Examples of how to create an eCommerce return policy

Examples of how to create an eCommerce return policy

If you are like most eCommerce businesses, 20% or more of the items you sell each year are returned. Most common reasons are incorrect size/fit/color or a damaged item. Although returns are inevitable in running an eCommerce company, there is a way to reduce them and make it a pleasant experience. This guide will show you how to create a return policy that makes customers happy, and can even increase conversions.

What is the purpose of a return policy?

Although U.S. state and federal laws don’t require that you have a return or refund policy (except for defective items and ” Cooling Off Period“) it is a good idea to have one. According to Invesp , 67% of consumers would like to know more about the return policy before making a purchase. A staggering 92% also said they would be willing to buy again from a company if it was easy to return their purchases. In essence, your return policy helps your buyers feel secure. Your return policy helps compensate for the fact that customers can’t see or try on your products, and sets expectations for post-purchase services. It is important to have a clear and generous return policy in order to improve customer retention.

What is the standard eCommerce return rate?

According to NRF Research, the average retailer receives $166 Million in returns for every $1 Billillion sales.
  • Auto parts: 19.4%
  • Apparel: 12.2%
  • Home Improvement: 11.5%
  • Housewares: 11.5%
  • Department stores: 11.4%
  • Footwear: 9.1%
  • Sporting goods: 7.6%
  • Beauty: 4.3%
  • Hard goods 3.8%
Although there is evidence that small online stores have lower returns, it doesn’t necessarily mean they are unhealthy. Like a newsletter with high volumes often has more subscribers than one that is low volume, larger companies expect high returns and will even accept it with a generous return policy. However, you can reduce certain types of returns by having a return policy. You could, for example, limit the items that are returnable (e.g. regularly priced versus sale). You could also limit the way returns are handled (e.g. store credit instead of a refund). During the holidays, return rates can spike. This could be due to gift returns and bracketing where consumers purchase multiple items before deciding which one they want to keep.

Five things to remember when you create your eCommerce return policy

There are many factors to consider when creating your return policy. These factors will vary depending on the stage of your business. It is possible that more established eCommerce stores are more focused on standing out from their competition. Newer eCommerce stores might be more focused on reducing the logistical burden in order to lower overall costs. Review the following list and decide which items are most important for your company.
  1. What are your competitors’ return policies? Are you able to offer a comparable or better experience by offering something different?
  2. Shipping costs The shipping costs are directly affected by the size and weight of your products. It may not be practical or sustainable to offer free shipping for large, heavy or bulky products.
  3. What are your customer’s expectations?
  4. What is the point at which your profit margin is negatively affected by the return rate on your profits? Is it better to split the return rate with customers or to absorb it?
  5. How do you manage the current volume of returns? Are you able to do more or is a decrease in returns better?

There are 6 types of returns policies

It may take some trial and error to determine the best return strategy for your company. Be open to making minor adjustments to gauge how buyers and your bottom line respond. Let’s take a look at some common business policies.

01. No-refund policy

This policy should be used with caution. A strict no refund policy can discourage buyers and create distrust in brands. This should not be used for situations beyond those listed below. To ensure buyers don’t get confused by the item’s dimensions, features, and care instructions, if you have a no refund policy, make sure to be very specific in product descriptions and photos. Who is the best for?
  • Businesses that specialize in low- or bargain-priced items, where it is prohibitive to accept returns.
  • Businesses that specialize in refurbished, overstock or closeout items
  • Businesses that want to sell products as-is
  • Going-out-of-business or inventory liquidation sales
  • Businesses with low profit margins should look for other ways to increase conversion rates.
Pros
  • Maximize profit per sale
  • Reduce overhead costs when starting a business
  • There are fewer unplanned inventory fluctuations
Cons
  • The buyer is responsible for all risks, which could deter them from purchasing the item.
  • This can be a sign that you are untrustworthy or cheap, even if the reasons are explained.
  • Customers who are trying to get a refund, return or exchange may be subject to a greater burden in customer service.
  • Positive customer experiences don’t automatically come with it
Live examples

