How to create the best return policy for your e-Commerce

Mariluz Sampalo

Mariluz Sampalo

29 Oct, 2021

How to create the best return policy for your e-Commerce

For many years now, the logistics of an e-Commerce shop has been dependent on the ever-changing consumer trends that online purchases set. Whether we like it or not, the high competition and the growing demands from consumers make it even harder to elongate the customer lifetime. In light of this situation, the return policy is a decisive factor when it comes to approaching conversion and loyalty strategies. When done well, they will provide upward results in the mid and long term.

Below, you can find a complete analysis on returns in the e-Commerce sector: the reason behind their importance, the types of returns that you could be facing, who should take responsibility for the transportation costs and, what is even more interesting, how to convert returned items into future sales.

The importance of a strategic return policy in e-Commerce shops

The main key factor for the success of an e-Commerce shop is to please the client throughout the funnel. Irrespective of the type of product we are talking about, the process of acceptance and gratitude tends to repeat itself in every customer. This is why it seems fundamental to deliver an optimal post-sale service: this affects sales and returns.

The logic is quite simple: if you treat your customers well and allow them to return their products easily, they will make it up to you in the future by recommending you to their friends and family. What could have ended up as a lost item is transformed into new selling opportunities. This is known as inbound marketing and you should start putting it into practice now.

However, this is not as easy as it sounds. Hundreds of elements can condition the return strategies and can make them extremely expensive to execute. The main reason why returns have gained so much importance is that they can be optimised with software like Outvio.

In any case, it has been proven that return policies are an essential and mandatory element for any e-Commerce or online shop in the long run. The numbers speak for themselves:

  • Over 60% of online customers feel affected by the return conditions when making a purchase online
  • Over 90% are willing to repeat a purchase if the e-Commerce with a good return policy
  • Almost 50% of retailers offer free returns
  • 70% of consumers value positively free returns in online shops and e-Commerce businesses
  • Over 20% of goods sold via the internet end up being returned

Many of the most common disadvantages perceived by consumers are the risks of being scammed, the lack of opportunity to see and feel the products in person or complex return systems.

infographic with the disadvantages of online shopping

FAQ on returns in the online retail sector

First of all, we would like to shed light on some relative aspects of the return of products online. They are quite basic, but altogether valuable to the article and reader.

Is it legal to not accept returns in e-Commerce?

In the European Union, a minimum of 14 days is set to offer returns to clients, for any given reason. However, there are certain exceptions to this law, like perishable or intimate items and certain rules that the buyer has to follow. 

Which kind of refunds and returns is there?

  • Full refund: the total value of the purchase is refunded, including the shipping costs.
  • Partial refund: a part of the total value of the purchase and shipping costs are reimbursed. Needless to say, all returns should follow the laws set in place.
  • Refund in credit: the refund, total or partial, will be available in the form of store credit. This will turn the return into a new purchase. Buyers do not always agree with this type of refund. You should also take this into account.
  • Exchange: the item is changed for another item of similar value. If the return happens because of a defect, the changed item will be replaced by the same article.
  • PUDO (PickUpDropOff): the client will need to go to one of the shipping company’s offices or any other discussed point.
  • At-home pickup: the courier goes to the set address of the client.

Who should take care of the return costs?

This topic could be a bit touchy. In summary, there is no clear answer to the question of who should be responsible for these costs. However, the online shop must indeed reimburse the value of the products returned, but… who should take care of the return costs?

If we take on the fact that optimising the purchase experience is the key factor that more conversion achieves, the most beneficial would be for the e-Commerce shop to cover all the costs so that the client is able to make a return free of charge. Remember: free returns are a favourite of customers worldwide, as you can guess.

The reality is, however, a bit different. Some e-Commerce shops have limited resources and cannot offer a free return policy. The costs of reverse logistics can be too high, especially, if the company does not have an advanced tool for automating shipments and returns.

What is the return rate?

The return rate is the percentage of returns in an e-Commerce compared to the total of sales. If the rate is too high, a step or element of your online shop is probably failing, whether that is the product, the shipping process, the marketing strategies, etc.

According to the experts, a return rate over 40% is a problem on its own, although this depends on the sector. The return rate is the result of dividing the number of returned items by the total number of sold items multiplied by 100.

