Auto Refund: How Libas Turned a 4-Day Wait Into Same-Day Resolution

For every E-Commerce retailers, one of the biggest nightmares is product return. While many brands don’t invest a thought into the return policy, but this certainly drives a major part of the customer behaviour. Ecommerce brands are giving a dopamine hit to the customers by offering seasonal sales, new drop of festive collections, and limited-time promotions to drive high transaction volumes. But, one can’t ignore the returns.

Returns are inevitable, especially in online retail. Reason could be any – from size or fit issue, wrong product, purchase errors, or any unfulfilled expectation, customers are returning products more frequently than ever. If compared with in-store returns, the customer is guided by a friendly face, but in online returns the entire journey is process-driven.

Therefore, brands must understand the importance of the customer journey that begins after the purchase is made. Because if the return process is seamless, the brand gains the trust and loyalty of the customer. But in case when the customer is left handicapped about the unclear return and exchange policies, you have lost the customer. They may not be returning to your brand.

Bottlenecks of Manual Refund Management

The refund process in ecommerce depends heavily on manual processes. This leads to cropping inefficiencies across different teams involved, like backend operations and customer support and finance. Most the prominent challenges faced are:

• Excessive Manual Work for Customer Support and Operations Teams This creates an operational burden, demand of constant coordination between multiple teams like customer support, warehouse, and payment gateway, resulted in increasing difficulty managing efficiency.
• Overflow of Customer Support Queries With the rise in refund and return queries, customers try to reach the support teams for respective status updates, increasing the number of inbound calls, emails, and chat queries. These build added pressure on the support teams and therefore increase the time to resolve queries.
• Sale Season Brings Operational Bottlenecks During major sale events like Purple Days Sale and festive season collection launches; brand has witnessed an enormous increase in the order volumes. Resulting in more returns as well. With the manual processes, the entire return cycle suffered causing refund backlog and operational bottlenecks.
• Raised Negative Customer Experience Delayed refunds led to customer frustration, affecting the Net Promoter Score (NPS), customers’ repeat purchase behavior, and online reviews on social media as well as on the brand website. This in turn weakened brand loyalty and customer confidence.

But, what if we say that these negative experiences can be turned into loyalty?

Yes, these challenges highlighted the need for a more scalable and efficient approach to refund management, paving the way for automation-driven solutions.

What is Automated Return?

Returns automation is changing the game for how online retailers are handling returns. So, what is an automated return? Automation-driven process brings together the use of technology with minimal manual effort to streamline and manage different stages of the returns process. This improves workflow efficiency, reduces overall processing time, and offers satisfying customer experience.

How an automated returns system helps:

• Automatically create return shipping labels for customers.
• Approves or rejects return requests automatically, based on the predefined rules.
• Monitoring the return status and movement of items in real time.
• Initiates a refund once returns are verified.
• Automatically inventory is updated, once returned items are received at the warehouse.
• As a part of Reverse Logistic, automated updates are sent to the customer through Wats App or SMS about the return status of the order.

This automated process also assists in collecting and analyzing data to identify return trends and improve processes.

Automating the Refund Journey at Libas

To address the operational challenges associated with manual refunds, Libas implemented an automated refund management system. This process was integrated within its e-commerce ecosystem last year.

Built on the Shopify platform, Libas integrated a dedicated returns management application along with its payment gateway systems to create a seamless, end-to-end refund process. This automation setup enabled the brand to eliminate manual efforts, reduce the processing time, accelerate the return request validation, approval workflows, reverse logistics coordination, and refund initiation.

This also helped in ensuring the gathering of real-time data that allowed better tracking of the returns and refunds; and seamless coordination between internal teams, resulting in faster resolution to customer queries.

So, when does this automated process begin in the customer return journey? Let’s know the entire process in detail.

A request is registered as soon as the customer submits a return request on the website. This is followed by the verification of the return window eligibility and product category, as per the pre-defined approval rules that validate the return request automatically. At Libas, the brand offers allowance for size and fit related returns and has streamlined structured handling during festive and sale seasons to manage high volume returns. Once the approval is accepted, the system raises a reverse pickup request and a shipping label. This wipes out any need for manual coordination with the logistics partners.

