How to Manage Returns on Shopify

  • Technology
  • April 13, 2020
  • 6 minute read

The average e-commerce returns rate sits much higher than that of physical shopping, at a hefty 30%. How you handle returns, however, can make a huge impact. First and foremost, it’s about having a transparent returns process.

When ordering online, the ability to touch, try, test, or simply get a closer-look at products just isn’t possible until delivery. And even then, it’s not always straightforward — the item isn't how the customer imagined, the colour looks off, it’s faulty. Every e-commerce transaction is, to some extent, a trust exercise between brand and customer. This is why a little reassurance can go a long way...

You’re going to need a watertight returns policy. This acts as a go-to for your customer service team as well as your customers, so it must be black and white about time frames, costs, conditions and any caveats that may negate a full refund. When writing your policy, picture every conceivable (and even inconceivable!) reason for a return, and how your team and brand should react in these instances.

How to write a returns policy:

  • Keep your language simple. Straight to the point and free of any legal jargon.
  • Include any product lifetime guarantees associated with your products.
  • Observe the legal time and conditions per country, as they will differ per territory.
  • Give your customers a reasonable time-frame to return items post-purchase
  • Bring any additional charges, such as return delivery costs to readers’ attention. Don’t forget to detail any items that may qualify for a free return if applicable, such as damaged goods.
  • Stress how late returns may impact the refund process. E.g. if an item is returned later than 14 days, will customers still get a full refund, or a credit note?
  • Outline the expected conditions of returned items, including packaging and labels.
  • If you sell any items that can’t be returned, such as underwear or consumables, highlight these

Returned items - who should foot the bill?

Returns can be a big expense. Reality is: many customers buy online with an explicit plan to then return part (or all) of their order. They order multiple sizes, colourways, outfit choices, unwanted gifts. And the returns process for all these items is a lot more complex than simply popping it back on the shelf — which means more costs: as well as the overheads of returns admin checking/repackaging tasks, you can end up with damaged goods or items lost in transit too. It’s why some smaller bricks stores shy away from selling goods online, and many online merchants up their prices to make up for it.

However, free returns and exchanges have become an expectation, and prove to be the second biggest reason in making customers more likely to shop online. With the likes of ASOS able to offset the cost of delivery and returns using delivery subscriptions (plus the volume of orders and markups), small businesses must make lean decisions when planning their strategy. It might simply be impossible to offer both free postage and returns, for some. There’s no one-size-fits-all. Whichever solution’s best for your business, however, one thing’s for sure: clarity with your customers is key.

The importance of efficient ERP

Another big player in earning customer trust is making sure your back-end operations run without hiccups. Regardless of how slick your front-end is, poorly executed Enterprise Resource Planning (ERP) can simply sink your business. Put simply: ERP is the automation between your front-end store and your accounting and warehousing, but can grow to encompass all elements of a business's day-to-day.

For a small brand, this currently may be a single employee or a set team. But as you grow, you may decide on a custom connection between your accounting software and warehouse, or an out-the-box automation solution, such as Brightpearl. If you’re hoping for fast growth, it’s going to be reliant on this workflow being both robust and uncompromisable. And your customers will notice the difference.

Let’s look at what could happen without one. After a record breaking flash sale, slowly but steadily returns and exchanges begin to mount (along with resource and postage costs). Your customers will only see the small picture: a delay in refund or replacement, a breakdown in communication. Your customer service team will be overwhelmed, trying to locate returns and link up the correct refunds, especially with more complex cases. Slowly, the complaints will start to surface online, and your social media channels will start to see impact… more and more negative comments as customers feel their voices and concerns aren't being heard. What started as a record-breaking win has soon descended into a potentially brand-damaging experience. All that, down to poor returns’ management.

A robust ERP solution, however, can spare you of all this, automating a significant amount of the process. From inventory levels to automatic refunding, each solution has pluses and minuses, and ERP is a complex topic, encompassing pretty much your entire back office.

The simplest advice is to start with growth in mind. If you’re already spending too long on spreadsheets and manual documentation, invest in a scalable solution ready for when your brand hits big time. Already in a steep growth stage? Whilst a period of change might be painful, the cost and time saved can quickly offset initial investment.

Shopify Plus is able to integrate with virtually any ERP solution through the RESTful API. So, if you’re already working successfully with a supplier, their solution can be migrated to Shopify Plus.

RMA solutions such as Return Magic or Returns Manager by Bold can automate processes without the investment into an all-encompassing ERP solution, connected through the Shopify admin panel. From creating a returns portal for your customers and printing prepaid labels, to tracking packages on their way back to the warehouse, returns management solutions can free up valuable time and provide essential data when trying to prevent future returns.

Ultimately, this data can be used to save your business money in the future. By highlighting commonly returned items for a frequently returned reason, you’ll be able to identify patterns, and possible faults. For example, if one jumper’s continually returned with a poor fit reason code, it could be that the size guide or product description isn’t inaccurate. Identifying problematic trends like this helps brands minimise revenue loss during the returns process.

With average e-commerce returns rates so high, brands must create an efficient returns management process. Regardless if you choose to purchase a full ERP solution or a simpler bolt-on, investment in your back office will allow you to spend time on what matters: growing your brand.


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