April 21, 2021

How to write a great ecommerce returns policy

This blog article is an excerpt from our latest guide, eCommerce Returns 101, which covers the entire process of writing and implementing a great returns policy that converts more customers and keeps them coming back, without breaking the bank. Download your copy for free here.

Writing an ecommerce returns policy that helps you to stand out, converts browsers to customers and still sits within the goals of your company can feel like a daunting task, but it really needn’t be. We’ll take you though some of the basics of drafting an effective returns policy show you why focusing on great returns is an investment in the future. At this stage, it’s probably worth familiarising yourself with a few of your competitors’ policies. So, grab a coffee, have a quick Google and then we’ll dive in…

A clear returns policy reassures and converts

Today’s shoppers are looking for more than just the right product at the right price before they commit to spending their money. Don’t be alarmed, we’re not talking complimentary fruit baskets and foot rubs – they just want to be reassured that your brand values their custom. Achieving this isn’t as cryptic as it might sound. They are simply looking for great service, both at the time of sale and delivery and in the event that they need to make a return. In fact, according to our recent research with YouGov, returns are every bit as important to shoppers as payment and delivery.

So, when a new customer discovers your brand, whether by accident or design, a clear indication of your returns policy may well provide the comfort they need to explore further. Take, for example, a simple Google search for men’s shirts. British menswear brand, T.M. Lewin answer the big questions immediately by addressing price, delivery terms, product guarantee and their generous returns window. They mirror this approach in email campaigns and home page.

It’s a smart move, given that 80% of shoppers check returns policies before making a purchase. And a poor or unclear policy will actively discourage over 50% of shoppers, according to Pitney Bowes.

To free, or not to free?

That is the question. By now you’ve probably noticed that there’s no such thing as a ‘standard’ returns policy and probably the thorniest question to tackle is that of whether to offer free returns. After all, the costs add up and can have a significant impact on your business, and much is made in the media about fraudulent returns and ‘wardrobing’. This being the case, you might wonder why the huge online retailers (such as Amazon) continue to offer no-questions-asked returns? A quick dive into the detail shows that the actual number of fraudulent returns is surprisingly small. Therefore, it makes better financial sense to absorb the cost than to increase vigilance across all customers. That said, they are also incredibly good at managing data, tracking behaviour and blacklisting repeat offenders.

However, some retailers continue to offer free returns only if items are defective or incorrect and charge a shipping fee for those that are unsuitable or unwanted. There’s a phrase that’s sometimes applied to these kinds of returns: ‘buyer’s remorse’ and we find this somewhat unfair to the customer. It cultivates a blame mindset, when shoppers are absolutely entitled to have a change of heart, whatever the reason. There are any number of reasons a customer may wish to make a return and… wait for it… some of them may even be an issue on the part of the retailer. Inherent flaws, inaccurate colour depiction and variable sizing are just a few reasons that a customer might have a very legitimate reason for dissatisfaction. It’s up to you, as a retailer, to harness this information at the point of return. A little food for thought, there.

On brighter matters, there are two very good reasons for offering free returns:

It creates new customers

As we’ve said previously, consider your returns policy as part of your customer acquisition toolkit. It creates a sense of assurance where human-to-human contact doesn’t readily exist. When shoppers see that they have the safety net of being able to return goods for free, as part of a clear returns policy that inspires confidence, they are more likely to reach the checkout.

…and gives them a reason to return

Our research with YouGov also highlighted that 65% of shoppers would reconsider purchasing with a retailer that charged for returns. It not only creates a financial barrier, but a psychological one, as customers factor in the potential cost of returning the item into their spend. If they can potentially save that cost elsewhere, they will. Offering free and easy returns is probably the quietest way into a customer’s heart.

Create the balance that’s right for your business

Begin by having a clear understanding of what value free returns can have to your business. If you’re a young business, scaling up, then it makes a lot of sense to broadcast ‘free returns’ as a way to drive acquisition and nurture retention. However, you might find it prudent to give customers a limited ‘window’ within which returns are free and after which they incur a charge. This means that returns get to you faster and supports swift resale.

When charging for returns, it’s really important to be sensitive to customer perception. Are you asking them to pay for return shipping or return shipping and restocking fees? If your customers get the slightest impression that they’re being charged more than they consider fair, they won’t come back.

Of course, having a clear view of the returns process gives more power to your arm. Digital returns can play an important role when testing strategies and show you precisely what value defined customer segments bring to your business. It can show you which customers should qualify for free returns and even support changes to the way you operate based on seasonal trends and reasons for returns.

How big is your window?

