Practical Ecommerce

Effective Return Policies Save Money and Earn Business

If there is one thing that every online retailer hates and fears, it’s returns. Many great stores fight to keep return rates below 2 percent of total shipments. Those merchants work with the carriers and shippers, modify their websites, and send customer satisfaction surveys—all of which are great—but one often overlooked factor that helps in reducing unwanted returns is to simply have better return policies.Picture of a Package: Good Return Policies Reduce Returns

By some estimates, returned orders will cost online retailers more than $20 billion in 2008. Providing customers with more and better return policy information can avoid unwanted returns and discourage baseless returns.

It could be tedious to consider all aspects of returns in your policies especially when you’re selling multiple products that may be different in nature from one another. But you can derive smart return policies based on the type of return. What follows are several practical pointers about particular “Return Type” policies that can reduce your stores total returns.

Defective Item Policy

A defective item means that the manufacturer is at fault. The policy should be written in such a way that the item can be easily returned back to the shipper before refunding or replacing the item for the customer.

  • Differentiate between a defective and damaged item— Don’t let your customer be the ultimate judge, deciding that an item is or is not defective. Have your policy encourage the customer to contact customer service in order to confirm the item as a defective piece.

  • Returning a defective item— Depending on the nature of the defect the policy should advise the customer. Should they expect replacement parts if that could solve the problem? Can you provide a replacement product? Should they return the item in its original packing or will you provide a box for the return?

  • Send replacement or refund— The customer should in all cases notify your customer service team before returning an item. This could avoid situations where the customer has not assembled the item correctly and assumes the item is defective. This item, if returned, will be a total loss as the manufacturer will not honor the return. Make it very clear that a customer must contact your service department before returning an item. Let them know that simply sending an item back will not guarantee a replacement or a refund.

  • Include Instruction Manual/Warranty papers— It is very important to include instruction manuals for all SKUs, also have the manuals available online for each item. Warranty information can make your customers more comfortable and less likely to mistakenly return an item that is really not defective.

Returns Of Damaged Goods Policy

  • Refuse shipment– The safest and the most important instruction to the customer should be to refuse shipment when they receive a visibly damaged item. This will allow you to file a claim easily with the carrier and simultaneously facilitate the customer with a replacement.

  • Notification of damaged item– You should instruct customers to maintain the original packaging. In cases of concealed damage, pictures showing the damage upon arrival could be of great help in getting reimbursed from the carrier. As customers to notify you of damage within 24 hours since many carriers have a cut off time after which they will not accept claims.

  • Contact customer service– Customers should call to report damage, confirming that the damage happened in shipping and is not the result of use or misuse of the product.

Wrong Item Shipped

This could be a win-win situation for the customer; the only point is to confirm that the customer did receive the wrong item.

  • Order confirmation e-mail– It’s mandatory to send an order confirmation email that substantiates the item number and the quantity ordered. The policy should ask the customer to mail in the order confirmation email or fax in if they received a physical copy.

  • Notification– In many cases, customers claim the item to be wrong due to some minor difference in the color or packaging. This is quite common in online retailing. In such cases a talented customer service team could work with the customer, helping with relevant options.

Customer Satisfaction Returns

This is a good way to earn customer appreciation by allowing the end user to try the product and return for refund if not satisfied.

  • Specify time period/condition of item– Allowing a customer to try out an item for a specified period of time is a good way to boost business. But it is a good idea to make it clear that after a certain date, the customer has effectively decided to keep the item.

Non-Returnable Products

Some items can’t be returned after using them, for example a CD or items that come in direct contact with the body (chest strap). Such items need to have an indication that they need to be returned unused.

Low Value Items

There is no use returning an item worth less than $50, the whole returns procedure could eat all your costs increasing the loss on that item. The customer service team could play a good role in convincing the customer to keep the item or have him discard and reduce the loss.


Stanley Arul
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Comments ( 3 )

  1. Lorraine Pierce November 13, 2008 Reply

    I don’t accept returns unless it’s damaged or the wrong item. Why? Because I offer samples of all of my cosmetics at ridiculously low prices with free shipping. Then I send them a coupon code for 10% off their full sized order, which helps re-coup the cost of the samples! This eliminates the need for returns. There’s virtually no risk in buying! Women love it.

  2. Stanley Arul November 14, 2008 Reply

    Lorraine, your strategy is great. This will defenately help reduce returns to a great extend.

    Regards,

    Stanley

  3. John Lindberg March 1, 2009 Reply

    I own a company that provides order fulfillment services to web store merchants and an important option we offer our clients is to direct their returns to us for processing or have returns go directly to the client, even though we handle the outbound warehousing and shipping.

    Publishers for example often use their returned books as review copies and merchandise merchants sometimes sell their returned items on eBay themselves. For some merchants like an online shoe retailer for example, there is sometimes a judgement call as to if the return qualifies for a return credit. In the case of a diet supplement merchant, all returned pill bottles must be discarded anyway, so there is no point in paying outsourced processing fees.

    If you are shopping for an Internet based fulfillment service provider, it would be wise to ask about return processing options before you make a final decision. To view a list of potential ecommerce fulfillment houses, just enter the term "efulfillment" into any search engine.

    John Lindberg – President
    EFULFILLMENT SERVICE INC

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