Explaining how Shopify returns work
Vaishali Ravi
·November 4, 2024
If you have an ecommerce business on Shopify, you know as well as anyone that a customer’s purchase doesn’t always work out the first time around.Customers need to make returns for any number of reasons: Maybe the item was too large or too small, or it didn’t arrive on time for an important event. Maybe the customer was considering a few different options with a plan to send a couple of them back. Or maybe the item had a defect or flaw, or was different from what was advertised.Whatever the case, with limited exceptions, such as final sale items, it’s important to have a strong return policy in place that lets customers send back their unwanted items for an exchange or a full refund.
Let’s take a look at how you can manage the return process on Shopify.
Manual returns via the Shopify app
When you’re running a business on Shopify, the ecommerce platform provides options for giving customers refunds directly within the Shopify app.First, a customer needs to request a refund, either by phone, email, or live chat.Once you’ve identified the item that the customer wants to return, and verified that it’s eligible for a refund, you can go to the “Orders” screen on your Shopify POS app and locate the item, then tap the “return” button next to it.The Shopify app includes options to return the balance to a gift card or to the original payment method, and to decide whether or not to refund shipping costs. Learn more about returning items on Shopify’s POS app here.You can also exchange an item through the Shopify app, with the option to either charge a balance or issue a credit based on whether the item is more or less expensive than the original item. The customer will need to provide their exchange request, or your customer support team can manually offer a recommendation. This page provides more details on making exchanges.From there, you’ll need to issue return shipping labels and update your inventory management system with the pending return.
Limitations of returns on Shopify
While it’s technically possible to manage your returns process through the native Shopify app, it’s not going to provide the best experience—for either you or your customers.
Here are some key limitations around Shopify returns:
Manual processing
Merchants need to track customer requests, issue refunds, handle exchanges, and manage shipping logistics on their own, which can be time-consuming and prone to errors. And if a customer wants to make an exchange, you’ll need to manually create new orders or use apps to handle exchanges.
Limited refund options
Shopify only allows refunds to the original payment method. If a customer prefers store credit or wants to exchange for another product, this must be handled outside the native system, often through apps or manual processes.
No support for prepaid return labels
Merchants need to either arrange return labels manually or use third-party apps to generate and manage return labels. This can be inconvenient and expensive for merchants who want to provide free or automated returns.
Lack of customization
While the native functionality is fine for basic returns, if you want to build a more complex return flow (like partial returns, multi-item returns, etc.), Shopify falls short.
Lack of brand cohesion
Shopify does not offer a branded return portal for customers. Unless a third-party app is used, customers may have a disjointed experience where they need to communicate via email or manually arrange their returns, which can lead to lower customer satisfaction.
Limited reporting features
Shopify lacks in-depth reporting on returns, making it difficult for merchants to understand why products are being returned and in what condition.
Want to upgrade your returns experience, prioritizing a better customer experience as well as improved merchant operations and data insights? It’s time to level up to a best-in-class returns automation solution.
Optimize your Shopify returns revenue
Learn moreAutomating returns with a returns management app
Shopify offers a wide variety of apps to help you optimize your ecommerce experience from end to end, including marketing, sourcing, fulfillment, and the returns process.Our returns management app, Loop, natively integrates with the Shopify ecosystem, streamlining the process of managing customers returns and exchanges with a self-service returns management portal.
Benefits of returns management with Loop
Streamlining your returns management with Loop’s Shopify integration offers many benefits, including:
Automated returns processing
Don’t force your shoppers to take their concerns to customer service—with Loop, they can initiate a return request right from a self-service dashboard. You’ll be able to automatically approve return requests based on set conditions, reducing your customer support tickets and delivering a better customer experience during the returns process.
Higher revenue retention from exchanges
Loop can help you boost your revenue retention by encouraging shoppers to choose exchanges or store credit, rather than defaulting to a refund request. By facilitating seamless exchanges through our Instant Exchange feature, and enabling shoppers to use their refund credit towards any item in your store through Shop Now & Later, you’ll be able to boost customer loyalty and keep revenue that you’d otherwise lose to refunds. Loop merchants typically retain around 50% of revenue from returns!
Customizable workflows
Your brand’s needs can be complex, and you may not want to treat all returns the same way. Loop has you covered: Our Workflows make it easy to set up different variables that dictate how each return will be processed, based on pre-set conditions. For example, if swimsuits must be sent back in new-with-tags condition to be eligible for a refund, but can be returned for an exchange even if previously worn, you’ll be able to automatically determine the item’s condition through user inputs, and can automatically process the item based on your policy from there.
A consistent user experience
Loop’s return portal can be branded with your shop’s colors, fonts, and images, ensuring a cohesive post-purchase experience for your customers. Plus, all of your Loop returns data will integrate with your customers’ purchase and customer support history, so your CX team will have detailed context on each shopper’s journey, no matter if they’re making a purchase, seeking support, or processing a return.
Flexible return options
By integrating Loop with Shopify, you’ll be able to make the return process more convenient for your customers. You can give customers the opportunity to send back returns using pre-paid return labels, drop the product off at a nearby drop-off center, or even return the product in-store if you have a physical store in their area. By catering the return process to their needs, you’ll be able to deliver a better customer experience that will make them more likely to shop with you in the future.
Better inventory management insights
Loop integrates with Shopify’s inventory system to automatically update stock levels when returns or exchanges are processed, so you know when you need to re-order or when you might be overstocked. Our integrations with 3PL partners also help you get better insights into the condition of your returned items, so that you’ll be able to determine which items should be resold, and which should be recycled or donated.
Return protection for customers
Many brands are moving away from free return shipping—and if you’re among them, you may be concerned about diminishing the customer experience. By using Loop’s Offset feature, you can encourage shoppers to pay a small amount for return shipping protection when making a purchase. That guarantees them a free and convenient return if they need one, while helping your brand recoup revenue to help cover return shipping costs.
Enhanced return insights
By integrating your Loop data with Shopify, you’ll get analytical insights that showcase trends in both sales and return performance. You’ll finally be able to understand why certain products are being returned more than others, empowering you to make updates to your product descriptions or even request changes from your manufacturer. That will help you deliver a better customer experience and reduce your return rates in the future.
Why automate returns on Shopify?
While it’s possible to process returns on Shopify without using an app to automate the process, it’s time-consuming for your team and frustrating for your customers.Customers need to wait for customer support to help them find the order and offer them instructions on how to process the return, and they need to manually choose a new item for an exchange if they’d like one — making them more likely to simply request a refund.Your customer support team needs to spend time reviewing return requests, interacting with customers, and providing instructions and return shipping labels — taking time away from higher-priority customer support tasks.By automating your return workflows with Loop, you’ll be able to quickly and efficiently manage the returns and exchange process with no need to involve your customer support team. Your return and exchange requests should automatically sync with your shipping and fulfillment providers and your inventory management system, eliminating the need for manual data entry. Because Loop is custom-built for the Shopify ecosystem, you’ll be able to onboard seamlessly and integrate Loop with the other ecommerce apps you already use.Providing a streamlined, automated returns management system will help you create a great customer experience for customers who need to make a return or exchange — which will encourage them to buy from your brand again and again.Want to learn more about setting up Loop in your Shopify store? Contact our team for a demo.
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With Loop, your brand can offer everything from refunds to direct exchanges to shopper incentives and more. Even better? These exchanges build your business.