Returns Management for Small Businesses: Our Guide for 2025

Returns management is often one of those business processes that companies don’t think about until they have to deal with them.

But returns can have far-reaching implications across all areas of a business, from revenue and operations to customer experience. For small businesses, learning this lesson the hard way can be costly.

Many only realise their returns process isn’t fit for purpose once they start expanding, and by then, fixing problems requires significant time and investment.

The best approach is to get it right from the start.

In this article, we’ll look at returns management for small businesses, the benefits of using a returns partner, and the steps they can take to improve returns management processes.

Why Returns Management is Important for Small Businesses

No business likes receiving an email or call from a customer requesting a return. But in online retail, returns are inevitable. How you handle them can make or break your brand’s reputation and long-term success.

Here are two reasons why an optimised returns process is crucial for small businesses:

1. Protecting Your Reputation

For small or growing businesses, reputation is everything. While a return might seem like a loss in the short term, it’s actually an opportunity to build trust in your brand and improve your post-purchase experience.

On the flip side, a poor returns experience can permanently drive customers away. Our research found that 73 % of shoppers say they would boycott a brand after a poor return process.

2. Keeping Costs Under Control

Returns come with hidden costs that can quickly add up. For small e-commerce and brick-and-mortar stores, an inefficient returns process and policy can drain resources and impact profit margins.

Common cost drivers include:

• Serial returners. Some customers frequently return items, increasing handling costs.
• Operational strain. Processing returns takes time, money, and labour.
• Customer service burden. WISMO/WISMR calls increase when returns are unclear or delayed.
• Logistics inefficiencies. Poor return policies can lead to unnecessary shipping costs and stock losses.

How a Returns Partner Can Help Small Businesses

Setting up an in-house returns department requires significant time, money, and expertise. Even large multinational retailers spend years refining their processes. For small businesses and new online retailers, this is often impractical and costly.

Partnering with a returns management provider offers a faster, more efficient way to handle returns without the operational burden. Let's look at the key benefits of using a returns partner as a small business.

Competitive Carrier Rates

Smaller businesses often struggle with higher shipping costs when dealing directly with carriers. Lower shipping volumes and less frequent returns mean they miss out on bulk discount rates that larger retailers benefit from.

Returns platforms like ZigZag solve this by aggregating return volumes across multiple retailers to negotiate better rates with shipping companies. This allows small businesses to access lower return shipping costs, even with fewer items shipped.

International Returns Capability

Expanding into international markets presents new challenges, especially when it comes to returns management. Each country has different regulations, administrative requirements, and costs, along with potential language and currency barriers.

A returns platform simplifies this process by providing ready-to-use infrastructure for handling international returns. This means that small businesses can quickly scale into new markets without dealing with the logistical headaches of managing cross-border returns independently.

Scalability & Flexibility

Managing returns in-house comes with fixed costs and capital investment, making it challenging for small businesses to adapt to seasonal demand or unexpected sales surges.

A returns platform offers a more flexible, scalable approach by charging variable rates based on return volume.

This allows businesses to:

• Manage costs efficiently. Pay only for the returns you process rather than committing to a fixed overhead.
• Scale with demand. Adjust returns capacity as the business grows, ensuring operations remain cost-effective.
• Ensure continuity. Implementing a structured returns process early on helps avoid costly and disruptive overhauls in the future.

Effective Returns Tracking

Tracking and transparency around returns are essential for a smooth customer experience. However, many small businesses still rely on in-the-box labels, which can create operational inefficiencies and increase customer service workloads.

Here’s why:

• Inventory management. Without a live tracking system, items can get lost or misdirected in transit, making it harder to monitor, rectify returns, and notify customers about delays.
• Increased customer service demands. Without visibility into return statuses, customers are more likely to contact support repeatedly, increasing workload and frustration.

An online returns portal solves both these issues by providing real-time tracking for customers and internal teams, reducing delays and minimising unnecessary service enquiries.

Introducing Paid Returns

Most small businesses don’t realise that returns can significantly impact profitability, with the average cost of processing an online return ranging between £10 and £20.

Many businesses accept this as a cost of doing business, but growing trends like bracketing, staging, and wardrobing make it essential to mitigate return abuse and recover costs.

While many consumers expect to pay for returns from smaller businesses, implementing a manual paid returns policy can be time-consuming.

Small businesses often face two challenges:

A blanket policy which applies to all returns, regardless of the reason.

An increased customer service burden to determine when returns should be free and when fees should apply.

Using a returns platform simplifies the process of implementing paid returns and allows businesses to customise their paid returns policies.

Related: How to Combat Serial Returners

4 Ways Small Businesses Can Improve Their Returns Management

1. Define a Clear Returns Policy

Review your current policy to check whether it sets clear expectations for both customers and logistics partners.

