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How To Create A Successful Return Policy That Encourages Repeat Customers

Returns account for a solid 8 percent of sales, yet many eCommerce retailers don’t always acknowledge the impact of returns on their operations and, ultimately, the customer experience. Without a solid process for returns management, brands risk upsetting customers and losing their valuable business and loyalty moving forward.

What to Consider with Your Return Policy

Here is what you need to consider as you define your return policy:

  1. Ease of return: Making returns easy for customers isn’t always prioritized. Returns can be a burden on operations and therefore you must decide what level of service they are willing to provide to customers who do not wish to keep their merchandise. There are several different variables to consider when designing a return policy. Including a physical return label or sending a download link for the shopper to print out the label themselves facilitates the most seamless return for the shopper. Some brands who make the long-term investment in customer loyalty even allow customers to hang on to their merchandise while still offering a refund. Others prefer to make it a little more difficult by requiring shoppers to ship the merchandise at their own expense.
  2. Time to Acknowledge: What will the timeline of your returns policy look like? Will your customer get their money back as soon as they indicate they need a return or as soon as the item is received and deemed restockable? Or will you even issue money back at all? Some retailers opt for only issuing store credit and some, like Modcloth, even provide the customer with options of how they’d like their money back, incentivizing the option of store credit by adding a bonus for choosing it. Will you charge them a fee for restocking or refurbishment? All these details should be approved by a brand’s legal team and then made crystal clear to your customers who should be aware of their options before they feel wronged.
  3. Cost of Disposal: Not all returns to the fulfillment center equal a loss in valuable inventory and substantial potential profit. If handling that inventory correctly, it’s possible to refurbish and restock those returned items with minimal damage so that they can be resold on the original channels. No matter the state of the return, it’s beneficial to have a process in place for what to do when a return comes in. The more people who have to get involved, the more costly the process is.

Optimizing Returns

In the best case scenario, returns are restock-ready and the fulfillment partner can update your inventory management system and put the inventory back on the shelf. Some merchandise might be in need of refurbishing, which may take cleaning or repairing on the fulfillment partner’s end before putting back on the shelf. When merchandise comes back in not-so-great shape, however, discarding may be warranted. In these scenarios, it’s important to record these items carefully in order to make sure your warehouse management (WMS) and inventory management systems are updated. Always keep a record of the type of returns that your customers are making so that you can use these insights as you make future product-focused decisions.

For more tips on how to develop the right return policy for your brand, download our tip sheet here.

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