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Managing Shopify Returns: A Quick Guide

Consider the following scenario. It's a busy day, but you have to go and see if any customers need a refund. So, you log into your Shopify admin and click on Orders. You see some customers who are asking for refunds, therefore you must manually go through all of the orders to select the one you want to return.

As you can see, this will take a long time! Then there's the hassle of creating or uploading an individual shipping label for each return, which will take time and effort.

Returns, refunds, and exchanges are all part of running an eCommerce business on Shopify, but that doesn't mean you should be spending hours after hours each week dealing with them. In addition, as the number of online shoppers continues to rise, an increasing number of customers expect to get the same level of service from when they first purchased, up to the time they need to return an item.

So, don't worry, we're here and we're here to help you. This article will help you optimize your time and resources.

To make a refund or exchange, customers expect an easy-to-follow return policy. This means that they should be able to finish the process quickly and easily.

However, most return policies for online retailers vary depending on the products and services offered. Return policies for food may differ from that of garments, while those may differ when it comes to electronics as well.

This makes returns a bit complex.

Because major eCommerce platforms lack return management solutions, merchants need to look for alternatives (also probably the reason you’re here). Some companies accomplish this manually via spreadsheets, while others use Shopify apps.

Most merchants view returns and refunds as inescapable eCommerce aspects they can't control but the truth is, you can. Once you know how to handle them, you should be able to lower your refund and return rates.

Establishing your exchange and return policy

To start creating your store return policy, you’ll first need to understand why a customer would want to return an item rather than exchange it, and vice versa.

Most of the time, when a consumer requests an exchange, they are satisfied with their purchase but they might have picked the wrong variation (wrong size, wrong color, or wrong design).

In contrast, when a consumer asks for a return, they're hoping to get their money back. This might be because they were unsatisfied with the buying experience, disappointed with the goods received, or both.

To cut down on the amount of administrative work your company has to do, you must figure out how to manage each of these instances. As a result, customers will have a better overall experience.

There are a number of Shopify applications that will take care of this for you. Most of these apps use standard codes like "did not fit," "wrong size," "did not match the description," "damaged," etc. Also, you will need to download another app to make return labels and yet another app to exchange goods.

Putting together a refund policy

When crafting your refund policy, there are various things to consider, but one thing’s for sure, it needs to be clear. Your customers should understand what it does – and does not – cover.

Will you provide customers with full refunds or partial reimbursements? Will they receive their money back, or will you give them store credit instead? Which things are refundable, exchangeable, and non-refundable/non-exchangeable?

Explain it in clear, plain English.

Returns

  • What counts as a return?
  • What is the procedure for processing a return?
  • What is the cost of returning something to the customer (who pays for shipping)?
  • What address should returns be sent to?

Refunds

  • What are the conditions for a refund?
  • How is a refund handled, and when will they get it?
  • What is the cost of returning something to the customer (who pays for shipping)?
  • What address should returns be sent to?

It's a good idea to put your return policy and FAQ on the website so customers know what to expect if they get an item or goods they wish to return.

Put yourself in your customer’s shoes, see what their potential concerns may be and then respond to them in your FAQs. If you receive any future inquiries that you didn’t consider before, keep updating your FAQs with them.

Eliminating uncertainty from your consumers' thoughts is an important aspect of the sales process.

3 main components of an effective returns policy

  • An easy and straightforward returns process
  • An efficient back-end system
  • A system for collecting and analyzing return data

While it may seem obvious that lowering the number of returns will save your store money, it should not be your focus. You need to create your policy in a way that encourages your customers to buy from you more regularly. It’s not always about money.

In fact, issues with returns or delays in issuing refunds or credits are surefire ways to lose customers which will be a bigger loss in the future. As a business, you want to create a streamlined, customer-friendly approach that leaves no room for uncertainty.

An easy and straightforward returns process

You should have a dedicated returns page so customers can see all they need to do to return or refund their item. Build that page and include noticeable links across your website such as:

  • FAQ page
  • Product pages
  • Shopping basket
  • Checkout page

Ensure that customers are able to:

  • Easily navigate to the page
  • Start the returns procedure themselves instead of calling or chatting with customer service.
  • Easily locate the relevant order(s).
  • Explain why the item is being returned
  • Use store credit to easily shop for an exchange item.

Apart from having a dedicated page, you should also have a dedicated team. This team will consist of people who will process items, refunds, and talk to customers (if needed).

Efficient backend system

Customers have come to anticipate that their exchanges and returns would be handled as quickly as humanly possible.

The first stage is the returns page and team, but for it to be successful, there must also be an effective back end that operates exactly on schedule. It must:

  • Allow for a speedy turnaround for the customer.
  • Keep the customer informed
  • Give you the information you need for your company to keep an accurate inventory

If you do this well, your customer relationship will improve and your business will grow. If you get it wrong, you'll lose customers. According to research, if it takes 4-6 days to do a refund, the customer is unlikely to return to buy from you again.

Establishing a system for collecting and analyzing return data

Keeping customers satisfied is one key element of your returns system when it goes into effect. The other is gathering and evaluating data to guarantee that returns provide insights into:

  • Customer conduct
  • Customer requirements
  • How to fine-tune your company's performance
  • How to reduce future returns

Knowing the most returned goods will help you decide:

  • Which items should be phased out
  • Which items should be modified or contacted by the manufacturer? Which products should be promoted more aggressively
  • How products are promoted and sold
  • What products should be researched and developed further

The information gathered from your returns system (including customer comments on the returns) is valuable and may help you improve your business.

How to minimize losses on product returns

Convert returns into exchanges.

You'll notice a difference in your profit margins if you can persuade a customer to exchange one item for another rather than receive a refund. With a refund, you'll lose shipping costs and initial order earnings, but with an exchange, you won't.

But how can you persuade customers to exchange rather than return an item? If the customer prefers to exchange, you can pay for the return shipment. If customers are offered free shipping for their returns, they’ll be more likely to exchange the item instead of asking for a refund.

It’s crucial to meet their expectations the second time around, it gives you an opportunity to improve their experience and turn them into loyal customers.

Providing warranty

If you sell high-priced products on Shopify, you may want to sell product warranties as well. This safeguards your company from having to pay for damaged goods. 

Selling product warranties is another option for your company to generate revenue. Because warranty providers frequently pay commission on warranties sold, adding warranties on your product pages might open up a new revenue stream for you.

Exchange upselling

When customers are exchanging an item, one tactic is to promote more expensive products. Although exchanges are normally better for your profit margins than returns, they might still incur fees, so this is an effective approach.

You can also increase cross-sales by displaying things that go well with what they've already purchased. If they're paying with shop credit, you may entice them to spend more by giving free delivery on orders over a specific value.

Closing words

Every day, the number of product returns grows. Returns, however, should be viewed as a natural feature of conducting business rather than a "necessary evil."

You should strive to make the return process on your Shopify store as streamlined and straightforward as possible. In addition, improved return optimization will provide you with superior insights into your business.

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