimizing discrepancies.
  • Offer Flexible Returns Policies: Provide customers and clients with flexible and transparent returns policies to encourage adherence.
  • Invest in Technology: Utilize advanced technology, such as automated sorting systems, to improve accuracy and speed in processing returns.

Bottom Line!

Knowing how 3PL returns processing works is key to helping your business grow. When returns are handled well, it keeps customers happy, builds a strong brand, and makes operations smoother. 

By keeping communication clear, using technology wisely, and having flexible policies, businesses can turn returns into chances to improve and get more value.

If you need help with your fulfillment needs, remember that 3PL Fulfillment and Prep is here for you. We're committed to giving top-notch services to make sure your business runs smoothly.
Get in touch with us today and let's elevate your business together!

Frequently Asked Questions

What is a Return Warehouse and What Do They Do?

A return warehouse is a facility specifically dedicated to processing and managing returned items. In this space, products are inspected, sorted, and either reintegrated into inventory, refurbished, or responsibly disposed of. The goal is to streamline the returns process, recover value from returned items, and maintain efficient inventory management.

What types of products does a 3PL typically handle in the returns process?

3PLs typically handle a diverse range of products, including electronics, clothing, consumer goods, and even heavy or bulky items. The scope covers virtually any product that a business may sell, each with its unique returns processing requirements.

How can 3PL returns processing contribute to a more sustainable supply chain?

3PL returns processing contributes to a sustainable supply chain by implementing eco-friendly practices. This includes minimizing packaging waste, refurbishing returned items when possible, and responsibly disposing of damaged or unsellable products. Such measures align with environmental goals and reduce the overall ecological footprint of the supply chain.

William K. Turner


William K. Turner (Supply Chain Management)

Willian K. Turner, our esteemed author with expertise in International Trade, Global Logistics, and Supply Chain Management, has a lot to offer when it comes to writing about these topics. He has a wealth of experience and knowledge to share with readers. Whether he's writing blog posts or articles his insights will be surely valuable to anyone interested in these industries.

Willian K. Turner, our esteemed author with expertise in International Trade, Global Logistics, and Supply Chain Management, has a lot to offer when it comes to writing about these topics. He has a wealth of experience and knowledge to share with readers. Whether he's writing blog posts or articles his insights will be surely valuable to anyone interested in these industries.

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