How to Write Your eCommerce Return Policy (with Examples)
Handling returns is a huge part of managing your eCommerce business. Online stores receive a significantly larger number of returns than brick-and-mortar stores—30% of all products bought online are returned versus 9% of products bought in brick-and-mortar stores.
If you don’t take action to prevent and reduce returns, then your business can potentially lose thousands or millions of dollars each year in inventory restocking fees, unsellable inventory, and inbound shipping costs. At the same time, if your business doesn’t allow returns, you run the risk of lowering your sales volume and turning off repeat customers. Especially for new eCommerce store owners, dealing with a lot of returns can eat into profits.
But, as you’ll see, you have plenty of options, and none of them are scary. You don’t have to let returns swallow your business.
In this guide to eCommerce returns, we cover policy creation, return reduction, and return logistics so you can protect your profits while satisfying customers.
What’s in This Guide
5 Things to Consider When Creating your eCommerce Return Policy
Here are five important factors to take into account before creating your business’s return policy. Depending on what stage your business is, some of these will be higher priority than others.
01. Your Customer’s Expectations
Around half of all US and Canadian online shoppers say they won’t buy from eCommerce websites that don’t offer free returns. That’s a high amount. While you’ll want to dig in deeper to discover the sentiment among your own ideal customers, the fact remains that the type of return policy you’ll offer will impact brand trust, which in turn impacts sales.
02. Your Profits
You’ll also need to consider profitability. What return rate is acceptable to you? At what return rate, are your profits negatively impacted in a major way? Should you split the cost of returns with your customers or absorb the cost? Your sales volume, brand awareness, and return logistics will determine how severely your return rate impacts your profits.
03. Your Competition
What your competitors are doing might dictate what sort of return policy you should offer. If your target audience is used to free returns, you’ll need to follow suit. If your competitors aren’t offering this, you have a chance to one up them.
04. Your Logistics
One of the biggest frustrations with returns is what they cost your business—not just in money but in time too. There are associated costs with the required expenses and work that goes into receiving returns, repacking, and restocking products.
05. The Shopper Experience
Since 92% of online shoppers say they’ll buy from a store again if the return process is easy, you need to consider what sort of experience you’re offering to customers. This can impact not only repeat purchases but also referrals and word of mouth, too.
Clearly, all of these factors matter to your business. The question is, at your current stage, what matters most? For example, more established eCommerce stores might be more concerned with wowing their customers and standing out from their competitors, while newer eCommerce stores will be more concerned with lowering the logistical burden.
What’s a Standard eCommerce Return Rate?
Because eCommerce return rates vary drastically by product category, there’s no single return rate that you should accept as normal. No two industries are alike.
Here are the typical return statistics by product type:
Clothing and shoes: 30 to 40%
Home electronics: 10%
Average of all eCommerce returns: 15 - 30%
There’s evidence that smaller eCommerce stores tend to have lower return rates than ones with higher volume. This could be because more established eCommerce companies tend to have more liberal return policies or because as their brand awareness grows, consumers feel less guilty returning products to a corporation than a mom-and-pop online store.
If you’re not already tracking your product return rate, you’ll want to start doing this so you can establish your quarterly and monthly benchmarks.
How to Choose the Right Return Policy Strategy
It can be difficult to determine the exact approach your business should take with your return policy.
Most eCommerce businesses can’t afford to offer free returns the way big online retailers can. But that doesn’t mean you can’t seek to delight and impress your customers.
If you’re selling low-priced products, you’re limited to a very small markup. For this reason, a large number of returns can quickly become too costly for your business. To minimize this cost, offer store credit or don’t allow returns at all (until you’re ready).
If you’re concerned that not offering returns will harm your sales, increase your conversion rate using professional product photography or implement testimonials. Free shipping on orders over a certain amount can help boost sales, too.
eCommerce websites selling higher priced products should offer returns so that customers aren’t deterred from making a purchase. Depending on your profit margins, you can offer free returns or require customers to pay for the inbound shipping.
When deciding what to charge, take a look at your return rate and associated costs with returns. Then try to come up with a per-return fee that covers them. If you can afford to lose some money on returns, go ahead and lower that fee by a few dollars so you don’t run the risk of lowering your product conversion rates.
