The catch is to not penalize innocent customers, such as the expectant mother who receives too many strollers at her baby shower and winds up on a fraudulent return list when she tries to exchange them. Consumer groups are pushing retailers to come up with fair return policies that are posted visibly at all purchase locations including on the Web site for online retailers.
Many return policies have conditional agreements, such as time limits, that must be clearly defined and expressed at the time of purchase. The consumer should know that he or she has 30 days to decide whether a product meets his or her needs or whether a store charges a restocking fee when an item is returned.
A definitive retail return policy can help increase sales because an overwhelming percentage of the consumer population looks for it. Consumers still see it as a guarantee that reflects the trust retailers have in the products they sell. Business All NYT.
World U. Skip to next paragraph Articles and resources from AllBusiness. Store Credit: If a customer is unhappy with their product, they can return the item to you and receive a credit for the amount of their purchase, usually less shipping costs. However, this may not appeal to a customer who has had a bad experience with your product, and it may not be effective if you only sell one type of product. Whilst widening the return window was rated of least importance, the University of Texas-Dallas found in a study that stores offering more time to return, whilst refunding a larger percentage of the original cost, were the most effective at increasing overall sales.
Here are a few steps you can take to make sure it does:. What do they look for when they shop, and what would make them choose you over someone else? There are also many studies on return policies that can give you a general idea of what people like and dislike.
Create a documented outline of what returns you accept, the condition they must be in, where they can be returned and the timeframe if any in which they must be returned. Returnly is one of the larger self-service returns providers for ecommerce stores. On the merchant side, Returnly offers the option to purchase pre-paid shipping labels through the app and get access to its shipping rates, or the ability to upload your own shipping labels to send to customers. This customization extends to almost all other aspects of the return flow, where you can decide what products customers can return or exchange, who pays for the shipping label, and whether they are given a store credit or full refund.
If the customer does not return the product but uses the Instant Refund credit, Returnly covers the cost. By providing an immediate store credit, Returnly found that shoppers were three times more likely to purchase again from the store. This feature helps transform returns and exchanges into repeat purchase opportunities.
Although you can cut down on customer service hours with an app, the shipping fees associated with returning a product and restocking it can still threaten your profitability. However, there are a few ways to minimize your losses while still offering returns and exchanges to customers. The difference between returns and exchanges is most prominent when looking at profitability. When a customer returns a product for a refund, the business usually loses money on the customer acquisition and return shipping costs, plus it needs to refund the customer any profit made on the original order.
With an exchange, the loss is often less impactful. With strong product margins, offering a replacement product instead of a full refund can keep your business cash flow positive.
A common way to encourage exchanges over returns is by only offering to cover the cost of return shipping if the customer chooses to exchange the product. When presented with the three options above, the choice to get a store credit or new product may be more appealing to those who have not fully sworn off your brand.
Convincing customers to give your brand a second chance with a new order can also help improve lifetime value, as they are more likely to come back and purchase again if they are satisfied the second time around. By only making the exchange option more valuable, and not penalizing customers who just want to return, Chubbies creates a positive customer experience for everyone, while encouraging more customers to choose exchanges instead of returns.
When a customer chooses to return a product for a refund or exchange, one risk a company often takes on is whether or not it will be able to resell the item. It can sometimes take up to two weeks for a product to re-enter stock after a return is initiated, and the time spent in transit and unpacking can often leave it damaged. If the product is expensive, replacing it might not be an affordable option. For more expensive items, companies may want to consider selling product warranties to customers.
Warranties protect businesses against paying to replace damaged products and avoiding disputes over who is to blame. Warranties can be sold through an app like Clyde , which can be added to your website to put the decision to protect the order back in the customer's hands:.
Warranties like this can also have the potential to unlock a new revenue stream for your business, since the providers often offer a commission on all premiums sold. That way, your customers are protected for a longer term and your business collects a little extra revenue instead of paying for damaged goods.
One ecommerce returns best practice is to upsell or cross-sell on exchange requests. Although exchanges are usually more profitable than returns, their profitability can be narrow depending on the product and its margins.
If exchanges are still costly, it might be a good idea to look at upselling or cross-selling on exchanges. Make sure to adjust your shipping policy for returns and exchanges. In cases where customers cover the cost of shipping on an exchanged item, it may make sense to allow them to add more products to their cart to reach a free shipping threshold. For example, if a customer is exchanging a digital camera because they found that it was too heavy, you can recommend a lighter-weight version that might have a higher purchase price but resolves the issue they had with their first order.
Looking at every exchange as a new opportunity to increase order value by upselling or cross-selling, the incentive to convert more returns into exchanges becomes clear. No matter how much effort you put into your product and customer experience as you grow your business, chances are you will still encounter a few unsatisfied customers along the way.
How small businesses decide to deal with these unsatisfied customers is an important factor in the staying power of your brand. A company that figures out a relatively painless shipping strategy to handle return and exchange requests is more likely to retain its customers and have them come back and purchase again or, better yet, tell their friends.
Writing a clear return policy that feeds into a well-thought-out return and exchange system—and regularly optimizing it to make it more efficient—is a powerful way to cut costs and potentially turn a bad customer experience into a net positive outcome for your business. A return is when a customer sends an item back to your store or warehouse. They usually have to return an item before they get a refund.
A refund means giving the customer all or some of their money back for an unwanted item. A return and refund policy is an agreement between customers and your business regarding returns and refunds.
It can include the following information:. Depending on your country and state laws, you can technically have a no refund, no return policy. But a no return policy can make customers distrust your brand and abandon a purchase.
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