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Updating Your Return Policy in 2019: What to Change
Stay on top of the latest e-commerce and marketplace trends.
Every February, retailers and e-commerce operators count their new scars from “National Returns Day.” This holiday season, UPS estimated that 1.5 million returns were sent on December 19th and an additional 1.3 million on January 3rd.
That is a significant amount of packages, and it can easily break many businesses. Your return policy is your best protection against being broken. According to The Washington Post, a smart return policy can help protect your margins, as 97% of shoppers say a good returns process encourages them to shop from your store again. On the other hand, 89% say a bad returns experience will make them shop elsewhere.
To help you stay on the productive side of the experience, we have put together a few considerations to run through with your team regarding returns, giving you the best chance for success in 2019.
Simplify the Process and Language
Protecting profit margins through your return policy requires smart, comprehensive rules. The process itself, however, can benefit you and customers through simplification. A clear return policy will let people know what to expect and can remove some of the customer service burdens you face when someone is not happy. Attaching the return policy to your emailed receipts is a clever way to share this information with customers, too.
For Amazon sellers, this process is even easier. You have a very detailed policy that is readily available and can explain what goods are eligible for returns and how the process works. The FBA program had part of its return policy updated in September of last year. At its core, this took the seller out of the returns process to a large degree and reduced your costs for getting a replacement to the customer.
If you also run your own website for orders, consider using the Amazon policies as a guide. A benefit here is that you can customize some offers and their returns to suit your inventory needs. One common tactic we see is the use of applying sales to older or seasonal products with restricted returns, such as only available allowing returns for store credit.
If your return policy is going to fit in an email or be easily legible on your own e-commerce website, it needs to be clean and direct. Define the process based on your needs, then describe it as simply as possible. The goal to set for yourself is to create a policy that can be read and understood by customers in about a minute.
Automate When Possible
Many leading e-commerce and sales platforms can automate some of the returns process for you. Your inventory and order management solution that tracks orders can classify each item so customers can see what is and what is not returnable. You may only save a few minutes during a normal day, but seasonal spikes in sales often deliver spikes in returns.
When you are hyper-focused on that peak time from Thanksgiving through the end of the year, automation will free up your team to focus on sales instead of having to spend the bulk of their time on returns or questions related to your returns policy. If you are running an FBA operation, then much of this is out of your hands. What you will want to do is track the reasons for returns in order to effectively understand the root cause of each one.
You can use tools to set alerts for different reasons or to create reports and see the volume of your returns. You might be able to identify defective products before reaching Amazon’s threshold or look for areas of fraud. Feedvisor’s returns dashboard allows you to slice-and-dice your returns data by volume, value, SKU, vendor, and brand to show how returns impact your profitability and overall operation.
If you are handling the fulfillment yourself and managing multi-channel fulfillment orders, automation can provide greater support and cost savings. This is often the case whether you are managing the returns process completely independently or if you are using the tools in the seller account or third-party software.
Look for options that allow you to define returns and provide customers with the information they will need. Filling out a returns form to get started should allow the customer to get the return mailing address, print out a postage slip, tell you the condition, and get a confirmation that you are expecting the return.
When managing your own fulfillment, those shipping labels also give your warehouse a boost. They will be able to scan each label and see how much of the expected returns they have, plus most warehouse management systems can integrate with ERP or CRM tools to then send a message to the customer to acknowledge the return has been received and will be processed soon.
Provide as much tracking information as you can. It helps customers feel connected to you and that you are taking their issues seriously. Simple notifications and tools go a long way to making the process easier for them, which can, in turn, lead to a higher customer lifetime value. Positive experiences are your key to sales growth, even when a product is returned or exchanged.
Every year we want to increase our sales capabilities and revenue numbers. Returns throw a wrench into all of that. They can eat away at your revenue, inventory, shelf space, and much more. You can minimize some of this impact by offering separate ways for your customers to get a return:
- 1:1 replacement can speed up the process and keep customers happier.
- Letting people keep damaged items or incorrect shipments. Check your costs here, because there is going to be a dollar value where it makes sense for you to ask for the original product to be returned (such as if its value is higher than shipping, restocking, and other labor costs).
- Direct refunds to their credit card or other payment option. This is your standard and can be positioned to make other options more appealing — you can charge a small percentage fee for this type of return but have a 0% fee on store credit returns.
- If you are fulfilling for your own website, look for additional opportunities such as providing store credit or gift cards to limit revenue losses.
Depending on your e-commerce or point-of-sale system, many of these and other options should already be supported or can be added easily through scripts and APIs. Having options is also an uncomplicated way to A/B test and find out what your customers want most.
Review Returns in General
Every year should have a point where you reevaluate your offers, including returns. Outside of Amazon, there is no requirement mandating most businesses to offer a returns policy and yours might not need one. The question to ask yourself is if your explanation for not having a returns policy would be seen as genuine by your customers.
Some obvious cases where the policy does not make sense include selling used or pre-owned clothes when your orders are custom created, food products, and other items that spoil over time. A “no-return” policy does not mean that you are shirking responsibility for getting the correct order to each customer. You will still need to be able to replace items when you make a mistake. To help customers understand this difference, consider adding links to report an issue with an order in the locations you list out your returns policy.
The Honesty Challenge
Each year we challenge ourselves to improve our business, from sales and product quality to service and support, and it is likely you do too. From reach goals and productivity gains to higher customer lifetime value, you push to do a little better. We are inviting you to set a specific framework for your returns policy: challenge yourself to be more honest and open.
Take a few minutes to read through everything you provide on your website and FAQ pages, as well as your standard email messages and chatbot or support scripts. If you take all that messaging at face value, will it come off as honest to your customers? Do they understand it? The final piece of making sure your return policy benefits your business this year is to edit and clarify so that there are not any surprises or confusion for your customers. Get that in place, and all the other work above will be worth it.