How to Create an Effective Ecommerce Returns Policy

Every online shopper faces the reality of needing to return an order at some point. Ecommerce returns policies go a long way in ensuring a seamless experience by providing directions on how packages can be sent back, terms for refunds, rules for exchanges, and more. 

This is much more than fine print; every section of a returns policy has the potential to help or hinder a business’ reverse logistics process and ongoing costs. 

In this article, we explain how to craft an effective ecommerce returns policy to keep your customers happy, as well as tips to make your ecommerce returns process smoother. 

Ecommerce Return Policies Explain

An ecommerce returns policy is a set of rules that outlines the process and conditions for customers to return products they have purchased from an online store. These policies can vary between different ecommerce retailers but typically provide guidelines on how long the customer has to initiate a return, what items are eligible to be returned, and the process for receiving a refund or exchange.

Return policies are a widely embraced best practice for ecommerce stores. This is because they deliver value to both sides of online shopping transactions. Buyers get clear terms before purchasing an item while businesses mitigate the risk and confusion that can come with not having a policy in place. 

While they aren’t federally mandated, returns policies are required on the state level in some jurisdictions. Check the local laws of the region you operate in to confirm whether you are obligated to include a returns policy on your website. In any case, it’s always better to be safe than sorry and have one.

How Ecommerce Returns Affect Customer Satisfaction

Returns shouldn't be an afterthought for ecommerce businesses. While life would certainly be easier if customers never needed to send items back, the reality is that returns are an inevitable part of online shopping. In fact, Shopify says that 20% to 30% of all ecommerce purchases end up being returned.

Since such a large proportion of customers will make a return at some point, it's in every business' best interest to implement a policy that makes understanding and initiating the returns process hassle-free. The ease or difficulty of making a return can define the experience buyers have and their lasting impression of a business.

Not only that, but return policies play a big role in establishing trust. Customers feel more comfortable making purchases online when they are presented with terms, conditions, and methods of recourse upfront. It quells some of the concerns that might cause someone to hesitate - like product fit, quality, and expectation mismatch - while providing a sense of control.

This can have a positive effect on brand reputation and loyalty. When customers have good returns experiences with a company, they're more likely to purchase from it in the future and share their satisfaction with others. Online stores without clear returns policies see the opposite effect, where dissatisfied buyers can be put off from future purchases and inclined to leave negative online reviews capable of impacting a brand’s image. 

How Ecommerce Returns Affect Operating Costs

The costs associated with reprocessing inventory so that it is properly inspected, organized, and either restocked or disposed of add up quickly. Return rates vary by industry, with clothing, bags and accessories, shoes, and consumer electronics leading the way at respective percentages of 24%, 17%, 17%, and 11%. It’s estimated that every $1 billion in sales a company makes is accompanied by an average of $165 million in merchandise returns.

Making a Strong Ecommerce Returns Policy

Since every ecommerce business is different, an important part of creating a strong and effective ecommerce returns policy is tailoring it to your business and customer base. A generic policy may not be suited to the items you sell or compatible with the internal processes you have set up. Below, we explain the must-haves for a strong ecommerce returns policy and how its content can be tailored to specific business needs.

What Should an Ecommerce Returns Policy Include? 

Every ecommerce store's return policy should cover the following concerns and situations. The actual policies for each of these cases are up to you, but it's important to define guidelines for each possible scenario.

Clear Definition of Eligible Products

Every return policy should include a section detailing what products are eligible for returns.

For example, you may state that unworn clothing and unopened electronics are eligible for returns. This means that if a customer purchases a piece of clothing or an electronic device, they can return it as long as it remains in its original condition. 

Other items such as perishable goods or personalized products may not be eligible for returns, depending on the nature of the item and your business model. It's best to break eligibility down by product category so customers know exactly what they can and cannot return.

Exceptions to eligibility are also important to note here. Sale items and personalized products, for instance, don't always have the same return processing costs or resale viability as regular inventory. Similarly, opened products are sometimes pointless to send back to the seller if they’d have to dispose of them anyway.

Return Timeframe

The 'Returns' section of a policy explains the terms and conditions under which a business will accept returned orders from customers. Most sellers allow for some level of product return, so long as it takes place within a specific time frame.

For example, you might decide that your store will take items back up to 30 days after the purchase date. In the case of perishable consumer packaged goods, it may make more sense to shorten this period to 15 or even fewer days. 

Many online retailers also choose to adapt their return windows to accommodate predictable changes in order volume throughout the year, like offering an extended returns period during the holiday season.

Return Process Instructions

Provide clear instructions on how to initiate a return, access any necessary labels, and package the product for shipment. This may include directing customers to a specific page on your website or providing them with a return form and label to print out.

It's also important to specify any packaging requirements for the product, such as using the original box or including all accessories. This will help ensure the product is returned in good condition and can be resold.

Include the address or location where customers should send their returns, such as a specific return center or your company's headquarters. 

Refunds

This section should include the timeframe in which customers can expect to receive refunds (e.g. 5-10 business days), any restocking fees that may apply, and how customers will receive their refund (e.g. back to the original form of payment or store credit). 

No-questions-asked refunds can work in a brand's favor by building customer loyalty and encouraging future purchases. However, there are downsides to adopting this strategy, such as an increased risk of fraud. The right terms will depend on your business’ operating model and tolerance to risk. 

Exchanges

The exchanges section outlines the circumstances in which a customer can exchange one item for another of equal or lesser value. This section includes conditions such as the item being in its original packaging and/or unused.