We’ve come to acknowledge that a minimum returns window for unwanted goods is 30 days, with conditions attached, but that’s certainly not the case for all retailers. 60 and even 90 days cause no audible gasps and when the pandemic hit, the rulebook was well and truly shredded. There are, however, some retailers who consistently find themselves given props for their generous returns policies. IKEA’s ‘365 days to change your mind’ is a staple of their brand and sustainable fashion brand Patagonia has received plenty of column inches for having no time limit on returns at all, simply asking that “returns for fit or colour be made in a timely manner and that items be kept in new condition with tags attached”.

One might be forgiven for assuming that a longer returns window will naturally increase the rate of returns by a significant volume, but actually this doesn’t really seem to be the case – after all, if a customer hasn’t made their return within a month, they’re hardly likely to do it after six. While you might see a slight uplift in overall returns and potentially a marginal increase in the age of returned goods, it’s likely to be of negligible concern when compared with the benefits. Overall, a lengthier returns window may actually be a relatively low-impact way to inspire shopper confidence.

Trial and track

Your returns policy isn’t carved into stone and it’s entirely possible, within reason, to trial different approaches, based on what you see your competitors doing and your current conversion and return rates. You might discover that longer returns are more suited to particular kinds of products and price points. The decision is truly in the data, so set your test parameters and determine a returns window that suits both you and your customers. 

The devil is in the detail

A wise person once said, “without clarity, there is chaos” and this is something to keep at front of mind when drafting your returns policy – deciding clearly and precisely what does and does not qualify as an acceptable return (for non-faulty items) and why. Many retailers take the approach that simplicity is best and capture the basics in one statement:

For an exchange or refund, please return your item, unused and undamaged, within 30 days. Please see our list of terms and conditions for items which can only be returned if defective.

These ‘exclusions’ or products unsuitable for return are usually items which are intangible (such as a service, subscription or gift vouchers), personalised, of an intimate/healthcare nature, received in sealed boxes for copyright purposes or likely to deteriorate rapidly (such as fresh foodstuffs). However, all businesses and customers are different, and there are ways to operate returns with this individuality in mind.

A good example of this in action is Amazon, who give certain autonomy and decision-making freedoms to those with customer-facing responsibility. Their automated returns process is incredibly straightforward, but if a customer needs to speak to a representative, they are well-trained and capable of making swift judgement calls around refunds and exchanges on a case-by-case basis. Amazon has taken the stance here that it’s important to prioritise customer experience, as it is likely to pay for itself in ongoing brand loyalty.

This is just one way that you can find an opportunity for a PR win in your humble returns policy. Another example comes from John Lewis in the UK, who include an assurance that they will refund the standard delivery charge if the full order is returned within 14 days. How unexpected! And how welcome! This goes above and beyond the statutory consumer expectations and sits well with the perception of trustworthiness and reliability that the brand enjoys. It’s clear that returns are more than just a physical act, there is also valuable psychology at play. In short, clarity is, of course, really important, but knowing when to flex the rules can be even more so.

Encourage exchanges for maximum value

Wouldn’t it be lovely if every time you issued a refund, the customer simply used it to buy something else from your store? And thus, the idea of ‘store credit’ was born. But unfortunately, it’s not proved particularly popular with shoppers, who dislike the idea of having their cash ‘shackled’ to one place. So, what’s the alternative? Customers feel perfectly happy making exchanges in-store, but the lack of immediacy means that they are often less popular online.

Fashion retailers have long been familiar with the concept of ‘power shoppers’, loyal to the store and with higher long-terms spend, they will shop and exchange frequently in order to get exactly what they want. They’re a valuable customer base, both in terms of financial value, but also brand ambassadorship, sharing their experiences widely among peers and on social media. A slick exchange mechanism is exactly the kind of service that will keep them spending and enabling easy exchanges online is not outside of the realms of possibility. After all, they keep customers’ money within your business, while at the same time creating a positive and shareable shopping experience. It’s worth scrutinising your processes to create a more streamlined way to get exchanges to customers.

And this is where strong data management comes in. A digital returns platform can help you to flag these ‘power shoppers’ quickly and segment them by their value to your business over time. It’s then entirely possible to expedite exchanges exclusively to these customers (that is, send replacements before you’ve even received the initial goods) based on trust, creating an exchange cycle of less than 24 hours.

To sum up, then: your returns process doesn’t have to be hyper-generous, but there’s very few ways to upset your customers quicker than by making them feel punished for returns through extra charges. Free returns are an amazing acquisition and loyalty tool, but they do have a cost, and you should tune your returns proposition accordingly. Above all, having a clear returns policy that’s easy to access and good enough to advertise is crucial for ecommerce success.

Once you’ve written that policy and returns start to come in, the next step is processing.

Download the full copy of eCommerce Returns 101 here.

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