A retail transaction doesn’t always end when the customer receives the product they’ve purchased: Approximately 9% of purchases from a physical retail shop result in returns, and that percentage is tripled when it comes to e-commerce retailers with a return rate of around 30%. 

Retailers should not only prepare for the possibility of returns, but should expect them as a regular part of doing business. Part of the necessary preparation involves creating an effective return policy, which is essential to a good business model and keeping customer retention rates high for brick-and-mortar and e-commerce retailers alike.

Return policies should be organized and written in a way that positively represents your company policies and connects with your customers. When a customer knows that they can easily and quickly return or exchange their product under the right circumstances, they’ll also develop more trust and loyalty for your store. 

Here are some tips for creating an effective return policy, whether you run an e-commerce business or a brick-and-mortar retail shop.

When writing a return policy, be clear and to the point. Write how you would speak, in a way that’s casual and easy to understand  — not in a way that intimidates or confuses the customer. You want your return policy to give customers confidence and reassurance about your business.

Promote your return policy so that it’s easy to find, either in store or online. For e-commerce retailers, make your policy easy to find on your website and in any emails that are sent after a purchase. You can also include your policy on the receipt in the box you ship the item in. 

Don’t bury your return policy in your website’s footer, and use a font that is easy to read and is visible to your customer.

If you run a physical shop, post your return policy throughout the store, including by the register and on paper receipts. You can even give a quick rundown of the policy when a customer is at the register making a purchase.

[Related: How to Handle Post-Holiday Returns]

If you don’t specify the time frame in which your company accepts returns and exchanges, you’ll have people trying to return things months down the line. You could suffer financial losses if you accept items that are no longer in season or, alternatively, gain some unhappy customers if you refuse to accept their returns.

Avoid these potential issues by clearly disclosing your time period for returns and exchanges. The typical return period is 30 to 60 days after a purchase (or receipt of a purchase for online shoppers).  

Define the condition the returned product needs to be in when returned, whether that means it’s returned in an unopened package, with original tags, not used outdoors, or any other guidelines your company deems appropriate.

Defining the accepted condition is important so that you don’t receive a large amount of very used or damaged products that cannot be resold.

[Related: Common Reasons for Delayed Deliveries]

Make a choice when it comes to issuing refunds. Will you be giving the customer in-store credit or a full refund via the method of original payment? 

If you’re offering both, be clear on the exact circumstances for either. For example, if someone is returning a product and they have the receipt and the credit card it was purchased on, you could easily issue a monetary refund onto their card.

If they are returning something without a receipt, however, a store credit could be more manageable. Oftentimes, store credit will encourage shoppers to buy more and can be better for a company’s reputation than not accepting returns at all.

If a customer purchases something from an e-commerce business and needs to return it, they can easily find the transaction information online. For a purchase at a brick-and-mortar shop, receipts aren’t as intrinsically linked. 

If you run a physical store, you may need to require receipts with returns in order to prevent fraud or store loss.

A 2017 survey from National Retail Federation states that returns without a receipt make up around 16% of all returns, and about 16% of those returns are fraudulent. Requiring a receipt as proof of purchase can eliminate any problems as well as provide you with the necessary transaction information.

[Related: Guide to Reverse Logistics]

If a customer wants to return something they bought online, they won’t be thrilled to learn that they have to pay to ship it back for their refund.

Be clear on who is going to cover return shipping for e-commerce returns, and know that customers will be more likely to continue shopping at your company if online exchanges and returns are inexpensive, quick, and easy. For 34% of customers, this means including a prepaid return shipping label in the box.

Some retailers with both a physical and e-commerce platform will even integrate their returns in-store. This means that people can buy merchandise online and conveniently return unwanted items in-store.

If your store does not have a physical storefront, consider integrating with return service provider programs such as Happy Returns, which works with local brick-and-mortar retailers and operates as a return point for a variety of e-commerce vendors (such as Rothy’s, Carbon38, and more).

Customers may want to return an item for a variety of reasons, from ordering a wrong product to receiving something as a gift that just doesn’t work out. By having a clear and effective return policy, you are committing to excellent customer service and satisfaction, while saving everyone time and money. 

Of course, a return policy is just one component of reverse logistics, a solution that’s crucial to reducing costs associated with returns and ensuring customer satisfaction. For businesses that prefer to focus their attention elsewhere, Hollingsworth provides comprehensive reverse logistics services, including return management, inventory control, and repackaging. Outsourcing reverse logistics gives companies access to more expedient shipping, error-eliminating technology, and superior tracking capabilities for logistics.

Need assistance in configuring the best reverse logistics plan for your business? Contact Hollingsworth today.