8 Best Practices for Managing eCommerce Returns & Keeping Customers Happy

10 min. read
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Picture this: You buy a new outfit online, but when it arrives, it doesn't quite fit. Frustrating, right? Now imagine trying to return it, only to be met with a confusing, complicated returns process.

That's not the kind of experience any customer wants, and how you handle those returns can make all the difference in keeping your customers happy and coming back for more.

The truth is, a smooth and hassle-free returns process can be a powerful tool for building customer loyalty and driving sales.

Returns are a fact of life for eCommerce businesses. No matter how great your products are, there will always be customers who need to return them for one reason or another. The question is, how can you manage returns to minimize their impact on your business while keeping customers happy?

From setting up a clear return policy to automating refunds, here’s everything you need to know to keep your customers happy and your business thriving.

The importance of efficient eCommerce returns management

Managing eCommerce returns effectively is an important aspect of running an online store. As well as keeping customers happy, it helps build trust and protect your store's reputation.

Here are a few reasons why it’s important to streamline your eCommerce returns:

  • Builds trust - Customers are more likely to purchase from a store that has a clear and easy-to-understand return policy. By providing a positive returns experience, you can build trust with your customers and keep them coming back.
  • Retains customers - If a customer has a positive experience returning a product, they're more likely to make a purchase from your store in the future. On the other hand, mishandling a return can lose you the customer.
  • Improves customer satisfaction - Providing an easy returns process can help improve customers’ overall satisfaction with your store. By promptly addressing their concerns and offering a solution, you can turn a negative experience into a positive one.
  • Reduces negative reviews - Customers who have a negative experience with a returns process are more likely to leave a negative review. By handling returns efficiently, you can reduce the likelihood of negative reviews and protect your store's reputation.
  • Saves time and resources - A streamlined returns process can save you time and resources by reducing the time it takes to process refunds and exchanges. This frees up your team to focus on other aspects of your business.
  • Follows Consumer Protection Laws - Efficient eCommerce returns are crucial for consumer protection laws as they ensure consumers have easy access to refunds or exchanges, promoting confidence in online transactions and safeguarding against fraudulent practices.

By providing a seamless returns process, you can create a positive experience for your customers and keep them coming back.

8 best practices for managing eCommerce returns

In order to streamline your returns process and manage returns and exchanges as efficiently as possible, here are some best practices you can use:

1. Create a clear return policy

Having a clearly-defined return policy can help improve customer satisfaction and streamline the returns process.

When creating your return policy, make sure to cover all the necessary aspects of the returns process, including eligibility, timelines, and requirements for returning products.

Here are some tips for creating a clear return policy:

  • Communicate your policy clearly -  Clearly display your return policy on your website, product pages, and emails. Use clear, concise language that is easy to understand.
  • Specify timeframes - Define the return window within which customers can return products. This will help manage customer expectations and reduce confusion.
  • Outline return resolutions - Specify the types of returns available, such as refunds, exchanges, or store credit. Make sure to also mention any associated fees, such as restocking or shipping fees.
  • Clarify product eligibility - Outline which products are eligible for return and under what conditions. For example, some products may be non-returnable if they are opened or used.
  • Include return instructions - Provide clear instructions on how to initiate a return, such as by providing a link to an online return portal.
  • Address common issues - Anticipate common issues that customers may encounter when returning products, such as damaged or defective items, and outline how these issues will be handled.

By creating a clear return policy, you can set expectations with your customers and reduce the likelihood of misunderstandings or disputes.

It's important to understand that different types of eCommerce stores will have different requirements when it comes to managing returns, and you need to create a return policy that is tailored to how your store works.

For example, if you have a dropshipping store, you will need to work closely with your suppliers to make sure your return policy aligns with their returns process. If you sell custom-made products, you may need to have a more restrictive return policy to account for the fact that this type of product can’t easily be resold.

Take the time to carefully consider the unique requirements of your eCommerce store and develop a return policy that’s easy to understand and fair to both you and your customers.