Gráfico que muestra los artículos con una mayor tasa de devoluciones en la industria e-commerce

What is the ideal period for a client to be able to return an item?

As we mentioned before, the law establishes a minimum of 14 days for returns in all companies in the European Union. 

However, offering just what is mandatory by law can do your business more harm than good and affect its online reputation. It can almost look like you want to make the return process harder for the client. This is a great psychological barrier inside checkout, and it is one of the reasons behind abandoned carts in checkout. We would suggest a minimum period of 30 days.

Hence why so many online shops are extending their return periods and promoting more flexible return policies. This will not only improve their conversion rates but also reduce the amount of returned items since the customer does not feel pressured and forgets about making the return.

Online shops that offer flexible returns wipe out any doubt on the quality of their service and considerably reduce their return rate.

What are the steps to make a return?

Returning an item is never an enjoyable thing to do and can quickly become a nightmare. Generally speaking, when a user wants to make a return, he would need to contact the online shop to make the request, prepare the package, print a new shipping label —this is a whole new deal— and go to a courier office that works with the company.

As you can see, the process is quite tedious, which is why many customers prefer to buy from shops that offer easier returns. They may not necessarily want to return the items in the first place, but they would rather avoid a tiresome process at all costs.

Should the return policy be the same for all products?

If we were to pick a perfect scenario, we would say yes. Clients will always perceive free and easy returns as something good. However, if the company does not hold enough resources to allow free returns on all the products of the catalogue or the nature of the product is sensitive, the safer choice would be to promote the sale of articles with a larger profit margin.

How can I reduce the quantity of returned products?

Before thinking about improving the return conditions, it is advisable to analyse the causes for the returns to happen. With a better-thought and studied commercial strategy, you can reduce the transportation costs and the resources spent on reverse logistics.

At the expense of the many reasons behind any change of mind, there are three that keep repeating themselves: the product does not meet the expectations, the product is damaged and the delivered product is not correct. As you can tell, these claims arise from a mistake in the e-Commerce or courier side.

Let’s see how e-Commerce can reduce incidents:

  • Be clear about the items you sell. Try to make as accurate descriptions and pictures as possible. Otherwise, the customer might feel scammed and request the return of the item. Add media content that includes further details on the catalogue’s products to reduce even more incidents.
  • Pay attention to shipping and delivery periods. You may receive a return of an item that you have not delivered yet. For example, your customer can get tired of waiting. When this happens, you will have to contact the courier and ask for any possible guarantees or compensations. This situation may affect e-Commerce negatively, although it was not its fault.
  • Logistics, warehouse and staff. Some of the damages in packages and products occur before they even leave the warehouse facilities. This is why trained and well-equipped staff makes all the difference when you try to deliver products up to standard. Extra points if you make regular audits of your facilities and quality inspections.

Guide for creating the perfect return policy in e-Commerce

  1. Define your possibilities. Before getting on with it, we would advise you to make a complete analysis of the resources you have, the real impact that the return policy may have on the purchase experience and the specific conditions of all the products in your catalogue. 
  2. Communicate with the users. Write the return policy in a clear and concise way. It should also appear in a visible part of your website, especially during the checkout, since this process causes most of the friction in clients. Giving them a reason to doubt your honesty is far from recommended.
  3. Look for an adequate courier. If you are a big company with a large order and return flow you may want to negotiate special rates and conditions. Working with different couriers will enable you to pick the most profitable for every particular case, for example, being able to choose the most affordable for every region or type of delivery. The price for these shipments will vary depending on different areas. Therefore, having different options will help your business save some resources.

How to encourage client loyalty with online returns

In this section, we would like to start by clarifying that a return policy is nothing else than a set of rules that e-Commerce establishes for their clients. However, there must not be a certain strategy behind these rules, they must simply exist.

If your goal is to transform returns into sales. If you want to create a marketing strategy to make an impact on clients’ satisfaction, you will need a well-thought plan. 

Provide the customer with control over their returns

One of the first obstacles that a client must face when making a return is the request to carry it out. This is mostly the case for online shops that do not offer a portal and thus do not facilitate this process.