Our research found that 87% of customers check return policies before making a purchase. So, having a clear and transparent policy is essential.

• For customers: A well-structured policy helps shoppers understand return terms, timelines, and costs upfront, reducing confusion and minimising returns-related customer service inquiries.
• For carriers: A clear policy establishes minimum service standards for third-party logistics (3PL) providers and customers that you can plan around.

2. Improve Your Product Listings

A common reason for returns is that the product doesn’t match expectations once it arrives. Customers rely on product listings to make informed decisions, so making sure they are accurate can significantly reduce return rates.

Here’s what to check:

• Accurate measurements. Clearly list product dimensions, weight, and materials, along with any details that help customers determine fit, size, or compatibility.
• High-quality images & videos. Use clear, well-lit product photos from multiple angles and show the actual item in use. Videos can provide additional clarity, reducing uncertainty.
• ‍Customer feedback & reviews. Display verified reviews and real-life customer experiences to set expectations and provide valuable insights.

3. Consider Charging for Returns

The idea that e-commerce businesses must cover all return costs is a common assumption but not a necessity. More online retailers are shifting to paid returns as a strategic business decision to make returns more sustainable.

Our research shows that 43% of consumers are happy to pay for returns from small businesses. While some pushback is expected, introducing a paid return policy while your business is small will help normalise the practice as you grow.

Weigh the benefits:

• Lower costs. Reduce the financial burden of reverse logistics and processing returns.
• Fewer unnecessary returns. Customers are more likely to think carefully before returning items.
• Reduced return abuse. Minimise issues like bracketing and wardrobing, where shoppers buy multiple items with the intent to return most of them.

Compare this to the potential risk of losing customers who expect free returns. If positioned correctly, paid returns can be a sustainable strategy without negatively impacting sales.

Related: Why are retailers charging for returns?

4. Offer More Carrier Options

Many small businesses rely on a single carrier for handling returns. While this may seem like the most straightforward approach, offering multiple return options improves flexibility and enhances the customer experience.

Expanding your carrier network can:

• Increase customer choice. Shoppers appreciate having multiple return methods that suit their needs.
• Improve customer satisfaction. Providing drop-off locations, courier pickups, or locker returns makes the process more convenient.
• Give your business flexibility. Having multiple carriers for both delivery and returns allows you to compare rates and service quality.
• Minimise disruption. If your sole carrier faces delays, strikes, or service issues, having alternatives keeps returns running smoothly.

Related: How To Reduce Returns In E-Commerce?

Why Choose ZigZag?

Managing returns as a small business can be complicated, time-consuming, and costly. But with the right tools, it doesn’t have to be.

ZigZag’s returns management platform makes returns easier for businesses and customers, helping to streamline processes, reduce costs, and improve the post-purchase experience.

Here are key features that make ZigZag’s return management software great for small business returns management.

1. Online Returns Portal

ZigZag’s online returns portal is a white-label solution that can be customised to fit your brand. Along with seamless integration into your purchase experience, it allows customers to:

• Initiate returns directly from your website. No need for email exchanges or manual processing—customers can start a return in just a few clicks.
• Select a reason for the return. Customers choose from a predefined list of return reasons, helping businesses track common issues and improve product descriptions or sizing guides.
• Track return statuses in real time without contacting customer service. Customers receive automated updates at every stage, reducing uncertainty and minimising WISMO and WISMR enquiries.
• Choose preferred return options. Depending on your setup, customers can select between drop-off locations, home pickup, or in-store returns.

For businesses, utilising an online returns portal simplifies administration and lowers the cost of dealing with returns in multiple ways, including:

• Automating returns processing. Orders, return authorisations, and refund eligibility checks can be managed automatically, allowing staff to focus on other tasks.
• Eliminating unnecessary printing and paperwork. Digital returns can reduce reliance on paper-based processes, cutting administrative overhead.
• Accessing detailed reporting and analytics. Businesses can track return trends, identify recurring issues, and optimise policies based on real-time data.
• Implementing dynamic return policies. Adjusting rules for free or paid returns based on item value, location, or customer history.

2. Shopify Integration

For e-commerce businesses using Shopify, ZigZag’s Shopify integration offers a seamless way to manage returns.

Our integration connects directly with your Shopify store, allowing for automated returns processing without the need for manual intervention.

Key benefits include:

• One-click integration that syncs directly with your Shopify store.
• Automated return approvals based on your store’s policies.
• Real-time tracking updates to reduce customer enquiries.

Find out more about ZigZag’s Shopify plugin today.

3. Non-Shopify Businesses

For e-commerce retailers using other platforms, ZigZag offers custom integrations that can be tailored to your business.

Whether you run your store on WooCommerce, Magento, BigCommerce, or a bespoke platform, ZigZag provides flexible solutions to integrate returns management into your existing setup.

To explore custom integration options, contact us through our demo page to speak with our team.

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