What is Return Merchandise Authorization (RMA)?

A return merchandise authorization (RMA) is a formal approval process that allows customers to return purchased merchandise while offering organizations control over the returns process from start to finish.

When a customer wants to return a product, they first request authorization from the brand or retailer.

This, essentially, tells the company that someone isn’t satisfied with their purchase and wants to make a return.

The merchant can review the request, approve or deny it and issue a unique RMA number for authorized returns. This number becomes the tracking identifier for the return throughout the process, allowing the business and the customer to see its status as it moves through each stage.

An RMA may also be known as a Return Authorization (RA) or Return Goods Authorization (RGA) depending on the industry and organization. In any of these instances, the RMA, RA or RGA is the framework for ensuring that returns are processed and completed as efficiently as possible.

So, who needs RMAs? In ecommerce, the answer is just about everyone. From small, boutique fashion and apparel stores that only stock a few SKUs, to complex, international electronics retailers with thousands of products and varied product lines, an RMA is necessary for each.

Food and beverage brands need RMAs, as do cosmetics and personal care companies, which often have hundreds or thousands of product variations and features. If a business sells physical products, then it likely requires an effective RMA process.

Many brands see returns as a necessary evil and a frustrating aspect of conducting retail business. Returns can be expensive, time-consuming and may contain so many working parts that they’re difficult to track and complete without hassle.

But agile, forward-facing brands understand an inevitable truth: returns are a critical touchpoint in the customer lifecycle. Even the most loyal customers may have a return at some point, so brands that view the process as crucial, rather than as a thorn in their side, can find ways to leverage the pain point into something more effective.

The RMA is important for several key reasons. First, it provides operational clarity and structure where there may otherwise be chaos. Customers may notice that larger brands and retailers often have more structured and streamlined return processes, while smaller companies usually require more manual work, such as reaching out via email, to initiate a return.

It’s easy to see how manual return processes can quickly lead to errors, delays and other challenges that neither benefit the company nor the customer. Instead, a structured RMA process streamlines this operation into something manageable and trackable.

RMAs can also help businesses spot and deal with fraudulent returns, which make up a not insignificant portion of total returns, according to some sources. A 2024 report from Appriss Retail and Deloitte revealed that about 15% of total returns in 2024 were fraudulent to some degree, costing organizations a combined $103 billion in lost revenue.

Without an effective RMA, this estimate could be even higher. An RMA process with practical steps can reduce fraudulent returns by ensuring the right customers are returning the right products for the right reasons. Once again, the structure provided by an RMA offers a framework for preventing further loss while receiving feedback on what to look for in future potential fraudulent returns.

Perhaps most importantly, RMAs are essential for traceability and compliance reasons. Industries, brands and retailers that promote complex or regulated products often have to trace returns back to specific batches, suppliers, serial numbers or other aspects of the supply chain in order to prevent compliance issues or further related product returns. RMAs can help businesses enforce warranty terms and gather relevant product data in case an “audit trail” is needed to meet specific compliance demands.

RMA processes can vary by brand and industry but in general, they follow a broad framework that creates an efficient feedback loop between a merchant and a customer.

Customer initiation

First, customers reach out, typically through a returns portal, email or customer service contact form. The customer reports the details of their requested return, often providing an order number, product details and the reason for the return.

Brands may also ask what their preferred resolution is, whether it’s a refund, exchange or store credit. This can be a unique opportunity to turn what would be a refund into a way to keep the customer satisfied and engaged before a full return is requested.

At this stage, the best practices are to make everything as frictionless as possible. More fields and requested information make it more difficult for customers to complete their requests. Brands are advised, then, to ask for only essential information to guide customers through the process successfully.

Review and authorization

Next, the company’s RMA software or team reviews the request against its internal return and warranty policies. This may consider if the return falls within the return window, typically 30 to 90 days, whether the product is eligible for return, whether the condition is acceptable and whether the reason qualifies.

At this stage, RMA software can automatically reject or approve returns based on return rules defined by the organization. If the return is approved, the customer is given an RMA number that outlines the following steps and timeline.

Packaging and labeling

After the return is approved, the customer packages and labels the products based on the return policy’s criteria. Some brands require returns to be packaged in the original box, for example and others may provide a self-addressed label for fast returns.

Proper packaging prevents additional damage in transit and clear labeling commonly used ensures the warehouse can quickly identify and route the return when it arrives. Best practice at this stage includes giving customers the option to print shipping labels at home or use printerless returns at convenient drop-off locations.

Shipping and tracking

Larger brands may cover return shipping costs but many small and mid-sized companies require the customer to pay for return packages. Once the carrier picks up the package, both the merchant and the customer should receive tracking updates automatically. This transparency reduces “where is my return?” inquiries to support teams.

At this step, best practices often mean partnering with different shipping carriers to offer multiple return options, including scheduled pickup, drop-off locations or even in-store returns if the business has physical locations.

Inspection and processing

Upon receiving a return, the warehouse verifies the RMA number and inspects the product’s condition. Here, the product should match all the information provided in the RMA request.

