A Hassle-Free Return Policy is the Best Policy for Online Merchants

Tips to create a return policy that will provide a good customer experience without losing your small business Web shop profits.

With holiday purchases come returns, and ecommerce site owners need to be prepared for customers who want to return or exchange an item after the holidays.

According to ConsumerWorld, the National Retail Federation estimates that 83 percent of stores are keeping return policies the same this year and that 13 percent will tighten policies. The report also notes that many stores continue to "slice and dice" their return policies, creating complicated rules for different categories of items. 

Hassle-Free Returns are Good for Small Business

As big brands tighten and adjust policies, consumers have fewer options to return unwanted items. That leaves room for confusion. For example, Amazon.com has pages of return policies, filled with refund calculators and specific rules to follow depending on the type of item purchased.

Customer loyalty comes from providing a good experience for the customer during all interactions with your business. As an online merchant, you can provide a simple but clear return policy that will improve customer experience and make customers feel secure when making a purchase from your online store.

When it comes to refunds and returns, online merchants might think they see dollar signs going down the drain, but returns shouldn't be a negative experience for you -- or your customer.

Alternative Options to Offering Free Shipping on Returns

It's not as easy for smaller merchants and online Web shop owners to offer free shipping on returns as it might be for a larger online retailer. Zappos, for example, offers free shipping on purchases and returns. The company provides a full refund or exchange within 365 days of purchase if it is unworn (unless defective) and shipped in the original packaging.

That's a great return policy to offer customers, but keep in mind that larger retailers have higher sales volume and larger order values that will help to offset the cost of returns.

Kendal Perez, a representative of FreeShipping.org said that small businesses have to first look at the numbers to ensure its return policy is positive for the customer and yet still profitable for the business.

It's not easy or profitable for a small business to offer free return shipping like Zappos does, but there are other options. For example, try free shipping on returns based on a minimum-order value.

"You can protect yourself with something like free return shipping on a minimum $100 order. People would get free return shipping if they send back one of the items they purchased, and you know you have that larger order to cover the cost," explained Perez.

If you also own a retail stores you can encourage customers to return items to your brick-and-mortar store at no charge, something that even large retailers do.

If that isn't an option for your business, you could offer free return shipping during your high-volume sales periods, like Christmas and other holidays, as a promotional offer. Customers who purchase during a set period of time -- up to December 24th, for example -- would qualify for free shipping on any returns.

Offer a Clear and Simple Return Policy

Consumers want to feel secure when ordering online, but the biggest question a consumer might have is "What if I don't like it and want to return it?"

Perez said that consumers want a hassle-free return, and they want to know the rules before they place an order. The key for small business owners is in making the rules and requirements for returns known and clear so customers won't have any surprises.

"You want to make sure that the information consumers need is easily accessible, so they can find it quickly," she said.

For a smaller online retailer, a return policy with pages of information will likely confuse and irritate your shoppers, but offerings helpful pages, such as a printable shipping label or an online form to start the return process will help make your return policy a hassle-free process for customers.

One important bit of detail to include in a return policy is the time period people have to return an item. Perez says that a 14-day return window is very slim and the expectation for both brick-and-mortar stores and online stores is that you have a month to return and item. She said that if you can offer your customers a 60 or 90-day return window, that's even better.

Some types of return policies do not benefit the consumer. A common scenario, on computer and electronics sites is when the retailer charges a fee to return the item. It's usually called a "restocking fee" but basically the consumer is being asked to pays extra to return an item.

Perez recommends that small business owners do their research to learn what others are doing as they formulate the language and rules for an online purchase return policy. "Seeing what other small businesses in the same industries are doing for return policies -- and then offering consumers something similar or possibly better will elevate you in the mind of a consumer," she said.

Vangie Beal is a veteran online seller and frequent contributor to ECommerce-Guide.com. She is also managing editor of Webopedia.com. You can tweet with her online @AuroraGG.

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