The importance of having a competitive and customer-friendly return policy for any ecommerce business cannot be overstated. A growing list of studies showcase there is a significant increase in the percentage of new visitors that will place a first order with your company if you offer a great return policy. Customers are also more likely to order from your business again, even if they had issues with a product, when the returns process is simple and convenient. Not having a competitive and customer-friendly return policy has also been shown to drive potential customers to your competitors that do offer convenient returns.
Understanding these trends with return policies are essential to growing a successful product-based business online, but it is typical for ecommerce operators to think this means they have to offer unlimited returns with no questions asked. To help any ecommerce business figure out how to offer customer-friendly returns without opening their business up to fraud or abuse that breaks the bank, we put together the ultimate guide to return policies in ecommerce. Here is everything you need to know about managing ecommerce returns and how they influence customer decisions.
Understanding Return Policies
A return policy stipulates the terms that enable a customer to send back a product bought from an online store in exchange for a refund, store credit, or a replacement item. It covers various factors like the timeframe for returns, conditions of the product, and who bears the return shipping cost.
Bad return policies are often vague, stringent, or hidden from customers until after a purchase is made. They may have short return timelines, demand the customer pay for return shipping, or refuse returns for sale items. Such practices can deter customers, leading to abandoned carts, lower conversion rates, and negative word-of-mouth publicity.
Why a Great Return Policy Matters
In the hyper-competitive ecommerce landscape, a business's success depends on more than just selling a product. It is about creating a seamless, end-to-end customer experience. While several elements contribute to this, the return policy is undoubtedly one of the most crucial aspects.
UPS published a study called Pulse of the Online Shopper that revealed that over 73% of shoppers said the overall return experience influences their likelihood to purchase from a retailer again. The study also detailed that nearly 70% of participants in the study said the returns experience shaped their overall perception of a retailer. Poor return policies can lead to one-time customers, while a friendly policy can cultivate loyal, long-term customers.
Understanding the typical return rates for your product type can help shape your return policy. The average ecommerce return rate is around 20%, but this number can vary substantially depending on product type. For instance, fashion has a higher return rate due to sizing issues. Regularly assessing your return rate against industry and product type averages can guide improvements in your return policy and overall product quality. Statista has a detailed breakdown of most returned online purchases by category in the U.S. as of March 2023, with clothing leading at 26%, bags/accessories at 19%, and shoes at 18%. To get a picture of how your business stacks up, it is important to start regularly reviewing your percentage of returns by product. This gives you the opportunity to consider removing items that have too many returns and spot returns abuse or potential fraud.
Best Practices for Crafting Return Policies
Here are key ways to craft a great return policy that encourages new site visitors to buy from your business, keeps customers ordering again and again, and gives your company the ability to make better decisions with data going forward:
- Make It Visible and Promoted: A customer-friendly return policy should be easy to find, not buried in fine print. Promote it on your website and other customer touchpoints to reinforce your commitment to customer satisfaction.
- Establish Clear Timelines: A reasonable timeline to return a product could range from 30 to 90 days, depending on the product type. Make sure the timeframe is clearly defined and communicated to customers.
- Provide Easy Access to Return Labels: Customers should be able to print return labels directly from your website. This reduces friction in the return process and improves the customer experience. Some companies, especially in the fashion industry where returns are more common, opt to include a return label with outbound shipments. There are many great options to facilitate returns labels from your website. The pay-on-use options from USPS have grown in popularity because it makes it easy for the customer and the business. And your company only pays for the labels that are actually used to ship back the return.
- Follow Industry Leaders: If industry leaders have effective return policies that keep their customers satisfied, don't hesitate to adopt similar practices. They have likely invested in understanding customer needs and preferences.
Amazon's return policy, widely regarded as one of the most customer-friendly, contributes significantly to its reputation as a trusted ecommerce giant. This policy typically allows customers to return most items within 30 days of receipt and provides a clear, streamlined process for initiating returns online, including easy access to printable return labels.
Amazon loyalists routinely rave about simplicity and the flexibility it offers customers, including free returns for many items, automatic refunds for some cases, and options for drop-off at Amazon hubs or other locations. This user-friendly, convenient approach minimizes any potential frustration and clearly enhances customer loyalty.
Ecommerce businesses aiming to replicate Amazon's success should consider adopting similar features, including clear, easy-to-find return information, flexible return options, straightforward processes, and quick refunds. Overall, try to look at your returns policy from the customer perspective and don’t hesitate to get feedback from any customers that went through your returns process.
- Use Infographics: Simplify the return process by using infographics to explain each step. This visual aid can help customers understand the process better and reduce inquiries to your customer service team. Infographics can convey complex information in a concise, easy-to-grasp format, which can significantly enhance user experience. By visually illustrating the process, from initiating the return to packaging the product and obtaining the refund, customers can follow along without confusion or doubt. Furthermore, well-designed infographics are not only functional but also add an aesthetic appeal to your site, contributing to the overall brand image and customer satisfaction.