New Store Launches
As a new store with mid-priced products, you can offer a very basic return policy. For example, allow returns for unused goods, but require customers to pay for the return shipping. If you find the returns are killing your profits, you could even add a return fee or handling fee.
You should aim to offer a more generous return policy in the future, but it’s okay to start out with something simple that protects your profit margins.
More Established eCommerce Stores
As your company grows, you should work on making your return policy even more customer-centric. When you invest in paid marketing to cold traffic and other growth campaigns, you’ll want to make sure that you have nothing working against you. If possible, provide shipping labels alongside either free or affordable returns. The fee can be between $3.99 and $8.99 depending on the price of your products.
If you’re able to offer free returns, you don’t need to shout it from the rooftops. While putting “free shipping” in your ads and a banner at the top of your website is smart, the same can’t be said for “free returns” (otherwise your return rate could go up).
Products That Are Subject to Higher Return Rates
67% of online shoppers say that they check a store’s return policy before deciding to make a purchase. You don’t want a stingy return policy to deter them from completing their order.
If your product is something that consumers wear (clothing or shoes) or for whatever other reason is challenging for consumers to make a decision about online, then you will likely need to offer returns. If you don’t offer returns of any sort, your sales could suffer.
Depending on where you are in your business and what your profit margins are, you should offer either free returns or returns for a low fee (between $3.99 and $8.99).
Established eCommerce stores in the clothing category frequently embrace and encourage returns. They expect shoppers to buy more than they need and send some items back. This means that customer expectations will be for either free or affordable returns.
5 Return Policy Examples
Clearly, there’s a lot of decisions that need to be made. Before you start, let’s take a look at some return policy examples from different eCommerce stores.
What this policy features: Kaekoo’s return policy doesn’t allow returns of their Honeycomb Shelves, which are handcrafted to order. They also don’t allow returns of sale items. Beyond those caveats, they allow returns of items in new condition when shipped within 14 days and they don’t cover the cost of return shipping.
What you can learn from it: The store encourages customers to contact them before initiating a return, so that they can discover the cause for dissatisfaction and hopefully resolve it without the need for a return. This policy is an excellent example for smaller stores selling luxury or specialty products.
What this policy features: This return policy allows returns of watches and other goods with no wear and tear within 30 days and does not cover the cost of return shipping. However, for goods that are defective, return shipping is covered within Germany.
What you can learn from it: If you are selling something with a technical or electronic element, it’s a smart idea to offer reimbursement or payment of inbound shipping for defective products. This return policy is also smart because it mentions that watches that have been activated or opened are not eligible for return.
What this policy features: Kaxi offers clear, simple instructions to customers. Products in new condition can be returned within 15 days, and if received after, store credit will be issued. The customer is responsible for shipping costs, and the customer must email support to initiate the return.
What you can learn from it: This policy is a great example for newer eCommerce stores and especially ones that don’t require trying on items. It’s also smart in that it requires emailing support to start the return process because this gives the seller the chance to collect feedback and resolve the issue in a personalized way.
What this policy features: Unless the products are defective, returns are not accepted. The store offers just one product, and they offer sizing information to make it easy for customers to buy one that fits.
What you can learn from it: If you’re not ready to offer returns, you don’t have to. If you have a unique and innovative product like this, there’s a chance that your audience won’t be deterred from making a purchase, even if they can’t return products.
What this policy features: This policy features ways to please customers while still covering the cost of returns. There’s a shipping fee and a handling fee for returns so that the store is able to offer refunds without this eating into their profits substantially.
What you can learn from this policy: Offer a shipping label and a reasonable deduction ($5.99) to satisfy customers’ expectations and make returns easy. This policy also offers free store credit and exchanges with no shipping or handling fee.
How to Write a Return/Refund Policy
Now that you’ve seen some examples of eCommerce store return policies, it’s time to write your own.
As you can see, you don’t need to compete with big brands like Gap and Bed Bath & Beyond that offer free returns. eCommerce shoppers are open to buy from small businesses who don’t offer that. However, you still want to be reasonable and meet customer expectations.
Note: Make sure to take into account the local laws in your state or country regarding returns and refunds when creating your policy. Reach out to an expert to make sure that your policies conform.
Here are the 4 main elements to include in your return policy:
Make sure each element answers all the questions listed below.
01. Determine what can be returned.
Will you accept returns of all products, or only defective ones?
Can sale items be returned?
Will you accept opened or used returns?
