The Role of Order Management Systems in the Returns World

In today's competitive retail landscape, returns are a major challenge.  A staggering $760 billion worth of merchandise was returned in the US last year, eating into profits and creating logistical nightmares for businesses of all sizes.

Order Management Systems (OMS) are evolving from backend logistics tools into central pillars of both customer satisfaction and operational efficiency. A recent panel of retail leaders and industry experts provided crucial insights into the role of OMS in managing returns, optimizing the customer experience (CX), and adopting new technologies like AI and blockchain. Below, we explore the most important themes and time-stamped takeaways, giving you a roadmap for staying competitive in this evolving space.

Order Management Gurus, Panel 11: The Role of OMS in the Returns World

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Panelists:

• Adam Kelly, Senior Director, Körber
• Zach Zalowitz, Principal, Order Management Practice, Perficient
• Chap Achen, VP, Product Strategy, Nextuple

Moderator:

• Darko Tushev, Product Manager, Gap Inc

The Challenge and Opportunity of Returns Management in Retail 

[00:00:44]

The conversation started with humor around unusual returns, but the focus quickly shifted to the growing financial impact of returns. In 2023 alone, returns in the U.S. totaled $760 billion, with nearly 50% being omnichannel or online purchases. This demonstrates both the scale and importance of return management strategies. Key statistics highlighted:

• 11% to 13% of online returns are flagged as fraudulent.
• Handling a return costs 17% to 30% of the original product price.
• Buy-Online-Return-In-Store (BORIS) represents 50% of returns, underscoring the need for seamless omnichannel integration.

[00:02:08]

Returns, though expensive, present an opportunity to build customer loyalty—if handled well. Retailers must rethink returns not just as a cost center but as a CX opportunity.

The Evolving Role of OMS in Reverse Logistics and Fraud Prevention

[00:07:33]

OMS systems are becoming more advanced, helping retailers manage returns, prevent fraud, and improve reverse logistics processes. Panelists emphasized:

• RMA (Return Merchandise Authorization) generation is now automated through OMS.
• OMS platforms can disposition inventory, deciding whether products return to stores, warehouses, or third-party resale platforms.
• Fraud detection tools integrated with OMS help reduce fraudulent return rates.

[00:09:52]

Panelists noted that seamless returns management requires better integration between online and in-store systems, something many retailers still struggle with. Inconsistent policies or poor coordination between departments (such as online merchants and store teams) increase the risk of returns.

How Data and AI are Transforming Returns and Customer Experience (CX)

[00:12:37]

The panel delved into how AI and data analytics are changing the way retailers approach returns and fulfillment:

• Personalized Return Policies: AI can identify habitual returners and adjust return rules dynamically to reduce unnecessary returns.
• Inventory Optimization: OMS tools now analyze inventory flows and make smarter decisions on how to restock and route returned products.
• Proactive Customer Communication: Systems that proactively inform customers of delivery delays reduce the chances of returns triggered by missed expectations.

[00:20:03]

Panelists agreed that the Amazon effect has pushed the industry to adopt hassle-free returns. However, this ease has increased operational complexity and raised customer expectations, forcing retailers to adopt more agile OMS solutions.

Overcoming Operational Silos and Embracing Omnichannel Strategies

[00:17:43]

The discussion also addressed internal collaboration challenges:

• Many retailers still operate with separate teams for online and in-store operations, leading to disjointed returns processes.
• Omnichannel teams now oversee both forward and reverse logistics, recognizing that fulfillment errors often lead to returns.

[00:18:48]

The panelists stressed that omnichannel operations are no longer a competitive advantage—they are table stakes. Any retailer without an integrated omnichannel strategy risks falling behind.

Sustainability and the Future of OMS

[00:30:22]

Sustainability also emerged as a critical topic. Panelists speculated about potential government regulations that may impose return fees to curb environmental impact.

• [00:33:42] Retailers are beginning to explore resale partnerships (such as with Trove) to provide customers with more eco-friendly return options.
• Several states, including Colorado and Minnesota, are already introducing delivery fees for sustainability reasons. The panelists suggested that return fees may follow suit in the near future.

Same-Day Delivery and the Intersection with Returns Management

[00:51:42]

Same-day delivery combined with return pickups represents the next frontier in retail CX, but high costs remain a barrier:

• Retailers are experimenting with same-day exchange and pick-up services but struggle with the logistics and cost of these offerings.
• Until larger enterprises like Best Buy or Gap can roll out successful models, these services will remain niche and cost-prohibitive for many retailers.

The Future of OMS: AI, Blockchain, and Proactive Operations

[00:40:23]

Panelists discussed how emerging technologies are driving OMS evolution. AI, blockchain, and automation will play a pivotal role in:

• Predicting Inventory Needs: OMS platforms will integrate with inventory planning solutions to anticipate restocking needs, ensuring efficient reverse logistics.
• Proactive Order Management: In the future, OMS tools will automatically adjust fulfillment strategies to avoid issues like late deliveries and excess inventory.
• Customizing Customer Experience: Retailers will use OMS and AI to create personalized offers and fulfillment options based on individual shopping behavior.

The goal is to shift OMS from being a reactive tool to a proactive intelligence hub that manages all aspects of retail operations—reducing returns, optimizing fulfillment, and enhancing CX.

Key Takeaways: OMS as a Business Imperative

[00:54:05]

The panel concluded that OMS technology is no longer optional. Retailers must embrace AI, automation, and data-driven insights to stay competitive in a world where customer expectations are evolving rapidly.

Key takeaways include:

• Omnichannel integration is essential—disconnected systems are no longer viable.
• AI and predictive analytics will drive future OMS innovations, enabling personalized return policies and inventory optimization.
• Sustainability initiatives will become more relevant, with the possibility of return fees becoming a reality.
• The most successful retailers will adopt OMS systems that function as intelligence hubs, proactively managing inventory, fraud, fulfillment, and CX.

By staying ahead of technological advancements and optimizing order management strategies, retailers can reduce costs, improve margins, and deliver exceptional customer experiences. Whether through same-day delivery, AI-powered fulfillment, or sustainability-focused returns management, OMS is transforming from a logistics tool into a competitive advantage.