2. Make returns easy and convenient

The returns process should be easy and convenient for your customers. Customers appreciate a hassle-free returns process, which can lead to increased trust in the brand and repeat business.

Here’s how to make returns easy for customers:

  • Provide multiple return methods - The more return methods you offer, the easier it will be for your customers to initiate the process.

    Give them the choice to return items in-store, by mail, or at drop-off locations, or even offer to have them keep or donate the item instead of sending it back if you want to reduce the amount of return shipments.

  • Keep it simple - Don't make the returns process overly complicated or time-consuming. Offer an online return portal and provide pre-paid return shipping labels.

    81% of customers want more self-service options, which is why providing self-service returns is so important. Customers who can issue return requests on their own will love the convenience, and you'll save yourself from having to manually handle the returns process.

  • Give clear instructions - Make sure your customers know exactly what they need to do to initiate a return. Include instructions on your website, in your packaging materials, and in follow-up emails.

    That way, customers won't be left scratching their heads trying to figure out what to do next.

  • Be responsive and transparent - Keep your customers in the loop throughout the returns process.

    Respond to customer inquiries promptly and provide transparent updates on the status of their returns. This will help build customer trust and loyalty, and reduce misunderstandings or disputes.

By making returns easy and convenient, you make life easier for your customers and improve your bottom line at the same time. You'll reduce return rates, improve your brand reputation and free up time and resources to focus on other areas of your business.

3. Automate the returns process

Automating the returns process can save time and resources, and reduce the likelihood of errors.

One of the biggest challenges that eCommerce businesses face is managing the returns process. Customers expect an easy and hassle-free experience when returning products, but managing returns manually, through emails and phone calls, can be time-consuming and costly for your business.

This is where returns management systems come in as a powerful tool to automate the returns process.

A returns management system is an automated platform that makes it easy to manage your returns process from start to finish, including creating and managing return policies and return shipping labels, integrating with shipping carriers, issuing refunds, and tracking analytics, all in one place.

By using a returns management system, you can streamline your returns process, reduce costs, and provide a better experience for your customers.

4. Track returns data

Tracking and analyzing your returns can provide valuable insights into the effectiveness of your return policy and returns process, enabling you to identify areas for improvement and make data-driven decisions to minimize future returns.

Your returns data can give you visibility into the reasons for returns, such as product defects, sizing issues, or inconsistency between expectations and what customers got.

Returns metrics to track include:

  • Return reasons - Track common return reasons to identify areas of improvement in product quality, customer experience, and supply chain management.
  • Return rates - Measure the percentage of orders that result in returns to assess the effectiveness of your returns process and identify trends and patterns.
  • Refund processing times - Monitor refund processing times to optimize refund processing times, improve customer satisfaction, and keep things running smoothly.
  • Return costs - Calculate return costs to improve product design and pricing, and calculate profitability.

Utilize the analytics and reporting tools that are provided by returns management systems to streamline your returns process and respond quickly to changing trends and customer needs.

5. Communicate with customers

Communicate with customers throughout the returns process to build trust, reduce customer frustration, and improve the returns experience.

Provide regular updates on the status of customers’ returns, including confirmation that the returned item has been received, notifying the customer when the return has been processed, and updating them on the status of their refund or exchange.

Make sure to also promptly respond to customer queries, whether it’s by email, chat, or phone, and provide helpful and informative responses. Providing quality customer service builds customer loyalty and shows your dedication to customer service.

Providing regular updates can help customers feel more informed and reduce uncertainty about the returns process.

6. Encourage exchanges over refunds

When customers return a product for a refund, you lose the sale, which can hurt your revenue. By offering easy exchanges, you can keep the sale and retain revenue.

In addition to retaining revenue, customers are more likely to return to buy from your store again in the future when they have a positive exchange experience, resulting in increased customer loyalty and lifetime value.

