You’ve done everything to differentiate yourself from the competition. Offering superb products, top notch customer service, and unbeatable prices or value for your buck. But is your return policy working against you, rather than for you?

Today a major factor dictating where e-commerce customers choose to shop is the existence or lack of a fair and comprehensive return policy – and the numbers prove it: 95% of online customers will purchase from an e-commerce retailer again if they have a good return or exchange experience with the company. Furthermore, Web Retailer says online retailers with 40% repeat customers generate 50% more than similar sellers with a 10% repeat customer base.

Online purchases and internet shopping concept

But, we know returns can be costly: a study by HRC Advisory shows that investments in supply chain upgrades and online returns – amongst others – is costing 2 to 3 percentage points of total sales. But while this investment is hitting the bottom line, there are ways you can leverage returns in both yours and your customers best interests.

So whether you’re a budding business looking to craft your return policy, or an established e-commerce retailer looking to revamp your outdated rules – this list will help you differentiate from the competition, retain customers, and in the end grow your business.

1) Your policy should be clearly laid out

Before we dive into some of the specific policies, it’s important to note that whatever your return policy may be it should be clear, easy to read, and easy to find on your website. Whether it’s an FAQ section, or a clearly laid out web page, it should be also be easy to find on your web and mobile site.

Why it’s good for your customers

Having a return policy that’s clearly laid out, and easy to find builds trust with your customers, and leaves little room for frustration when figuring out when and how to make returns. Plus, this trust can lead to increased sales.

Why it’s good for you

It clearly documents what a customer can expect from you, and when and why they are allowed to make returns. This also means you get less people calling your call center asking about returns – saving you time and money.

2) Return policies should be built around convenience

Returns aren’t just a hassle for you, they’re a hassle for your customers. Chances are they never bought your product expecting to return it (unless you sell clothing – in which case some people buy clothes online in multiple sizes to try on – which is also a problem) so getting around to do it usually takes time and effort they’d rather not exert.

By having a convenient return policy you have the opportunity to greatly increase your customer’s satisfaction and you can do this in a few simple ways, as laid out by NChannel.

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3) Accept e-commerce returns via shipment or in store

Now, not everyone has both an e-commerce shop and a brick and mortar store, but if you do take note. A study by Lab 42 showed that about one third of customers prefer to return an online purchase in a physical store – that’s huge percentage of customers you can better serve.

People chose to return in store rather than online all the time: sometimes it’s so they can talk to an associate about which product might be better for them than they one they want to return, and sometimes it’s because they want to physically make sure their return is processed because they’ve had poor return experiences before (we’ll get to how you can make sure this doesn’t happen to your customers in a moment). Either way, you should accommodate them.

Why it’s good for your customers

A third of your customers prefer to return in store, so give them that option. A happy customer is more likely to be a repeat customer.

Why it’s good for you

As pointed out by N Channel, an in store return is an opportunity for an upsell – which means more revenue for you. If they come in wanting to return one product, you can show them why another might be better and you can even show them why they should also add on another product.

4) Provide pre-printed return labels

This is one of the easiest ways to please a customer. By giving them a pre-printed label it saves your customer the hassle of searching your website for the address, or printing out the label themselves – because let’s face it, your printer’s ink cartridge always runs out when you need it most.

Why it’s good for your customers

By making the return process simpler – and in this case super easy to figure out – your customers can make their returns quicker and with less hassle. They don’t have to go figuring out the right label or address, and they sure don’t have to run to the store to pick up a new ink cartridge. We said it before and we’ll say it again – a happy customer is most likely a return customer.

Why it’s good for you

Quicker returns mean quicker turnaround for you. We’ll get into return timeframes soon – but by giving your customers the incentive to quickly and easily return a product that means you have to spend less time with less inventory, and you can get it back out the door into another customer’s hands quicker.

Plus, pre-printed labels protect you from fraud. There are those customers who will try and take advantage of shipping returns by claiming everything is in the box when it isn’t. By providing a label you can also include SKU’s, original invoices, quantities – anything you can think of, so that when it’s re-processed your workers know exactly what should be in it.

5) Pay for free return shipping

We know this is one of the biggest downfalls for e-commerce businesses because it can easily add up and hit the bottom line. But free shipping returns are almost expected these days – as reported on Web Retailer, 88% of consumers surveyed would rate free return shipping as “important” or “very important” when making purchase decisions.

So while not paying for return shipping might save you some cash, it could also cost you customers.Free shipping cardboard box isolated on white background

Why it’s good for your customers

Paying for free return shipping makes customers feel less trapped, and trust you more. Especially if you don’t have a brick and mortar store – your customers only way to return your product is by shelling out more cash, which is a major downside.

Why it’s good for you

Your customers trust you, and chances are you’re going to get good business (88% say free return shipping is “important” or “very important”).

Plus, you have options here. If paying for return shipping is really affecting your bottom line you can get creative. For example, you could state in your return policy that you’ll pay for return shipping on orders over $50, or whatever makes financial sense for you. Chances are this is understandable for your customers, and it could even drive them to purchase a few extra items to bump themselves over the limit.

6) Finally, don’t forget the details

When figuring out what return policies work best for you and your business there are some key logistics to keep in mind:

Put a reasonable time limit on your returns that makes sense for you and your business – but don’t be sticklers. N Channel suggests allowing your employees to have discretion, so if a customer wants to return an item on day 32 of a 30 day return policy – they honor it. Little considerations like this go a long way.

Be clear about what kind of refunds you offer, ie: cash, exchange, store credit. It’s important for your customer to know what deal they are getting when they buy your product.

You also need to be clear about the different types of returns, like defects versus a fit issue. For example, you might fully refund a defective product, but honor store credit for the fit issue. It has to work for your business and customer base.

In the end, when it comes to drafting, or revamping returns for your e-commerce business it’s pretty simple. If you provide the service and convenience your customers expect, chances are you’re going to retain their business and possibly grow yours.

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