Accepting exchanges can bode well for customer satisfaction, as it gives unsatisfied buyers the opportunity to rectify and satisfy the need behind their purchase as opposed to abandoning it and starting over. 

Some businesses have a strict no-exchange policy, while others allow exchanges within a certain time frame. It depends on the product at hand and how willing a brand is to take on additional costs and work. In other cases, exchanges may be expected. For example, products that are available in many sizes like clothing and footwear are often bought with the assumption of being able to exchange if something is the wrong fit. 

Shipping Costs and Responsibilities

Who will be responsible for assuming the costs of returning items to your online store? If it's customers, they'll need to know. The same goes for any applicable fees for restocking or repackaging. Stating this information clearly is essential to prevent misunderstandings and reduce the likelihood of negative experiences with your brand.

Generally speaking, the fewer costs you can pass on to customers, the better. People appreciate it when they can return items without having to pay for the privilege. This can also lead to increased customer satisfaction and loyalty. Consider your business' operating expenses to determine whether it can cover labor and shipping expenses. Oftentimes, the answer lies somewhere in the middle.

For example, offering free returns for defective or damaged products is a common practice that many customers appreciate. You can also consider implementing a restocking fee for certain items or only offering free returns within a certain time frame. 

Handling of Received Returns

Outlining how quickly returns are processed and when customers can expect refunds or exchanges helps manage expectations and ensure a smooth and timely resolution to the return process. Provide an overview of how your brand inspects and processes returned items to maximize transparency for customers. How are defective items handled? Can a customer appeal a decision if they feel their return was unfairly rejected? These are all important aspects to consider and communicate to customers.

Customer Service Contact Information

Although it should already be easy to find on your website, including customer service contact information in your returns policy will help convey transparency and accessibility to your customers. This can include email, phone number, and live chat support. Make sure to respond promptly and professionally to any inquiries regarding returns. If your customer support is offered by phone, its hours of operation should also be clearly stated.

FAQs or Examples

A frequently asked questions (FAQ) section certainly isn't mandatory in a returns policy, but it can go a long way in helping customers understand the terms and conditions presented to them. Address common points of confusion in this section to reassure buyer concerns and alleviate excess demand on your support team. Oftentimes, outstanding questions about returns relate to case-specific scenarios, such as defective products or wrong shipments. Including examples of how these situations would be handled can help clarify the process for customers and provide peace of mind.

Best Practices for Ecommerce Returns

Both ecommerce returns policies and the reverse logistics process itself can be made better with proper planning. Consider these tips for successful results when establishing your own system: 

Use Simple and Straightforward Language

Consumers don't want to spend ages decoding 'legalese' and will appreciate clear, simple, concise language regarding returns. Having an easy to understand return policy is also important to prevent issues in miscommunication before they arise and promote brand trust.

Save time by staying away from jargon and always define acronyms and complex terms so that customers know exactly what they're agreeing to. Along with being easy to understand, your return policy should also be easy to find. Include your return policy or a link to it on your website product pages, in the website footer, and in order confirmation emails.

Product Contact Information

Returns must be addressed promptly and efficiently. Be proactive in preventing potential communication issues by giving customers an easy way to reach out the moment they realize they need to return something. This could be via email, phone, or even an automated returns portal on your website. The latter solution allows customers to initiate returns and obtain return shipping labels without having to connect with a human agent. 

Be Generous With Return Timeframes

Allowing ample time for returns is crucial in ecommerce. Unlike brick-and-mortar stores where customers can physically bring back items, online shoppers need to go through the process of repackaging and shipping their returns. Give them enough time to evaluate their order and initiate a return – this will look different depending on what your business sells and its ability to be flexible with timelines. 

Provide Multiple Return Options

Not everyone has equal access to conveniences like a printer or post office, so offering various return options will make it easier for customers to send back their items.

This could include:

• Pre-paid return labels
• In-store returns for online purchases
• Drop-off at designated locations (e.g. post office, UPS store)
• Pickup by a carrier service

Providing multiple options also gives customers a sense of control and convenience, which can positively impact overall returns experiences.

Invest In an Efficient Fulfillment Process

This is why investing in the right infrastructure and resources is critical. Order management systems are a great place to start for any business looking to streamline their fulfillment process. These systems automate manual tasks such as order processing, inventory management, and ecommerce shipping. They also provide real-time data and insights that can help you make informed decisions on how to improve your process and reduce returns.

A strong order fulfillment system can ensure every aspect of the reverse logistics process runs smoothly as well. Brands without the proper infrastructure in place to handle incoming returns can experience a backlog that not only makes inventory management more difficult but also has the potential to delay outgoing orders and impact customer satisfaction. When orders are quickly and correctly fulfilled, the chance of customers being dissatisfied and returning items decreases.

Partner With a Fulfillment Expert

A third-party logistics (3PL) provider can take on the work of both fulfilling orders and processing returns for you. For a monthly fee, they handle all aspects of the fulfillment process, from receiving inventory to packaging and shipping orders. This frees up your time and resources to focus on other areas of your business.

Even better, well-established 3PL providers have advanced technologies like automated order processing in place to ensure fast and accurate fulfillment. Let them worry about maintaining a cutting-edge workflow while enjoying the competitive benefits that come with large warehouses, sophisticated order management systems, and trained staff. 

As the top-rated 3PL, Shipfusion offers third-party logistics services that can simplify your entire fulfillment process - both forward-moving and reverse. Contact a member of our team to get started today.