Beware Your E-Commerce Return Policy
For the thousands of remote workers launching e-commerce Websites to monetize their hobbies, build a side hustle or start entirely new careers, writing a return policy typically ranks far at the bottom of the to do list as barely an afterthought, if it even makes the list. Big companies like Amazon.com can absorb returned items without much consequence, both financially and physically via its retail bricks and mortar partners. But for small businesses on Shopify, Squarespace, Wix or another e-commerce platform, every sale calls for a celebration and every return a funeral.
Small businesses simply cannot absorb a significant number of returns. They typically lack the staff to manage the process with any efficiency from communicating with the customer and providing return authorization forms to physically restocking and updating inventory, plus accounting for any refunds or credits. It isn't just the loss of the sale that hurts. In most cases, the revenue has already worked its way through the company and has been used to pay vendors, taxes or payroll so providing a refund feels much more painful. And given tight cash flows, a full refund on a nice sale might require the owner to forego salary for a month. It's clear that returns must be avoided wherever possible.
Of course, in cases of a defective product or where a warranty applies, returns need to be accepted. To avoid the energy drain from these returns, start by sourcing and selling only high quality products. Not only does this prevent warranty claims, it promotes customer satisfaction, loyalty, repeat purchasing, and word of mouth marketing.
But in the fearful, uncertain business climate the government has created and imposed upon us, some people may decide to cancel orders or return products that are not defective, having shelved new product launches or halted an expansion, for example, or merely thinking the value of the cash has become higher than the value of the product. Wal-Mart may accept almost anything on the day after Christmas but small businesses cannot survive like this. In 2018, $22.6 billion of returns were labeled fraud or policy abuse by the National Retail Federation. It's vital to protect your e-commerce business from these returns by posting a formal, ironclad return policy on the Website.
The online shopping return policy needs to be written to appear as accommodating and forthcoming as possible in plain language to help move prospects towards the sale. However, it also needs to be firm. A 10-day or 30-day deadline provided the original packaging remains intact works for many companies. The policy may differ from one company to the next based on the product. No one expects to be able to return worn underwear, for example, but given Amazon's willingness to accept almost anything returned, consumers have begun to expect this wide latitude in returns from every e-commerce retailer, whether direct to consumer or B2B. Offer a full refund or just store credit? Free shipping on returns? Every company needs to consider the balance between scaring away sales with an onerous returns policy and minimizing the high cost of returns.
To reinforce the policy beyond the Website, it may be repeated in the email order notification, in the email shipping confirmation and again as a printed piece sent with the order. This multi-level series of alerts helps deter people from demanding a return beyond the deadline and provides backup in writing for the store owners considering whether to refuse or accommodate a return request. Of course, any part of a strict return policy can always be waived on a case by case basis. But a written policy establishing the terms and conditions sets clear expectations and provides protection against online shoppers considering return policy abuse at your expense. And don't forget to closely monitor all appropriate social media platforms to quickly address any complaint before it can spread out of control.
For guidance on crafting an e-commerce return policy, call epr at 908-479-4231 or firstname.lastname@example.org.