A fair and comprehensive return policy not only influences where online customers choose to shop but also how much they buy.
- 60% of customers review the return policy before buying from a merchant online
- 54% are more likely to shop online from a merchant offering free returns or exchanges.
- 62% would buy again from the same merchant. 47% will not buy an item if they must pay for return shipping.
- Over 40% of customers buy variations of a product with the intent of returning what does not fit.
Customers expect hassle-free returns, in fact so much so that they also expect a pre-printed return shipping label with their online purchase. On average, over 30% of products bought online are returned for a variety of reasons; the top ones are:
- Poor fit, too large or too small
- Not as described
- No longer needed
- Incorrect gift purchased
- Was sent the wrong product, colour, or size.
- The product was defective
- The order never got delivered
- Return abuse like wardrobing (is a form of return fraud where an item is purchased, used, and then returned to the store for a refund), bricking, switch fraud and upgrading
Regardless of the reason, returns are a significant cost to the business. Aside from the cost of processing the return, refunding the revenue and the cost of return shipping, there are other costs like conditioning items for resale, obsolescence, cost of lost or damaged products, and lost warehouse efficiency.
A well-designed return policy can not only drive sales and build loyalty, but it can also reduce the cost of returns.
It’s important to remember that each return is an opportunity, not a lost sale but an opportunity to sell and retain customers.
Some things to think about while developing or refining your returns policy. (Based on your business and your products)
How will you refund the customer?
Full money-back guarantee, store credit or exchanges only? Store credits are a smart option as it ensures that customer will shop with you again.
Who pays for shipping on returns?
Online shoppers now expect free shipping on returns. This, however, may not be possible on all your products, so consider which products are eligible.
Do your prices include the cost of returns?
Ensure that your retail prices include enough margin to cover your cost of returns and exclude discounted products that don’t. Does your return policy apply to all your products?
How will you use returns to cross-sell or upsell?
Look at every return as an opportunity to sell. Listening to your customer can help you know if the situation is right for exchanging, cross-selling or upselling.
What will be the return time limit?
Provide a sufficient return window based on the type of product you sell. Longer windows typically reduce returns due to reduced urgency.
Eight winning e-commerce return policies
#1 Be upfront
Whatever your return policy, it should be displayed prominently in multiple locations on your website so that it is easy to find.
#2 Make your policy clear.
Your return policy should be easy to read and clear about the kind of refunds you offer, monetary return, exchange, or store credit.
#3 Keep it friendly.
A harsh and punitive sounding return policy diminishes its selling power. Keep the tone of your return policy warm and welcoming.
#4 Make returns trackable
Enable customers to track returns and refunds the same way they track their orders; this will build trust, increase sales, generate positive reviews, reduce customer service calls and saving you time and money.
#5 Set a time limit.
A time limit makes inventory management easier and reduces your losses on returns. Giving customers a wider return window of 30 to 90 days can reduce returns as it takes away the urgency.
#6 Allow some flexibility.
Putting a time limit on your returns is essential, but allow your customer service team some flexibility to honour at their discretion returns that are a day or two late.
#7 Make it convenient to return.
Make return labels easy to print; better still, include a return label with the purchases. If you have a physical store, allow customers the option to return by shipment or return in-store (BORIS), they may end up buying something else when they come in to make a return.
#8 Pay for free returns
78% of shoppers left items abandoned in their carts upon seeing unanticipated shipping costs(dot.com). Not paying for return shipping might save you money, but it could cost you sales and customers.
A returns policy can be a double edge sword, but with the right approach and tools, returns can become both a competitive advantage as well as a healthy source of loyalty and profits.
 (walker sands, 2018)
 Dotcom Distribution 2020 eCommerce Consumer Study)