Returns Arriving at the Wrong Warehouse: A Fulfillment Problem Nobody Talks About

Do your warehouses often get overburdened with returned items that were meant for other warehouses? If so, there is usually a data mismatch between your eCommerce platform, ERP system, warehouse management system (WMS) and return management system. Solving it often requires a custom solution designed specifically for your setup.

In this article we explain what the problem of items being returned to the wrong warehouse actually is, its impact on your business, and the solution to correct it.

Causes

Incorrect Return Routing Rules

Businesses usually implement fixed return routing rules that define how items are returned, irrespective of the customer’s location or the warehouse accepting the returned items. Such outdated routing rules lead to the wrong warehouse being allocated to store returned items.

Failure of Smart Label Routing System

Automated return portals usually generate smart labels based on the customer’s location and the item being returned. A conflict occurs when a customer returns multiple items from different orders in a single box, because the label only accounts for one destination.

Problem with Return Carriers

Return carriers like FedEx and UPS handle a large number of packages every day. Simple errors like smudged barcodes, old shipping boxes with old labels still attached, or sorting mistakes may lead items to the wrong warehouse.

Disconnected eCommerce and Warehouse Management Systems

When the eCommerce and warehouse management systems operate independently, the warehouse selected to accept returned items is not defined the same way in both of them.

Multiple Sales Channels Have Different Return Policies

Businesses selling on multiple sales channels may have different return procedures and policies for each. If these rules are not followed correctly, items can end up reaching the wrong warehouse for return collection.

Manual Return Processing and Data Entry Errors

Businesses relying on manual data entry for returns are exposed to human errors such as outdated spreadsheets, incorrect order details and the assignment of the wrong warehouse to returned items.

Impact

Increased Reverse Logistics Costs

When a returned item reaches the wrong warehouse, the business needs to send it on to the right one. This increases transportation and handling expenses, and for businesses operating multiple warehouses the cost can be even higher.

Delayed Inventory Updates and Restocking

Products received at the wrong warehouse may need additional verification and inspection before they are restocked and updated in the system. If the systems in use do not communicate well, or the business runs several distinct systems, data synchronization can lag and the inventory update is delayed.

Delay in Customer Refunds

When a warehouse receives a returned item it was not meant to receive, employees have to verify the order, locate the return authorization and confirm receipt of the product before approving a refund. This is time consuming and leads to delayed refunds.

Inventory Mismatch Across Systems

When the wrong warehouse receives a returned item, it cannot be updated in the system and inventory records become inconsistent. This leads to discrepancies in stock levels across different systems.

Lost Sales Opportunity

Returned items that are not processed by the warehouse in time cannot be restocked, which makes them unavailable for resale on the platform even though they are physically in stock. This leads to lost sales opportunities.

Poor Customer Experience and Reduced Trust

Customers expect returns and refunds to be handled in a timely manner. Delays caused by items being routed to the wrong warehouse lead to a poor customer experience and reduced trust.

Solution

Custom Middleware Software Solution

A custom middleware software solution resolves the problem of returns arriving at the wrong warehouse. It connects multiple systems and can work with third-party logistics systems. It updates the inventory systems whenever a refund is generated for the respective item and changes the item’s return status to in stock.