How to Write a Good Return Policy for E-сommerce Stores

Oct 26, 2016 by Jesse Ness, Ecwid Team
How to Write a Good Return Policy for E-Commerce Stores
Posted Oct 26, 2016 by Jesse Ness, Ecwid Team

Before you can take your store live, there is something you need to tackle: your product return policy.

Returns are a part and parcel of any retailer’s life. No matter how good your products and how liberal your prices, some customers would want to return them.

A good return policy can turn around a poor customer experience. Play it right and you can even turn it into a brand asset.

The business need for a good return policy

First questions first: why exactly do you need a good and convenient return policy? After all, can’t you get away with a simple sign like this?

bad return policy

The first reason is legal. In many countries, you are required by law to accept returns on most merchandise within a reasonable period (say, 15-60 days).

For example, in Australia, signs saying “no returns”, “no refunds”, etc. are illegal.

In the UK, the law states that online shoppers have the right to “have the right to cancel their order for a limited time even if the goods aren’t faulty.”

Additionally:

You must offer a refund to customers if they’ve told you within 14 days of receiving their goods that they want to cancel. They have another 14 days to return the goods once they’ve told you.”

A return policy will make sure that you’re on the right side of the law.

But legalities aside, there is also a business case for creating a solid return policy. Simply put, many shoppers will refuse to buy from you if you don’t offer easy returns.

For instance, a UPS study found that over 80% of shoppers won’t want to shop at your store if your return policies are a hassle.

Another study carried out last year by a UK virtual fitting room company, Fits.me involving 1000 UK customers, found that 60% won’t purchase clothing online if the retailer does not offer free returns.

Understand that returns are a part of online shopping. If you have an online store that sells products, returns are inevitable.

80% of shoppers won’t want to shop at your store if your return policies are a hassle.

According to Wall Street Journal, about one-third of all products ordered online are returned by consumers as compared to around 9% bought at brick-and-mortar shops.

Offering returns also boosts sales. As per CNBC, when free returns are offered purchases can increase by up to a whopping 357 percent.

The data is clear: there is a legal and business case for crafting a strong return policy.

Let’s look at how to create one for your own store.

How to write a compelling return policy

Start by treating customers that are trying to return the product as an opportunity rather than a problem.

When you satisfy the customer with the return, they will tell their friends/colleagues about it  spreading the word about your business in the process.

With that in mind, let’s look at 9 tips to help you write a compelling return policy.

1. Keep everything transparent

Your customers need not put in extra effort to find your return policy. While not everyone will read the return policy, having it up front and center will reduce their doubts and uncertainties.

For example, you could put up the return policy link on the homepage above the fold to make it more visible.

Amazon places its returns policy link in its footer, for instance:

Amazon return policy

product-specific policy is also mentioned on each product page:

Amazon return policy

The best place to put an e-commerce return policy is in the confirmation emails on purchases. This makes your customers feel secure — in case they don’t like the product, they can always return it.

Provide examples with interactive images to help your customers out should they ever need to return the product.

For example, Amazon shows the return process visually:

Amazon return policy

2. Don’t ever copy your return policies from other business

Copying pasting some other business’ return policy should be the last thing on your mind.

Understand that your return policy is heavily dependent upon the industry you’re in. It also depends heavily on your business margins and your business philosophy.

For example, if you’re selling clothes online, you will need to personalize it to your specific business and target audience. You might want to accept returns on some product categories while excluding others.

It’s a good idea to have detailed instructions on your return policies for different product categories as well.

Snapdeal, for instance, shows you a table of what items it accepts returns/refunds for:

Snapdeal return policy

Nordstrom, on the other hand, doesn’t even offer returns.

Why?

Because Nordstrom’s business philosophy is to stock products that are so good that you’ll never want a return. And in case you do need one, they will do everything in their power to keep you satisfied.

Nordstrom return policy

3. Longer return period means more sales

Most online stores have return policies that expire after 30 or 60 days.

While this is good for improving trustworthiness, if your return policy lasts for 90 days, 120 days, 365 days or even for a lifetime, you will likely see a jump in your sales.

This isn’t just conventional wisdom; it was actually proven by research. As per one study, extending the return period led to higher returns (as expected) but also increased sales.

People are still skeptical of buying products online especially big ticket items. If you’re selling products with a bigger sticker price, consider extending the return policy.

That said, don’t go overboard and have a return and exchange policy of 365 days and not fulfill it.

Extend your policy as long as you can, because the majority of the customers will never return the products back — they just want to know the return policy exists in case they do want to return it.

4. Keep the language simple and to the point

Write as if you’re having a conversation with your target audience. Keep the sentences short and to the point. Few puns won’t hurt either.

It shouldn’t take your customer more than a couple of minutes to figure out how your return policy works. There is no point in complicating things with legal jargon. It will only confuse prospects and increase the chances of them abandoning your website altogether.

When you use terms that are easy to understand it becomes easier for your customers to follow your policy.

For example, take a look at the returns instructions at Zappos.com. They manage to turn what is arguably an unpleasant experience — returning a product — into something fun and even delightful.

returns instructions at Zappos.com

Another example is LLBean’s returns policy. They start with a simple premise: “you’ll be satisfied with your purchase, and if you’re not, we’ll make it right”.

LLBean’s returns policy

The entire policy is written in simple language minus any legalese. There are no time limits, no restrictions; just a promise that “if your purchase isn’t completely satisfactory, we’re happy to accept your return at any time”.

5. Define the expected condition of returned item

When you go about structuring your company’s return policy, explicitly mention the condition of the product you expect when it is returned.

You wouldn’t want your customers returning you a broken phone or torn clothes.

Failing to include this information will likely lead to customers misusing your return policy.

Yes, you want to have a friendly return policy but at the same time, it has to be fair as well.