This is a serious mistake on its own. The return process must always be easy and fast. Making it complicated will not translate into fewer returns. The only thing you will gain is a heavier workflow in the customer support department, making your response time slower.

In this sense, the most efficient way to tackle returns is by offering the clients autonomy over their returns. But, how? By connecting Outvio with your e-Commerce platform. Your clients will benefit from a cutting-edge return portal with flexible return options.

As an e-Commerce, you will just need to set up the account and return rules. This will take you no longer than 5 minutes after which, the return requests will start arriving automatically in an organised manner. Your team will either accept or deny them.

This means the end of wasted resources in the return department: incidents will not occur as often, the members of support will better manage other tasks and the clients will be overall more satisfied.

Take advantage of the returns to create brand awareness

The communications that inform about the status of an order can have a higher opening rate than any other email or newsletter. Why? It seems only logical that the clients worry about the status and location of their order. 

Customise your return and tracking portals to show those marketing and branding elements that have been proven more successful for conversion. You can choose an artistic picture, special offers, remarketing strategies, colour psychology or any other aspect that you consider valuable for your target.

ecommerce brenen kids returns portal

Brenden Kids’ return portal is a great example of how Outvio simplifies and optimises the return portal of an online shop or e-Commerce. In this particular case, the company managed to improve customer loyalty with an important impact on sales.

Allow automatic label printing and at-home pickups

Most consumers are not familiar with logistics. They simply assume that all the required procedures to return the items will be provided by the e-Commerce shop. This is correct to a certain extent. Bigger retailers surely offer labels automatically generated, so often, that customers now take it for granted and do not know what to do in other scenarios.

Imagine for a moment that you do not provide this label to your client. He will need to create it himself —for which he will need your warehouse data— or contact your courier. Anyhow, the experience will be terrible and it will surely affect your reputation and become a source of incidents.

This is why it just makes sense to provide the label to your clients and, if possible, enable an at-home pickup. Your courier does not offer this service? Maybe it is time to broaden your transport network. You can check out our article on order fulfillment, shipping and returns.

Automate your logistics system as a whole, not only reverse logistics matter

At a first glance, this may seem unrelated to the topic of today’s article. Nothing further from the truth! A reduction in costs and resources will help you develop and improve other departments, like marketing or customer support.

If you cannot yet offer free returns, it is worth considering making the logistics’ costs more profitable, lowering overall costs and being able to cover those losses.

Create precise databases

As hard as we try to optimise the purchasing experience, get to know our clients and improve the product, there will always be external factors that escape our control and forecasts.

However, you have the support of the return information. This is a great source of feedback and data about your target and products. You can even ask them the reasons why they are making a return.

International returns, the future of post-sale experience

The rising number of online sales is not confined to a country, but a global phenomenon. International sales will become increasingly more popular, with the boom of marketplaces. This is backed up by the latest study from Grant Thornton, which recognises the fact that 43% of retailers expect to increase the number of countries they sell to in the next year.

Having said this, online shops with the desire to design a rich purchasing experience worldwide should take special care of the return process. Customers tend to be less permissive about international incidents, especially after additional shipping costs have been added.

What are the key points behind a successful international return system?

  • They should be easy. This is quite important and we could not stress it enough. Returns, national or international, should be easy to do for anyone.
  • They should be trackable. The tracking of the returns is especially important when the warehouse is in another country. Customers tend to worry more when the purchase is international.
  • They should create the documents automatically. Many online shops sell internationally. However, their inbox is full of claims from unsatisfied clients. Nobody took care of the documents needed for international shipments. Maybe they sent the packages without them. Maybe the documents contain mistakes. Now they have not received the order or they faced unplanned tax payments.
  • They should be possible. This is the heart of the matter. Not all couriers offer international returns. For example, if you work solely with Correos, likely your international customers will not be able to get a reimbursement. This is a serious problem. Obviously, the solution would be to extend your transportation network with international transport services. The logistic system will be more complex, but the prize is worth the price.

By automating and optimising the management of international shipments, you will be able to integrate many couriers into one solid interface. Outvio is the online app that concentrates your international reverse logistics with all your couriers. But that is only the cherry on top. Get to know all the advantages that Outvio has to offer for your e-Commerce.