How to build a retail return policy that generates repeat sales
Kelli Trapnell
·October 4, 2023
When you run an ecommerce retail business, you’re likely to see a lot more customer returns than a brick-and-mortar business. That’s often because your shoppers find it harder to tell what they’re going to get: While they might have a chance to sample a new brand of salsa before they take it home from Costco, or try on a pair of jeans from H&M, there’s not much you can do to give your shoppers the full experience of your product before it arrives in their homes.
As a result, ecommerce retailers typically see much higher return rates than brick-and-mortar retailers: around 30% of ecommerce products are typically returned to the retailer, versus just 8.9% for brick-and-mortar shops.
That’s why it’s crucial to have a well-defined returns policy that works toward generating repeat sales. In this article, we’ll cover some tips for crafting a retail return policy, including:
- Outline the types of returns accepted and the timeframe in which returns can be made
- Follow state guidelines (at minimum) when it comes to returned merchandise
- Provide flexible options for returning a product
- Don’t ask the customer to send back an item that won’t be resold
- Offer multiple return options to encourage customer retention
- Automate your return management process
Outline the types of returns accepted and the timeframe in which returns can be made
Clearly state if you accept items with no questions asked, or if there are certain conditions that must be met before a return can be processed. Some brands offer a generous no-questions-asked return policy within a set number of days, even if the product shows signs of obvious use, while others require items to be in their original packaging and new condition to be eligible for a refund, though you may consider offering them store credit as an alternative. Create a brief and easy-to-read return policy that’s highly visible on your website—for new shoppers, your return policy can help them gain confidence in making a purchase, as they’ll know that they can easily send it back if it doesn’t work for them.
Follow state guidelines (at minimum) when it comes to returned merchandise
State laws often govern the rules for when a retailer must accept a return and how long the shopper has to request one, so make sure that your return policy is in full compliance with state and federal guidelines. You can offer a return policy that’s more lenient than the state law, but not less. Keep in mind that even if your store is based in a particular state, your customer is governed by the return policies of the state where they reside, so make sure that if you’re shipping products nationwide, you have a blanket return policy that is compliant with all state laws. Some states don’t mandate a return policy at all, while others state that if you don’t provide a clear one, their default terms will come into place. Make sure that you consult an attorney in advance of finalizing your return policy to ensure state and federal compliance.
Provide flexible options for returning a product
Modern shoppers are focused on convenience—and it’s not always convenient for them to get an item back into its original packaging, especially if it’s a delicate or bulky item that requires special handling. While it’s helpful to provide the option to print out a self-service return label so that the shopper can return the item from home without paying shipping costs, you can improve their customer experience by offering them the option to take the item unboxed to a nearby in-store drop-off location, where it can be professionally repackaged for them. In most cases, it also makes sense to offer free return shipping, although you may need to charge a return shipping fee if your store sells bulky items like furniture or mattresses.
Don’t ask the customer to send back an item that won’t be resold
If you’re selling low-cost items that aren’t likely to be repurchased, it may not be worth asking shoppers to send back returned merchandise. Similarly, if your products are perishable or highly seasonal, the items aren’t likely to be resold in time. Instead, if the shopper doesn’t like the item, don’t ask them to send it back when it will more than likely end up in a landfill—just give them their money back in the form of store credit, encouraging them to try out another item from your store that they’ll like better.
Offer multiple return options to encourage customer retention
Whether or not a returned item is likely to be resold in your online store, it’s important to give your shoppers multiple options for returning their product. While many brands make it easy to return an item for a cash refund, or to exchange the product for a different size or color of the same item, it’s important to provide the option to exchange the item for store credit that will allow them to purchase any other item from your online store. To incentivize shoppers to choose an exchange over a refund, you may even consider offering bonus store credit, which they can apply towards the purchase price of their new item. This can help you not only increase customer retention, but result in upsells that drive revenue beyond the value of the bonus credit you’ve offered.
Automate your returns management process
When it comes to the customer experience, the post-purchase side is where results can often fall short of expectations. Shoppers who return items often struggle with waiting in endless customer support queues or games of email tag to provide the required information for a return, which can leave them frustrated and unlikely to consider shopping at your online store again.
By automating the returns process in line with your return policy conditions, you can ensure that shoppers get access to a streamlined process when returning an item. Even better, by using a returns management solution like Loop, they’ll get instant access to a range of menu options for what to do after the return, including requesting a cash refund, requesting an exchange for a like product, requesting an exchange for a different product, or requesting store credit to use in the future. For items that fall below your return-eligible value threshold, you can even offer the shopper store credit or a cash refund without asking for the item back, helping your brand build sustainability into its promise.
By building a return policy that incentives exchanges over cash refunds, you’ll be able to maintain the customer relationship and encourage repeat buying—helping you increase your customer lifetime value and satisfaction rates.
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