Also, include instructions on the packaging material you’ll require (if at all).

For example, consider Athleta’s (a Gap brand) return policy. Instead of specifying the condition, they offer a “GIVE-IT-A-WORKOUT” guarantee.

Athleta’s (a Gap brand) return policy

Note the condition requirements for other GAP brands.

6. Decide whether to give full refund or store credit

Sometimes customers want to return the product because they got the size or product id wrong. Offer them the option of in-store credit or full refund.

Many customers will demand a full refund of their money and you should do it for them, but not without convincing them for in-store credit.

Do not push them for it, just politely ask them and give some benefits on top of it. Usually, banks charge a small fee for refunding the amount. Try to avoid it.

This is also a good way to boost sales. Customers are more likely to use in-store credit to shop for another product than to credit it back to their accounts.

7. Disclose any fees associated with returns

Are you charging your customers for the return shipping? Or are you taking care of returns and restocking? Clearly say so in your policy.

Failing to do so will upset your customers. From their perspective, not only did you send them the wrong product, you want them to send it back to you at their expense.

Frustrated customers might go on social media and complain about your business. This is not good for any business.

Here’s a great example: Wirecutter Deals recently tweeted about BestBuy’s restocking fee. And customers were justifiably angry.

BestBuy’s restocking fee

Try your best to avoid this situation and clearly mention when you expect your customers to pay and when you don’t.

8. Have a FAQ page

Having a FAQ page goes a long way generally. Customers can find answers to their questions very quickly.

FAQs particularly work well with Returns related questions because more often than not a lot of customers have similar generic questions.

For example, “For how long does the return and exchange policy lasts?”, “How to place a return request?”, “Do I need to ship the product back myself?”, “How to check the status of my return item” etc

Amazon does this very well:

Amazon FAQs

Myntra’s FAQ page is another great example.

Myntra’s FAQ

9. Keep promoting your return policy

You’ll be surprised how many new customers you can get just by promoting your return policies.

For instance, one survey of Asian shoppers discovered that a third of the buyers looked up the return policy before their purchase.

A survey of Asian shoppers

By aggressively promoting the returns policy, you can reel these customers in.

If you think you have a good return policy, you should definitely promote it everywhere you can: on your homepage, shopping cart, checkout pages, newsletters and even in your offline promotions.

You could even go a step further by including a printed copy of your return policy inside every package you ship.

How to use the return policy to increase conversions

Some companies have successfully built an entire business around their return policies. Zappos is one of them. Their 365-day free return policy gives them an edge over competitors

Zappos return policy

This extremely liberal return policy was initially just a way to get customers for a product that is all about fit — shoes. Over time, as Tony Hsieh (Zappos’ founder) documents in Delivering Happiness, it became the differentiating factor and the foundation of their business ethos.

As a small business, you could also take advantage of this technique by highlighting your return policies. This will not only improve your conversion rate but also how people perceive your brand.

Here are some tips to go about it:

1. Show off testimonials from customers who’ve successfully returned products

When a customer successfully completes the return of an item, use their experience to your advantage.

Process the return immediately and don’t be afraid to ask for a testimonial. Take their testimonial, name, a photo and add it to your “returns” page.

When shoppers see testimonials they’ll be more like to buy from you. This is Social Proof in action.

You can even turn your social media feed into a testimonial page by showcasing positive experiences.

Here’s an example:

social proof

2. Be liberal with your policies

But before you do that calculate the cost of returns for your business.

For consumers, “Free Shipping and Returns” is no less than a dream come true. It means that they pay for what they see. If they don’t like it they can send it back.

It’s also fairer to the customer since studies show that most returns are because of an error at the retailer’s end.

Key reasons for returns

But as a seller, free shipping, and returns could easily become a logistical nightmare.

Working out how much money you will lose on sales that are returned could be a bigger problem than it looks. Your profit margins will certainly go down in short term.

That said, according to a survey conducted by complete.com suggests free shipping and returns is the largest influencer in what would encourage people to buy more online.

what encourages to buy online

Having customer friendly returns policy boils down to how well you manage your logistics. You can recover your lost profits by improving reverse logistics.

As this guide by UPS shows, the returns process isn’t just about bringing the item back to the warehouse; you’ll also have to bring it back to stock, return it to OEM or liquidate it on the secondary market.

UPS returns

Keep this in mind when you create a liberal policy. Calculate how much money you are losing on each return, your average return rate and the impact on your margin each return has.

3. Orient your business around quick returns

Customers love when things happen quickly whether it is shipping or returns.

If you have resources to do returns with a couple of days, you should definitely do it. It leaves a good impression on your customers.

A great example is Warby Parker. With their “Home Try-on” policy, they let you try five frames for 5 days and in the end you get to keep the one you like.

Yes, all the shipping and returns are free of cost.

 Warby Parker

Over to You

You can’t run a successful e-commerce store without a return policy. Instead of treating returns as a hassle, see it as an opportunity to build your brand and flex your logistics muscles.

Use the above tips to craft a return policy that’s more customer focused. Start by following these three steps:

  • Identify your return rate by the number of days after purchase. Use this to calculate whether you can offer a more lenient (say, 90-180 day) return policy.
  • Identify 3 stores whose return policy and policy page you admire. Pick actionable insight from each policy.
  • Consult a lawyer and craft a policy that encapsulates your brand philosophy and assists customers.

And remember: A return policy is a legal document. Consult your lawyer before you commit to a return policy; the advice here can only guide you in the right direction.

Read also: 6 Free Shipping Strategies and Their Alternatives

About The Author
Jesse is the Marketing Manager at Ecwid and has been in e-commerce and internet marketing since 2006. He has experience with PPC, SEO, conversion optimization and loves to work with entrepreneurs to make their dreams a reality.

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