How to Create an Ecommerce Return Policy
Most multivendor marketplace or B2C marketplace operators we’ve talked to want to own the returns relationship, but they don't know how to make it less painful to do so.
Specifically, they ask us:
- How can retail marketplaces turn their returns policy into a revenue driver, not a cost center?
- How do you handle returns if you work with multiple brand partners?
In order to answer these questions, you need to ask yourself, “Do I want to own the customer experience or do I just want to be a dropship middleman?”
If you merely want to be a middleman, then you can let your sellers handle the return process. This requires minimal work on your part - you just need to find your sellers’ return policy pages and direct customers to them for returns.
However, if you want to maximize customer satisfaction, then you need to own the returns process. Figuring out your returns and refund policy and your reverse logistics system takes more planning upfront but, as we argue in this article, is a better long term strategy.
In this article we cover:
- How to solve the ecommerce returns policy puzzle for marketplaces
- 3 tactics brands with great ecommerce return policies have in common
- How returns policies affect conversions and customer loyalty
- 4 examples of the return policy template from online retailers in apparel, footwear, home goods, and accessories
How to solve the ecommerce returns policy puzzle for marketplaces
We believe that a retail marketplace should own the returns process and use returns software to automate as much as they can, from initiating returns, picking products to return, and giving the shipping label.
Returns automation software like Narvar, Returnly, and Loop can help with this.
Joe Vancena, a product marketer at Loop, says, “Handling returns for multiple vendors is more challenging [than a single brand], but it's something that software can automate.”
The key feature is the ability to have product rules. This makes sure that the returns go to the right vendor warehouses. Once a customer initiates a return for a product bought from your marketplace, the software needs to…
- Recognize which brand and warehouse the item came from.
- Print the return shipping label addressed to the warehouse.
- Notify the warehouse team that the product will be coming.
In 2020, global apparel retailer Superdry turned to FitAnalytics to help customers find the right fit, Zigzag to help customers initiate paperless returns, and invested in robotics to handle returns processing in their warehouses.
Using apps like Loop to automate your returns, doesn’t just save you time. You also increase your conversion and retention rates because you increase the trust first-time customers have with you. Your team will also be happier because they spend more time interacting with curious customers, instead of angry ones.
What brands with great ecommerce return policies have in common
At Modern Dropship, we work with hundreds of marketplace and brands. We’ve found that there are 3 return policy constants that hold true amongst our most successful ecommerce brands:
- They offer free returns & exchanges
- They capitalize on exchanges
- They decrease the possibility of returns in the first place
Free returns & exchanges
Joe emphasizes, “The one question you have to as is, ‘How do you think about return shipping, and specifically return shipping fees?’"
In Shopify's Future of Commerce 2021 report, 40% of online shoppers say free returns would make online shopping better.
First-time customers, in particular, need to feel confident that they can return the item they bought from you if it didn’t turn out to be quite what they expected. Returnly, an ecommerce returns management software, found that 80% of online shoppers think about the return experience before buying.
If you do choose to implement free shipping in your returns policy, don’t hide it away.
Don’t weigh your exchange policy against the fraud prevention lens. Instead, use it to inspire confidence in your customers that they can trust you.
Footwear company Allbirds, for example, puts free returns in all of their ad creative on social media.
Tecovas goes a step further and has “free returns and exchanges” in their product page and product description, right below their Add to Cart button.
Upsells to other brands or products
Owning the shopping behavior and returns story allows a marketplace to retain and generate revenue.
Instead of defaulting to giving cash refunds, brands can offer exchanges or store credit first.
Chubbies, for example, offers return shipping for exchanges but not for refunds to incentive exchanges over refuneds.
Depending on your assortment, an upsell or cross-sell opportunity may also be viable.
This is where a multivendor marketplace has an edge: a single brand may not have the assortment to upsell or cross-sell complementary products.
For example, if you have a collection of apparel, you can encourage customers to bundle different pieces from different brands or facilitate product exchanges from one brand with another. You could even offer store credit or a gift card for your marketplace that customers can redeem at any of your brands (think, Amazon).
Help customers find the right fit
Narvar found that 34% of returns to Amazon sellers were because of the wrong size or fit. That number climbed to 46% for non-Amazon sellers. Online stores can help customers find the right product for them and stem the volume of product returns before they happen.
For example, Knix, a DTC brand that sells women’s intimates, operates in a high return space. With a sensitive product, fit and comfort are extremely important. Additionally, the company has to grapple with hygiene issues around returned items.
To handle the returns process, Knix used Loop to automate most of the returns process, from initiating the return to generating prepaid shipping labels.
With the time saved from automation, their customer support agents ended up being available for live chat for virtual fit consultations on their home page. This helped decrease the overall number of returns they received in the first place.
How does offering a return & refund policy affect conversions?
According to McKinsey, 2 out of 3 online shoppers say they would not shop at a retailer again after a negative returns experience.
When you know that at least 60% of your customers read your return policy before they purchase, then returns is a touchpoint you want to own. Otherwise, you lose conversions. If you let your sellers handle returns, potential customers are clicking away to your sellers’ site before buying from you -- if they come back to your marketplace.
Footwear retailer Zappos pioneered the “free returns & exchanges policy” for marketplaces. This gave customers the peace of mind that they could find the right shoe size or style that fit them, even if they couldn’t physically try them on in person. This way, they foster a direct relationship between themselves and the customer, instead of the shoe brands they carry.
Similarly, Canadian luxury menswear retailer Harry Rosen handles all returns and exchanges on its online marketplace and doesn’t send any products back to its brand partners. This keeps Harry Rosen’s brand partners happy because they don’t have to deal with returns. And Harry Rosen retains full control over the end-to-end customer experience.
Return policy examples & templates for ecommerce marketplaces
Apparel: Harry Rosen
Harry Rosen is a family-owned, Canadian retailer that specializes in luxury menswear and style.
- Harry Rosen has both ecommerce and brick and mortar stores. Customers can return online purchases at any retail store location. However, items bought in-store can only be returned in-store.
- They offer free return shipping on all orders.
- They give customers a 30-day return window to return items.
- They don’t accept returns for custom-made, made-to-measure items or for intimate apparel.
You can learn more about Harry Rosen’s return policies here.
Home Goods: Scandiborn
Scandiborn sells Scandinavian-inspired home goods and baby accessories. They list products from over a hundreds (and have to facilitate returns to those, too!)
- Scandiborn allows returns for up to 30 days for a full refund, no questions asked. They even have a clause that says, “If it’s been a little bit longer, go ahead and submit a request and we’ll see what we can do to help.”
- They acknowledge that sometimes returns happen, simply because the customer changed their mind.
- If the return is due to a faulty product, a customer has up to 2 years to exchange the product or get a full refund.
You can learn more about Scandiborn’s return policies here.
Refund policies form the foundation of ecommerce success
Ecommerce analyst Web Smith wrote,
"Efficient customer acquisition and conversion are the primary objectives of most in eCommerce. But it’s inventory management, fulfillment, and returns that the foundation of modern commerce is built upon."
Hassle-free online returns are table stakes for ecommerce success. Optimizing your return rates and shipping timeframe, taking on the cost of return shipping, and maybe even waiving restocking fees all play a crucial part in turning returns into an issues that helps, not hurts, your bottom line.