Do certain products, such as handmade or customized items, need a different policy?
02. Choose a timeframe.
How long do customers have to send their return in?
Will you offer store credit for returns received late? (And how long they have to receive store credit?)
03. Decide on the costs.
Is there a return fee?
Is there a handling fee?
Will you offer a pre-paid return label?
Does the cost of returns vary by country?
04. Handle the logistics.
What address should customers send returns to?
Do customers need to email support to initiate returns?
Do customers need to print their receipt and include it in the box?
Other Return Policy Tips
Create short paragraphs that discuss each of these 4 elements. Make sure to include any other important details that are specifically relevant to your store.
When creating your policies, write plainly and politely. Avoid phrases like “you must” or “are required to.” For example, instead of “You must return items within 14 days or you will NOT receive your full refund” write something like “Return items within 14 days to receive a full refund.”
Where to Share Your Return Policy
When your policy is complete, make sure to link it in the footer of your website with the link text “Returns” or “Return Policy” so it is very easy to find.
If you have an FAQ page, you can also mention your return policy there and then link to the full page with all of the return policy details.
You don’t need to advertise your return policy anywhere else. Even if you offer free returns, it’s not wise to put it on a banner on the homepage of your site or in your ads, because you don’t want to inspire purchases from shoppers who intend to return your products, just to try them out or use them for a day.
4 Strategies to Lower Your Return Rate
Fortunately, there are ways to lower your return rate. The best way is to take action before a dissatisfied customer contacts you.
01. Help Customers Make the Right Purchase
A lingerie or clothing site might want to use live chat support to answer questions about fit and offer personalized advice. If you created your store with Wix, you can install Wix Chat on your site and respond using the mobile app. The chatbot prompts customers to leave their email addresses when you’re away. This lets you respond at a more convenient time and brings the customer back to your store.
02. Improve Your Product
Work proactively to get feedback so you can improve your product. Send follow up emails to customers after they purchase to ask their opinion on your product and their experience. Encourage customers who make returns to fill out a form to explain what went wrong. You can reach out to unhappy customers who left negative reviews or social media comments to understand their concerns.
It’s important to keep innovating your products so you can gradually lower your return rate over time.
Making changes isn’t always about your actual products. It might also include the way you present and market your products. For example, the lighting of your product photography might misrepresent the color.
03. Optimize Your Product Page
Make sure your images are well-lit and showcase the product's color, size, features. For example, you could put a vase next to a standard size guitar or a chair, so shoppers know the height without having to read dimensions.
Write clear and detailed product descriptions. When selling clothing, shoes, and certain accessories, include a sizing chart.
Consider showing a video of the product in use. While images are amazing, for some products, like toys, gadgets, and hobby items, videos are much more effective at showcasing how the product looks and feels in real life.
Get another opinion from a team mate, partner, fellow entrepreneur, or friend to determine ways to make the shopping experience even more transparent. Then include this important information on your product pages.
Check out these high-converting product page examples to get inspired.
04. Encourage Customers to Avoid Use Before Deciding
Unsellable inventory is a massive problem. Not only is it bad for business, it’s bad for the planet too—leading to 5 billion pounds a year of globally returned goods ending up in landfills.
To make sure the maximum amount of your returned inventory is able to be resold, add stipulations in your policy. For example, Jack and Timber doesn’t permit returns of activated watches. This allows them to protect the quality and battery life of their inventory.
Consider creating packaging that allows customers to get a sense of the product without needing to open it. For example, Luxy Hair extensions include a swatch on the box so customers can match it to their hair before they open the box. Opened boxes are not available for return. This small investment in the packaging likely adds up to an enormous amount of recovered inventory.
What to Do When Customers Don’t Comply
When customers send back products that can’t be resold, what do you do? The answer is up to you, and your decision on the best response will likely shift over time. Initially, you might be tempted to hold to your policy and not give refunds for opened or worn items.
However, if you experience too much backlash via social media comments and bad reviews, then you might end up just offering the return even though the customer is in the wrong. The truth is, there’s no easy answer, and the right approach depends on your profit margins and your growth plans. eCommerce store owners with a desire to scale multiple 7 or 8 figures might decide to take the hit of unsaleable returns in order to protect brand reputation.
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Dayana is a copywriter who works with the world's top SaaS brands and a marketing coach for service providers who want more visibility online.