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The Rising Importance of Ecommerce Return Policies

If you’re anything like most ecommerce entrepreneurs, you never want to hear the word “returns” again. You dream of a world where people love every purchase, completely negating the need to send it back to your store. Until pigs fly, you’re stuck with reality and the rising importance of ecommerce return policies.

Ecommerce Returns: The Stats

It helps to treat a strong ecommerce return policy as a non-negotiable staple of running an online business rather than a perk. In 2013, Wall Street Journal reported approximately one-third of online transactions resulted in a consumer return. And, as increasing numbers of shoppers make the jump to online and mobile buying, it’s only natural that return rates hold their ground.

According to nChannel, a study by the National Retail Federation found that returns are actually three times more prevalent for online retailers — 72 percent of shoppers return 10 percent or less of their purchases.

Online consumers know they may need to return an object, and so they’re putting more stock in return policies before they buy. In fact, your return policy (or lack thereof) may be the deciding factor on whether a customer converts on your website or abandons their cart altogether.

Components of a Great Return Policy

What makes a great return policy? First of all, it depends on what you sell. If you run a clothing ecommerce business, you may accept returned garments with tags still attached. If you sell makeup from home, you’ll likely limit returns to cosmetics with intact packaging. An electronics store would craft its policy around accepting returns on undamaged equipment with a receipt. The specifics vary by store, but there are some general principles you can follow to ensure clarity and satisfaction for your customer base.

Devote an entire landing page to outlining your return policy in great detail, and make sure visitors to your website can find the link on your navigation bar. This will eliminate a lot of confused customer phone calls and emails. Spell out these parameters so shoppers fully understand the terms and conditions of your return policy:

Types of goods eligible for return (unworn/packaged/wrapped products, products with corresponding receipt)
Types of goods ineligible for return (worn/opened/damaged products, outdated goods)
Return deadlines
Compensation for returns (full refund/in-store credit/partial refund/replacement item)
The actual procedure for returning products
Which party covers shipping and handling

Returns and Profitability

Unfortunately, returns can be expensive. Fledgling ecommerce stores may not be able to offer near-unconditional returns and pay for the return shipping. But ecommerce stores of all sizes have options in this regard. You may start out offering exchanges only instead of refunds. For example, if a customer still likes a shirt but feels the fit is a bit too loose, they can pay to mail back the smaller size in exchange for a larger one. This is a win-win because it’s relatively cost-effective for you, but you still get to keep the sale.

Some people may simply not like the product upon arrival, which is a different case. Make sure you identify customer trends within your sector, so you can predict what kinds of products people will want to return and why. For example, a furniture store specializing in mid-century modern couches is in a different shipping league than one selling jewelry. It’s not always feasible to shoulder the burden of free returns. Only you understand the logistics of your store.

On the other hand, free returns may make or break a sale. Although returns do cut into your profits, you should investigate whether your sales volume makes up for these costs. If you establish a stingy return policy, you’ll likely see fewer conversions — saving you money on the front-end but hurting your overall growth and reputation.

The rising importance of ecommerce return policies is undeniable in today’s online landscape. Make sure you take the time to come up with a workable policy for your store, then publish it where everyone can see.

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