02. Refund and return policy limited

There are many options to limit or limit the types of returns that you accept, and the amount of refunds you offer. Companies that have a restricted return policy will only accept returns on defective or damaged items. They also offer full refunds. Shipping costs are not included in any return of other items. Reduced returns time frames can help to reduce costs and minimize buyer risk. Be sure to choose a reasonable return timeframe. A return window that is too short can frustrate customers and cause them to lose interest. A longer return window can also be psychologically beneficial for customers who might otherwise feel pressured to take a quick decision. Some companies split the return shipping costs with their customers. You can also accept returns. However, in your return policy you should state that you will deduct the return shipping costs from the total amount. Who is the best for?
  • Online shops that must keep returns rates and associated costs low
  • Small businesses and startups looking to be competitive while still keeping expenses under control
  • Companies seeking to lower the number of returns
Pros
  • Reduces buyer hesitations
  • This reduces the perceived risk of buyers
  • Can be tailored to meet the specific needs of your business
  • Scale easily as your business grows
  • Smaller businesses and startups are most flexible
Cons
  • Buyer expectations may not be met if the industry standard or other businesses offer more flexible policies
  • This does not eliminate all risks for the buyer
Live examples

03. Only exchanges and store credit

A lot of returns can quickly prove costly for businesses that already sell low-priced goods. This can be reduced by offering store credit or an exchange process. If someone asks to return an item, and they list “size”, you can offer an exchange for a different size. Keep in mind, however, that you should still include restrictions regarding what can be exchanged (e.g. tickets, unused or unopened). Your company could also be subject to return fraud or the return of non-sold items. Who is the best for?
  • Boutiques and clothing shops with lower profit margins
  • Hand-made and one-of-a kind items are sold by businesses
  • Online brands that are well-established
  • Brick-and-mortar businesses
Pros
  • Reduce bracketing
  • This reduces the perceived risk of buyers
  • Encourage repeat business
  • This gives customers more opportunities to interact with them and provides a better customer experience.
  • Inventory fluctuations are reduced
  • Reduce overheads for receiving, repackaging and restocking
Cons
  • The policy may make disgruntled customers feel trapped
  • Customer satisfaction is key to retaining customers’ trust.
  • This puts more pressure on customers to think carefully before making purchases
  • Smaller average shopping cart sizes for new customers
Live examples

04. Flat-fee return policy

Instead of charging the full return cost, consider offering a flat-fee shipping fee. This allows you to share some of the costs with your customer. Keep the fee as low as possible to avoid discouraging potential customers. Another way to charge a flat fee is to offer low-cost shipping labels. You could also offer a different rate depending on the size, weight, and quantity of returned items. A single item could be returned for a flat fee of $3.99. A return that includes two or more items may be subject to an $8.99 flat rate fee. It is more expensive to ship bulky, large or heavy items. It may be appropriate to have a separate policy or return fee for larger items. Who is the best for?
  • Online shops looking to lower return rates and associated costs
  • Start-ups and small businesses that want to remain competitive while keeping costs under control are welcome
  • Companies seeking to lower the number of returns
Pros
  • This allows the business to share the cost with the customer
  • This reduces the perceived risk of buyers
  • Assists with the business’s needs
Cons
  • Buyer expectations may not be met if the industry standard or other businesses offer more flexible policies
  • This does not eliminate all risks for the buyer
  • Businesses with a wide range of product sizes or types are not ideal
Live examples

