When it comes to refunds, the question isn’t whether to offer refunds, but how to do it successfully.
In ecommerce, return requests are par for the course: As many as 40% of ecommerce sales end in a return. Refusing to grant refunds won’t help you retain profits – instead, it will just discourage customers from shopping with you in the first place.
Offering a generous and flexible refund policy can help you get in the door with new customers who might not otherwise give you a try, and it can keep your existing customers coming back, secure in the knowledge that if a particular product isn’t a fit, they don’t need to keep it.
If you’re new to establishing your return policy, or you know you could improve on it, here are some types of refunds and return policies you might consider:
- Standard return policy (30 days)
For many ecommerce merchants, 30 days is a standard return window – long enough that customers have a chance to see if the item works for them, but not so long that you’ll be getting back merchandise you don’t have a shot at reselling.
When offering a 30-day return policy, make sure that you inform customers of not only their time period for returns, but also the conditions for returns: Should the item still have tags on, or is it OK if they’ve been removed? Does the item need to be in mint condition, or can it show a few signs of wear? Offering flexibility has trade-offs for both you and your customer – the more generous you are, the less likely the items are to be resold, but the more likely your customers are to give you a try if they’re unsure about an initial purchase.
- Extended returns window
Depending on the brand or the time of year, you may want to offer more generosity than a standard return policy: Some outdoor gear brands offer a year-long return window to ensure customer satisfaction on their items, for instance.
Or, if you’re selling products during the Black Friday – Cyber Monday window before the holidays, there’s a high likelihood that the gifts your customers are purchasing won’t be opened for more than 30 days, so it’s helpful to extend the return period seasonally to ensure that their recipients don’t end up out of luck – consider extending your returns window to 60 days during the holiday shopping season.
- Exchange for store credit policy
So what if some items a customer wants to return don’t meet your conditions for a full refund, or they’re requesting a return after your standard window? Consider offering store credit instead. Offering store credit means that you’re able to retain all of the revenue from the original sale, so even if you’re taking back merchandise that you can’t resell, you won’t be losing revenue on top of it.
Plus, offering store credit means the customer is more likely to continue shopping with your brand in the future, while a refund may mean the end of the customer relationship. Providing store credit also means that the customer will often spend more than the original purchase price when selecting a new item, helping you generate new revenue through the return process.
- Exchange for another item
You can also make it a seamless process for the customer to return an item for another item in your store, without needing to transfer it to store credit. Using a returns management platform like Loop, you can ask the customer why they’re returning an item, and use their response to offer personalized product recommendations for replacement items: If a pair of shoes was a size too large, you can offer them the next size down instead.
The customer can exchange the item for the same product in a different size or color, or choose an entirely different item in your store, paying the cost difference or accepting a partial refund if the new item is a lower cost. This simplifies the exchange experience for the customer, transforming it into a one-step process that will leave them delighted.
- Returnless refund
Sometimes, it’s simply not cost-effective to process a customer return. Between the cost of reverse logistics, packaging, and restocking, it costs about 66% of the original price of an item to accept it as a return. If you know the item won’t be resalable at the original price, it simply may not be worth it to ask the customer to send it back – but that doesn’t mean you want to ban returns on these items.
Instead, keep customers happy by refunding them for the item, but telling them that they can hold onto the item, give it away, or donate it. You don’t want to disclose this policy upfront as customers may take advantage of it, but it can be rolled out on a case-by-case basis depending on the item type. By offering a refund without a return, you’ll be able to reduce unnecessary shipping and packaging costs, and improve your company’s sustainability efforts.
Whatever return policies you choose, make sure that you provide a great customer experience that ensures your customers are satisfied with your brand’s response – it will keep them coming back time after time.
Want to learn more about how Loop can help you optimize your returns process? Get in touch for a demo.