How to create a (good) return policy to increase your clients’ trust and your sales

Are you someone who doesn’t put much thought into your return policy?
If that’s the case, have a look at the following data published by Business2Community about returns in the e-commerce sector: 

• 67% of shoppers check the return policy page before making a purchase.
• Around 49% of retailers offer free shipping on returns.

Suddenly the topic has piqued your interest, right?
A good return policy (visible, well explained, and strategically made) not only generates trust among your customers, but also, logically, it increases sales.
So pay attention because this post is going to explain everything you need to do to create a good return policy.

What is an e-commerce return policy?

Here we have the definition:

It consists of the terms you establish so that clients can return or exchange a product bought from your shop and with which they are not satisfied.

In every physical shop, buyers can see and touch the product, but that’s not true for online purchases. For that reason, many clients look for shops with simple return conditions for their products.
Returns (also called inverse logistics) can become a nightmare for your business, or… it can be a sales tool when properly managed (and the aim of this post is to teach you how to do just that). 😉

Things to bear in mind to design an impeccable return policy

The first thing you need to know if you have a digital business that sells in the European Union is the following:
According to European law, any sale carried out online can be returned to the e-commerce shop within 14 days; this is what we call right of withdrawal.
And these are the conditions:

• You don’t need any reason or justification.
• You get the full amount refunded (or a voucher for the same amount).
• The reimbursement includes the initial shipping costs, but not the return shipping costs.
• Some goods such as food, software, and customized products are not eligible.

After those 14 days, there are still several reasons why a client may want to exchange a product:

• The product doesn’t match the picture in your online shop: you can avoid this by working on your product cards.
• The product received isn’t the one they bought: you need to optimize the ordering process as well as your stock management to avoid mistakes.
• The sale doesn’t match customer expectations: be honest when describing your products.
• The package is damaged: choose a good logistic company that can guarantee the shipping conditions and that offers good claims management.
• The article is not the right size or model: the textile sector is the one with the most returns (30% of all online sales).

As you can see, there are many factors that can lead to a return and that can be minimized from the e-commerce itself, but others are completely unavoidable because they depend on the customers themselves.
Let’s see what you can take into account to design a return policy that fits your business and your buyer persona.

✅ 1. Calculate your return rate

Once again, the most important thing is to measure and revise the information that you already have.

Depending on your return percentage, you’ll be able to design your conditions without putting your business as risk of collapsing.

We’ll take a closer look at the options later in this post.

✅ 2. Make the return or exchange easy

Don’t hide your return and refund conditions – make them accessible to clients at all times.
This way you’ll increase their trust and their willingness to buy from your shop since you’re easing their buying decision. 
The return policy should be properly written and shown on your homepage. At very least, it needs to be included in the Sales Terms and Conditions or in a specific section for Returns (like the one HP has on their website).

In order to make it really easy:

• Clearly state the address that returned goods should be sent to.
• Provide the shipping label so that they just need to print it.
• Make it clear who is responsible for covering shipping costs.
• No matter who pays for the shipping costs, use a service with a tracking system.
• Specify the time it will take for you to reimburse the money and how it will be done.
• Specify the maximum period of time during which products can be returned. Remember that the minimum is 14 days, but you can extend it for as long as you want to.

Related to that last point, have a look at how Ikea gives you 365 days to return a product.

✅ 3. Optimize your e-commerce customer service

Many returns could be avoided if they were better managed from a customer service point of view.
Customer service is key to increasing engagement and promoting recurring sales, but it’s especially relevant when talking about returns.
You have plenty of options to choose from to establish a communication channel with your clients:

• Phone
• Email
• WhatsApp or Telegram
• Social networks
• Chatbots

The important thing is to empathize with the customer and to keep them updated at all times until the return is completed. This way you avoid having an unhappy client and a “bad experience” – and you create a good opportunity to foster their loyalty.

✅ 4. Provide tools to minimize returns

As we’ve seen, if your business operates in the fashion sector, you’ll probably have more returns. In order to avoid them, there are several apps that allow you to determine your size in different types of e-commerce shops.
And they’re not just for fashion. 😉
The online optical shop Warby Parker has designed an augmented reality app that lets users “try on” different models of glasses before they buy them. It’s just for iPhoneX users (for now).

To develop our new Virtual Try-On tool, we used Apple’s #ARKit and #TrueDepth camera technology, along with our own frame placement and fit system—allowing you to see the color, texture, and size of our glasses using just your #iPhoneX. Give it a try: https://t.co/573lyORJUq pic.twitter.com/HOeMmW7A7X

— Warby Parker (@WarbyParker) February 5, 2019

You can think about creating a similar app if you sell products that can be “tried on” by clients. There’s even one for nail polish!

Different options for your return policy (with examples)

We briefly mentioned it in this post about shipping costs, but now we’re going to go more in depth and talk about the different options that you can offer:

✅  1. Cover the cost of any return

The pioneer was Amazon, though it was just a temporary measure. Nowadays, it only offers free returns for the fashion sector.
And that’s no coincidence: according to a study by IAB Spain 2018, users prefer shopping (for clothes) online because:

• It’s more comfortable and practical.
• They find better offers online.
• It’s easy for them to make their purchase.
• They have access to a wider variety of products.
• They save time.
• It’s cheaper.

Online shoppers are normally people without much free time, who are familiar with technology, and who are used to surfing and comparing.
What’s the result?

Many clothes and shoes buyers purchase lots of products to calmly try them on at home and then return those that they don’t like.

To do so, they look for e-commerce shops with free returns.
In fact, this can be your selling strategy, just as Zalando does by promoting impulse shopping and increasing their average checkout price on each transaction.

As you can see, that’s the foundation of their communication policy. 😉
But that’s not just a feature of the fashion sector; here you have a mattress shop, Emma, which allows you to try a mattress for 100 nights and offers free shipping and returns.

✅  2. The customer covers the return costs

Strictly complying with European law doesn’t mean your e-commerce has to cover those expenses.
This is the alternative for many small online shops that offer an address so that clients can send the products back themselves.
If you choose this option, we recommend requiring a shipping channel with a tracking system so you can make sure the package arrives.
For example, look at the way that La Kaja De Vintage establishes it in their return conditions.

✅  3. Establish a fixed return fee

Toppik is an e-commerce that sells capillary makeup made from organic keratin so that your hair immediately looks like it has more volume.
All the returns have a price of €5.95 (in Spain) and they’re done via their own logistic provider to facilitate the process.
Obviously, they also show the rest of the return conditions on the corresponding page in accordance with the right of withdrawal established by law.

✅  4. The e-commerce sends its own means of transport

Have a look at how PC-Componentes does it:

To make it even easier, they even send the label that the clients need to stick to the package.
This is the most common thing to do, although label-free returns are becoming popular, as Celeritas is already doing with their options for inverse logistics solutions:

• Home pickup
• Drop-off at one of their drop-off points

They replace the label with a digital code that they send to the clients so the process is faster and the customer buying experience is improved.

✅  5. Allow physical returns if you have a physical shop

If clients are near one of your physical shops, they may see your online shop as more “trustworthy” when making a purchase because the return process seems easier.
This is the option offered by Zara Home: you can return a product at any shop so long as you show the digital ticket sent with the product (and you can even show it on your phone).

And an extra detail to increase your clients’ trust: extend the return period to 30 days, twice as long as what is compulsory by law.

Design a good return policy to sell more

Having a good return policy doesn’t mean that your clients will start returning all your products. Quite the opposite, what you do is minimize possible sales objections.
With all the strategies and options explained in this post, you have more than enough information to design a good return policy to generate trust among your customers and, of course, to increase sales. 😉