From here, options include restocking for resale in the ideal scenario, refurbishing and reselling at a discount, returning to the manufacturer for credit, liquidating to third-party buyers, or disposing of as damaged and unsellable.

Speed matters at this stage because the faster businesses process returns, the sooner they can get products back into inventory for resale. Returns management software integrated with inventory systems provides real-time visibility and updates, eliminating the lag between receiving an item and making it available again.

Customer resolution

Based on the returned product’s condition, the company can issue a final resolution. This can be a full or partial refund, exchange or other option based on the organization’s return standards.

Automated emails triggered by status changes keep customers informed without requiring manual effort from teams. Key messages include confirmation that the business received the return, notification that the inspection is complete and approval has been received, confirmation that the refund has been processed and notification that any exchange has shipped.

Most customers expect refunds within 5 to 10 business days of the merchant receiving the item. Setting and meeting clear timeline expectations is essential for maintaining trust from the start.

Managing returns effectively may seem simple on paper but the entire process is fraught with areas where brands can fail to meet customer expectations. Here are some common challenges and pain points brands must consider before revamping their RMA processes.

First, it’s imperative to have clear return policies. If these aren’t well-understood by the customer or the organization, it can create gray areas that make it challenging to evaluate and process returns consistently. A return policy should spell out time limits, eligible products, acceptable conditions, any restocking fees and refund methods. Ambiguity creates frustration and disputes.

Essential elements to define include the return window, whether 30, 60 or 90 days, condition requirements such as unused with tags or original packaging, exclusions like final sale items or personalized products and who pays for return shipping under what circumstances. The policy should also specify refund methods and processing timelines.

Next, brands should make sure that the channels set up are actually accessible to customers. Offering accessible, user-friendly channels for return requests is essential for a seamless customer experience.

Businesses should consider implementing self-service returns portals available 24/7, email support for complex cases, phone support for customers who prefer speaking to a person, chat support for quick questions and in-store returns if they have physical locations.

The key is letting customers initiate returns through their preferred channel without jumping through hoops.

Return teams, including those who manage RMA software platforms or processes, should also be adequately trained to handle all types of return situations.

Teams need training on how to navigate RMA software, when to approve, escalate, or deny requests, how to communicate policies empathetically and where to find documentation like receipts and shipping records.

They also need to learn how to spot potential fraud without accusing customers. This is a critical but sensitive task that requires consistency: providing customers with the same level of courtesy while recognizing the harsh realities that come with product returns, particularly at large organizations.

Finally, businesses must be able to track the right return metrics and act on feedback that comes from customers and their respective returns.

Critical metrics to track include:

• return rate as a percentage of orders that get returned
• processing time measured in days from customer initiation to resolution
• cost per return calculated as total costs divided by return volume
• approval rate showing the percentage of requests approved versus denied.
• Fraud rate, tracking suspicious returns
• customer satisfaction measured through post-return survey scores

When it comes to feedback, brands can ask about how easy it was to initiate the return, whether they received clear instructions, whether the timeline was acceptable and whether they would shop again. Internal team questions should address what creates bottlenecks in the process, what customer questions come up repeatedly and what tools or information would make their jobs easier.

Because an RMA is never a “set it and forget it” process, continually asking for feedback is crucial for consistently improving return workflows based on real user data.

Organizations can handle returns with various software platforms. Some, like product lifecycle management solutions, offer end-to-end support far beyond returns processing. Others are more narrowly focused and provide e-commerce merchants with specific abilities related to returns and shipping.

Because each software offers different abilities and features, it’s critical to compare and contrast platforms that fit a brand’s specific product lines and growth goals. Here’s where to start.

The non-negotiables include a self-service returns portal where customers can initiate returns 24/7 without contacting support, automated approval rules that reduce manual review and shipping label generation through carrier integrations.

Real-time return tracking for customers and internal teams, mobile-enabled inspection workflows for warehouse staff and flexible resolution options for refunds, exchanges, store credit and warranties round out the basics. Analytics showing trends by product, reason code, region, or channel identify improvement opportunities while integration with ecommerce platforms, inventory systems and accounting software eliminates manual data entry.

Advanced features that add value include fraud detection algorithms that flag suspicious patterns, customizable communication templates that match brand voice and multi-location routing for businesses with multiple warehouses or retail stores.

International returns support, including customs documentation, warranty management for extended coverage periods and exchanges with upsell opportunities, helps recover revenue.

When effectively managed, returns can become a source of opportunity instead of liability. The brands and retailers outperforming the competition in this area view the return process as a continuous feedback loop, using data to continually enhance customer satisfaction and longevity.

But turning returns into business growth doesn’t happen overnight and it only works for organizations willing to be proactive about their post-sale product workflows. Centric PLM helps businesses do just that, by transforming returns and product lifecycle management in general, into a seamless, collaborative process from product ideation to customer satisfaction and beyond.

Ready to shift the returns process into a competitive advantage? Centric Software’s agile, end-to-end PLM solution connects product development and post-sale operations on one platform, unlocking true data visibility and automation when it matters most.