05. No cost return policy

Consumers expect free shipping and returns. This is especially true when it comes to expensive items such as furniture and electronics. You could offset price-based buying barriers by offering free returns. If you offer free shipping, it might not be possible to pay the full cost of return shipping. Consider offering return shipping free of charge as a loyalty perk for members. Wix’s eCommerce tools offer an integrated membership area that allows customers to reward repeat customers. It may seem counterintuitive that you offer free shipping to customers who shop most and return most often, but it is a valuable perk that can keep your customers returning. Even with free shipping returns, the lifetime value for a repeat customer can be much greater than that of a customer who only shops once or twice. Be sure to carefully review all costs before you implement a free return policy. Consumers hate losing perks so it’s important to review all possible costs before you implement a free return policy. Promoting a limited-time promotion of a free returns policy is a great way to get it tested on your website. It should be understood that the promotion is temporary and not permanent. Temporary promotions allow you to collect the data necessary to determine if it is a sustainable policy. Who is the best for?
  • Businesses specializing in high-ticket items
  • Companies with established businesses that have higher profit margins
  • Brands for apparel and clothing
Pros
  • Popular among consumers, especially when it comes to purchasing apparel
  • All risk removed from buyer
  • Reduces several purchasing obstacles
  • Trust builds trust
  • This sets the tone for your business to be serious and established.
  • Larger average shopping cart sizes
  • It is a competitive advantage
Cons
  • Retraction is risky once implemented
  • It requires dedicated staffing and skilled return management
  • May encourage bracketing
  • Holidays bring about higher inventory fluctuations
  • Shipping costs will increase for larger orders.
  • Increased volume results in slower returns processing
Live examples

06. No return policy

A returnless policy allows customers to receive a refund without the need to return the item. This may not sound like a good way to handle returns. It could save you money depending on what products you sell and the condition of the items (e.g., damaged items upon arrival). Not to mention that the energy required to manufacture, package, and transport items from location to location creates a substantial carbon footprint–approximately 15 million metric tons of carbon dioxide each year. The environment can be protected by returnless refunds. Showcasing that you’re an environmentally-conscious business can create additional opportunities to differentiate your brand from your competition. Who is the best for?
  • Businesses that specialize in low- or bargain-priced items, where it is prohibitive to accept returns.
  • Companies with higher profit margins are established
  • Businesses that stock overstock products with significantly discounted sales
  • Special circumstances (e.g., product arrives defective)
Pros
  • This saves consumers the trouble of returning items
  • It is a competitive advantage
Cons
  • Only applicable to products that are more expensive to transport back to your company than they are worth
  • This could lead to fraud in return (returns are often based on an honour system).
  • This is not usually advertised. It involves direct contact between the business owner and the customer to let them know that a replacement or refund is on the way.

How to create an eCommerce return policy

  1. Choose a template for a return policy as your starting point
  2. Form the details of your return policy
  3. Create a FAQ
  4. Create a process for managing returns
  5. Find Your return policy is easy!

01. As a starting point, choose a template for a return policy.

The limited return policy template is a great place to start for most eCommerce businesses. Before you implement a new policy, make sure to examine the current and future costs of returns. This will prevent you from having returns that are reducing your profit margins. Don’t force a return policy if you’re not ready or financially viable for your business. Choose an approach that is both supportive of your business and will meet your client’s needs. Most businesses will use one or more of the following return policy templates. You can make your return policy more customer-centric as your business grows. Every state has its own guidelines about what constitutes a valid return policy. These guidelines should be followed when you create your policy.

02. Form the details of your return policy

Six main components should be included in your policy. To ensure that you have addressed all possible scenarios, first answer all questions. Your customer service team will need to respond less frequently if you’re more specific. A well-written return policy will help you be consistent and treat every return the same, while also saving valuable time for your team. Acceptable Returns
  • Are you willing to accept returns on all products, or just defective?
  • Can items from sales be exchanged or returned?
  • Are you able to sell custom-made or handmade items? Do you accept returns on handmade or customized items?
Acceptable conditions
  • After they have been opened or used, can items be exchanged or returned?
  • Are the tags required to be attached to the items?
  • Are items allowed to be returned in the original packaging?
  • Are there different exchange or return rules for shoppers or members?
Return window
  • What time must customers wait to return their items?
  • What happens if the items are not returned within this time frame?
Refund(s)
  • Can you send a substitute product for the original?
  • If the original product is not available, will you send a comparable product?
  • You will offer store credit instead of a cash refund.
  • Are you willing to offer full refunds on returned items?
Return costs
  • Is there a charge for returning the item?
  • Is there an administration fee?
  • Do you have a pre-paid return label?
  • Is it possible for the cost of return to vary from country to country?
  • Is there a difference in the cost of returns depending on product type?
  • Are you willing to offer lower fees to members and repeat customers?
  • Is it possible to have an item replaced or refunded without returning the original item? What conditions will it be granted?
Logistics
  • Which address should customers send their returns?
  • Are you able to offer in-store returns as well as online returns?
  • Customers are required to email support in order to initiate returns
  • Customers are required to print and include their receipt in the mail?
  • Which parts of the return process can be done by self-service?
Write short paragraphs that briefly discuss each of the six elements. To ensure that your policy is clear and understandable, have others read it. Include any additional details that are relevant to your store. Remember to be direct and kind when writing your policies. Instead of writing “You must return the items within 14 calendar days or you will not receive your full refund,” consider something more warm like “Return the items within 14 calendar days to receive a complete refund.”