- Compliance with Laws: Obviously, your return policy must comply with all relevant state and federal laws regarding defective products. Non-compliance can lead to legal issues and damage your reputation. Keep in mind, we are not legal experts and it is advisable to review your return policy with an experienced business attorney in your state if you have questions about compliance. It is also important to keep in mind that individual states have laws that may impact your sales to consumers in those states. For example, California has enhanced consumer protection laws like the Song-Beverly Consumer Warranty Act that require sellers to replace defective goods or fully reimburse customers, whether expressly permitted in the return policy or not.
The good news is that common sense and good customer service will generally keep your business compliant with state and federal laws. If you run into an issue that falls outside of your returns policy, use it as an opportunity to take care of that customer when at all feasible and review if policy adjustments are needed. One angry customer can do plenty of reputational damage to your business. It is generally better to take the high road and determine if you should provide some detailed disclaimers to prevent that situation or misunderstanding in the future.
- Empower Customer Service: Allow your customer service team to be flexible and reasonable in dealing with customer issues. Their aim should be to resolve the problem in a way that keeps the customer happy and loyal.
Zappos, an online shoe and clothing retailer, is a prime example of a company that empowers its customer service team to solve problems instead of forcing them to stick to a rigid return policy. Known for their legendary customer service, Zappos goes above and beyond to ensure customer satisfaction. This involves a 365-day return policy and allowing their customer service team the flexibility to make decisions like upgrading a customer to VIP status for free overnight shipping, helping find out-of-stock items in competitor's inventory, and even sending flowers to a customer who received the wrong order. By putting customer service at the heart of their operations, Zappos has built an enviable reputation for customer loyalty and retention.
Your company does not need to copy every aspect of Zappos return policy in order to succeed, but you can learn from their example that giving customer service reps the flexibility to solve problems and keep customers happy can make a huge difference.
- Promote Your Policy: A flexible and customer-friendly return policy is an incredible marketing tool. Highlight how your policy sets you apart from competitors and makes your ecommerce store the preferred choice for your product.
Consider using these effective strategies to promote your return policy:
- Website Banners: Use banners on your homepage and product pages to highlight your return policy. Eye-catching visuals or compelling text such as "Hassle-Free Returns" or "30-Day Money-Back Guarantee" can effectively communicate your policy.
- Email Marketing: Include information about your return policy in your email newsletters and transactional emails. It should be clear that prospects are significantly more likely to place a first order with your company when they are assured their satisfaction is guaranteed.
- Social Media: Regularly post about your return policy on your social media channels. This can help in not just promoting your policy but also in building transparency and trust with your followers. It helps convey that a core part of your brand is customer satisfaction and you have a strong belief in your products.
- Product Packaging: Including information about your return policy within your product packaging can enhance that all important unboxing experience. Imagine you're opening a package you've ordered online, and there, right in the box, you find a little card that spells out the return policy. It's simple, it's clear, and it reminds your new customer - "Hey, if this doesn't work out, we've got your back." That's the power of including your return policy info in your product packaging. It's like a friendly handshake between you and your customer, reminding them you genuinely want them to be happy.
- Checkout Process: Highlight your return policy during the checkout process. Providing this reassurance just before purchase can help reduce cart abandonment rates.
Companies like Warby Parker and Casper have used these strategies effectively. Warby Parker promotes their "Home Try-On" program extensively, allowing customers to try five frames at home for free, while Casper offers a "100-Night Trial" for their mattresses, both leading to increased customer trust and higher sales.
- Stay Vigilant Against Fraud: While striving for a customer-friendly return policy, don't ignore the potential for returns fraud or abuse. Implement processes to monitor and manage suspicious return activity and regularly review your return rates by product to stay ahead of most potential issues.
A well-crafted return policy, combined with efficient shipping, can be a potent tool for converting website visitors into repeat customers. A robust return policy signals a commitment to customer satisfaction, fosters trust, and builds long-term customer relationships. So here's the deal - if your return policy is a hassle, it's like turning customers away at your shop's door. It's not just about losing a sale, it's about your brand taking a hit. Just a few vocal critics of your brand can cause a lot of damage in this day and age.
Hopefully it is abundantly clear that having a customer-friendly return policy is crucial to keep your shoppers coming back, while a poor one could hurt your brand big time. Here's the good news: Jillamy's fulfillment services are designed to help ecommerce businesses with all aspects of shipping and logistics. This includes a review of your returns policy and process, while also taking the operational burden of customer-friendly returns off your plate. Ready to take your shipping and logistics to the next level and focus more on growing your business? Reach out to us today at 800.592.7449 to learn how Jillamy can streamline fulfillment, improve your returns process, and boost your customer retention.