Upon the arrival of the returned item at the Libas warehouse, it goes through the quality check. This is followed by the automatic generation of refund requests to the customer through the integrated payment gateway. Simultaneously automated Wats App and Email updates reach the customers at every stage, ensuring transparency in the automated process.

Because we as a brand understand that having a clear return policy, instant refunds, and smooth processes in place, is directly proportional to a satisfied customer and in turn directly impacts profitability of the brand.

Implementing Refund Automation: Data, Timeline, and Operational Alignment

At Libas, the implementation of this automation-driven process for easy return and refund was carried out in phases, over a period of approximately 6–8 weeks. The execution involved technology integration while keeping the internal teams aligned with the future processes.

The initial step involved analyzing return and refund behavior using insights from Google Analytics 4 and analyzing the data on the Shopify dashboard. The team examined key data that revolved around Libas’ return request frequency, the refund processing timelines, what are the peak return periods, and an in-depth study on the customer touchpoints related to refund queries.

This analysis helped the team identify key friction points in the refund journey. This was inferred that the delays are particularly experienced during warehouse verification and the manual initiation of refunds through payment systems. Together, these gaps contributed to longer turnaround times and increased dependency on multiple teams, highlighting why this automation was mandatory and how it will help in driving efficiency.

Once these challenges were identified, Libas redesigned the internal workflow and established standard operating procedures (SOPs) across the involved teams. The warehouse team streamlined return intake and scanning protocols to ensure that returned products could be logged into the system immediately upon arrival. Quality control teams were made aware of the predefined inspection rules to quickly validate product conditions and eligibility for refunds or exchanges.

Simultaneously, the finance and operations teams integrated the refund automation with payment gateway systems so that refunds could be generated automatically.

Lastly, the customer support teams were also aligned with the new automation updates, enabling them to guide customers toward the self-service return portal.

This well-coordinated implementation ensured that automation was not just a technology upgrade but a cross-functional operational transformation, allowing Libas to process refunds faster.

Data Insights: Before and After Refund Process Automation

Brands often see returns as a loss, but Libas uses their returns to increase customer lifetime value (CLV). We understand that managing returns and the reverse logistics process efficiently builds customer retention.

The data highlights a significant acceleration in refund process and post-automation. Same-day refunds have surged to 71%, while it was found that most refunds are now completed within 2 days. This shift indicates improved operational efficiency and reduced customer wait time, and a hassle-free post-purchase experience.

The comparison highlights a sharp shift toward faster refund processing post-automation. Refunds that earlier took up to 3–4 days are now largely completed within 1–2 days, with a significant rise in same-day resolutions.

Complicated return processes are a major reason customers abandon brands. As per our study, we found that implementation of the Auto Refund system has significantly improved the speed of refund processing. Prior to implementation, same-day refunds were negligible, accounting for less than 1%. In contrast, after the automation process, same-day refunds have witnessed a dramatic increase to over 60–70%, highlighting a significant improvement in refund speed and efficiency.

Similarly, refunds processed within one day have also improved from 12–13% pre-implementation to 83–90% post-implementation. The proportion of refunds completed within two days also rose substantially from approximately 45–56% before implementation to 94–97% afterward. Overall, the data indicates that the Automated Refund system greatly accelerated refund turnaround time. It is assisting in refund completions within two days, as compared to four days previously.

Enhancing Customer Experience Through Refund Automation

Besides, bringing an impactful change in the refund process, this has also projected a notable impact on customer service interactions related to refund queries.

Customer Queries:

Prior to automation, refund-related concerns formed a significant share of customer calls, accounting for approximately 24–25% of overall queries handled through support. After automation, this share declined substantially to around 13–14%, indicating a notable reduction in refund-related customer queries. With this, now Libas’ support team is investing more in resolving complex customer concerns.

Conclusion

The implementation of refund automation at Libas highlights how operational efficiency can directly translate into a better customer experience and turn it into long-term customer loyalty. We understand that replacing the manual process didn’t just reduce refund and return timelines, but it also strengthened the customer’s trust in the brand and also encouraged repeat purchases, increasing profitability of the brand.