03. Make a FAQ to support it

A FAQ section is a great way to reduce customer service calls and answer questions about returns. This allows customers to become more independent. This helps reduce friction in the sales cycle. Ask your customer service team for the most frequently asked questions about your refund policy. As you have additional questions, you can always add to the FAQ.

04. Set up a process for managing returns

You should create a process that your team can follow. You will need to process returns quickly. However, you will also need to be able track returns’ status and provide the same level information to customers who are anxiously waiting for resolution. Software that manages returns can simplify and centralize your business. Wix eCommerce integrates with ShippoShipStation, which allow you to create return labels for free, provide self-service returns and automate the rest of the process. Wix allows you to cancel or refund orders made via PayPal, Stripe, Wix Payments, or Wix Payments. You can also notify your customers by email. You can always ask a third party logistics provider (3PL), if handling returns is not an option for your team. Make sure that your 3PL is familiar with your policies and what is considered returnable. A 3PL can handle multiple after-sales tasks, such as shipping replacements to customers and determining which items can be resold. They can also chase couriers for credit if the items were damaged in transit.

05. Easy to locate your return policy

Your return policies must be clearly visible in order for your state laws to be valid. It’s also good practice. Your return policy should be listed in multiple places on your website.
  • Footer for website
  • FAQ page
  • Product pages
  • Automated emails to abandon cart
  • Other automated email addresses where applicable
  • Chat on your website
It is important to have a clear and simple return policy. This will help customers build trust and set the right expectations.

Bonus: Take a closer look at four return policy examples

Here are four examples of return policies that have proven successful for Wix merchants.

Kaekoo’s return policy

This policy features: Kaekoo’s return policy does not allow for returns on Honeycomb Shelves. These shelves are custom-made to order. They don’t accept returns on sale items. They allow you to return items in their original condition if they are received within 14 days. However, they do not cover the cost of returning shipping. What you can take away from it: The store encourages customers contact them before initiating any return. This will allow them to determine the root cause of dissatisfaction, and hopefully solve it without the need to return. This is a great example of a small store selling specialty or luxury products.

Kaxi’s Return Policy

This policy features:Kaxi provides clear and simple instructions for customers. If the product is not in its original condition, it can be returned within 15 calendar days. Store credit will be issued if received later. To initiate the return, the customer must contact support by email. What you can take away from it: This policy is great for eCommerce stores that don’t require customers to try on products. This policy is smart because it requires sellers to email support to initiate the return process. This allows the seller to gather feedback and solve the problem in a personal way.

BrickBrick’s Return Policy

This policy features: Returns are not accepted unless the product is defective. They only sell one product and offer information about sizing to help customers find the right size. Lessons to be learned: You don’t have the obligation to offer returns if you aren’t ready. Your audience will be more likely to buy if you offer a unique product that is innovative than others.

Bare Necessities eBoutique’s return policy

What the policy features: This policy offers ways to please customers while still covering returns costs. Returns are subject to a handling fee and shipping fees. This allows the store to offer refunds without having to reduce their profits. Learn from this policy. Provide a shipping label with a reasonable deduction ($5.99), to meet customers’ expectations. This will make it easy for them to return their items. This policy offers no shipping or handling fees and free exchanges and store credit. source https://www.wix.com/blog/ecommerce/2020/08/return-policy

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