How to encourage exchanges over refunds:

  • Offer incentives - Provide a discount or other incentives to encourage customers to choose an exchange over a refund.
  • Make exchanges easy - Streamline the exchange process to reduce the time and effort required for customers to exchange a product.
  • Make upsells from exchanges - Use exchanges as an opportunity to upsell customers to higher-value products.
  • Offer free shipping - Offer free shipping or other perks to customers who choose to exchange a product.
  • Analyze exchange data - Track all exchanges to identify trends and areas for improvement, such as product quality control or shipping practices.

In addition to keeping customers happy and loyal, encouraging exchanges instead of refunds reduces costs associated with returns and retains revenue that would otherwise be lost.

By encouraging and incentivizing exchanges you can improve customer satisfaction and increase revenue, making it a valuable strategy to implement.

7. Protect against return fraud

Return fraud is when customers fraudulently return products for financial gain. There are several forms of return fraud, including returning stolen items, returning used items as new, or returning counterfeit items.

Return fraud can be a serious problem for eCommerce businesses, as it can lead to lost revenue, increased costs, and damage to reputation.

The US retail industry loses about $24 billion each year due to return fraud and return policy abuse, amounting to an average of 8% of all returns.

To prevent return fraud:

  • Inspect returned items - Conduct thorough inspections of returned items to verify that they are the same products and are in the same condition as when they were delivered.
  • Implement a clear return policy - Implement a clear and transparent return policy that outlines the conditions under which returns are accepted and the process for returning items.
  • Limit the number of returns - Limit the number of returns that a customer can make within a given timeframe to prevent customers from making excessive returns.
  • Verify the customer’s identity - Verify the identity of the customer making the return by requiring identification or checking the shipping address against the billing address on file.
  • Keep detailed records of returns -  Track your returns data, including return reasons and item condition, to track patterns of return fraud and identify suspicious activity.
  • Work with fraud prevention solutions - Work with third-party fraud prevention services that specialize in identifying and preventing return fraud.

By taking these precautions, you can reduce the risk of return fraud and protect yourself against financial losses and a damaged reputation.

It's important to remember that preventing return fraud is an ongoing process, and in order to stay ahead of evolving fraud tactics, keep reviewing and updating your return policy and process.

8. Comply with refund laws

Part of managing eCommerce returns includes making sure you comply with refund laws and regulations that can vary widely depending on the country, state, or region in which your business operates.

For instance, some jurisdictions require businesses to provide customers with a certain minimum return window, or require certain information to be included in return policies.

It's important to understand and comply with refund laws and regulations to avoid potential legal issues and penalties. Non-compliance with refund laws can result in expensive fines, legal action, and reputational damage.

To ensure compliance, research and acquaint yourself with the refund laws and regulations that apply to your business. One way to do this is to consult legal professionals or government agencies that specialize in consumer protection and refund regulations.

Additionally, make sure to regularly review and update your return policy to reflect changes in laws or regulations.

By being transparent and compliant with refund laws and regulations, you can protect your business and your customers while maintaining trust and credibility in the marketplace.

Non-compliance with efficient eCommerce returns can lead to legal repercussions under refund laws, potentially resulting in fines or legal actions against businesses failing to uphold consumer rights and following consumer protection laws. By adhering to refund laws and ensuring seamless returns processes, businesses not only mitigate legal risks but also foster trust and loyalty among their customer base, ultimately contributing to long-term success in the eCommerce landscape.

Streamline your returns process

By implementing these best practices, you can streamline your returns process and provide a positive experience for your customers.

Don't forget that every eCommerce store is different, and your return policy should be tailored to your unique business needs.

With the right approach, you can turn returns into an opportunity to build customer loyalty and improve your bottom line.

If you have any other questions about refunds, returns, or eCommerce, feel free to reach out to the 24/7 SaleHoo support staff and we’ll get back to you right away.


About the author
Rebecca Fox

Rebecca Fox is the Content Marketing Manager at ReturnGO. She is passionate about creating helpful and effective content for eCommerce business owners who want to streamline their returns and exchanges process..

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