Returns and refunds are an acceptable part of retail business whether you are selling online or selling via a physical store. As a matter of fact, they have formed part of most retail businesses strategy and this for a good reason. Customers are very hard to please and returns and refunds are just another way to keep customers happy if you are running a retail business more so if you are a dropshipping online store. But how do you implement this very important strategy without running your dropshipping business aground? This is just what we will detail in this article so you can offer returns and refunds and stay even more profitable.
Product returns can have serious impact on your net profit margin if you are running a dropshipping business when you consider the total cost of the product in addition to the cost of shipping the returned product. However, if you choose not to implement a return for your online store this can also affect sales not to mention the poor reputation that it can cause your store as the stats suggest.
According to The National Retail Federation returns in US for goods sold through online channels was more than 30 percent amounting to over 101 billion USD. This is a nightmare of a development for all online retail businesses selling physical goods and especially if dropshipping model is being adopted.
So, as a dropshipping business selling online how do you respond to this? For the brick-and-mortar retail business model, most businesses are responding by hiring more people, expanding warehouse space, and creating specialized divisions to handle reverse logistics as they have come to realize this is a long-term concern because returns and refunds have become the new normal, and they make for a very important part of the retail business experience.
For solely online retail businesses there’s more that can be done to offer customers a superb shopping experience while at the same time reducing the abuse of returns and refunds by customers. Legacy ecommerce business models will have to manage this both ways; strengthen their logistics operations and processes as well as enact return policies to keep things in check. For new models like dropshipping it can get even trickier giving that the dropshipping model relies on third party services for most part of its operation, from product sourcing to order fulfillment and all after sales services involved.
Giving the nature of the dropshipping business model dropshippers will have to rely on putting together a good return policy for their online store and communicate this in a smart way to customers and potential customers. That way your dropshipping store is seen as customer-friendly and legit giving your business the reputation it needs to succeed in the very competitive space of dropshipping plus ensuring your net margins is not in threat from customers looking to abuse returns and refunds privileges. Let’s explore further on this concept of product returns policy so you understand what it means for you and your online store.
What is a return policy in retail?
A return policy refers to rules a retailer defines detailing the manner and conditions for which the retailer is going to accept returns, refunds and exchange of unwanted items from customers. It covers information on what customers can expect and how they should go about requesting a refund or exchange. Basically, a return policy helps protect your dropshipping business against abuse of return privileges, incorrect returns and credit card chargebacks that could result in financial loss to your business. It also serves as a guideline that ensures that both you and your customers follow a consistent method throughout the return process. When it comes to return policies, it’s important to strike a balance between keeping your firm from being overly harmed by returns and keeping your customers happy at the same time which is why returns, refunds and exchanges can be a tricky business for any online retailer.
When putting together a return policy for your online store you will need to think through some of the reasons why customers seek returns. This will help you understand better what you need to include in your returns policy and how to present it. Some of the common reasons why customers make returns include;
Unwanted gifts and holiday items – According to statistics holiday season purchases account for almost 40 percent of returns made by customers every year. The reason for this is because of the gifting culture that has become part and parcel of these seasons. People generally scarcely know each other very well but somehow, we all often find ourselves needing to surprise a friend or family member with gifts during holiday seasons as we prepare to share good moments together. Well, this very gift shopping spree period leave retailers with millions of returns to deal with and cost businesses hundreds of millions in turn. So, during the holiday seasons you should expect that some of the sales you are making will end up in returns and for the sake of dispute mitigation you might want to double check on your product information and make your return policy visible throughout your online store and especially your checkout page.
Wrong product or size ordered – This is a very common reason customers return products they shop online. You find customers who from time to time make a wrong choice for size or order the wrong product per the specifications they really want. However, you still find stores who make mistakes with their products listing and list wrong size to an SKU. With dropshipping stores wrong size is often a common issue that results in returns and refund. It is very important to bear in mind the size chart differences for different countries and regions and present your size chart with great detail in order to avoid product returns nightmare.
Wrong product shipped – This is very common mistake with dropshippers working without a professional dropshipping supplier company or agency, or say dropshippers using AliExpress to dropship. When this happens, you will have to bear all the cost in order to safeguard the reputation of your store and with AliExpress you will be dealing with a very long return period for the product. The advantages of working with a dropshipping supplier in this case is that you have a better quality control with the order picking process. That way these mistakes are avoided or at least limited to a great degree. Also With professional dropshipping suppliers returns and exchanges are faster and easily managed as they offer way better after sales services compared to suppliers on AliExpress.
Product not matching description on your online store catalogue – This will result in a definite return and on top of that a bad reputation for any dropshipping store. It is very commonplace that some dropshippers do not follow the recommended best practice of ordering a trial product before listing the product on their store. Listing unverified products from AliExpress for example is a guaranteed way of having a return and refund request from your customers. Employ good quality pictures and show clearly the product features so that your customers know exactly what they are paying money for
Product no longer needed – Another reason why people make returns is with the case change in mind for the product they once desired to have. In this case there’s little you can do as a dropshipping business with this unfavourable customer behaviour. However, putting a timeline to returns can help reduce this occurrence in your retail business. A customer may be affected by new circumstances where they therefor don’t see a need of having a product they just ordered from your online store and therefore choose to return it. You can decide to use this to promote your customer satisfaction strategy by requesting the customer to leave positive feedback on their return experience.
Customer unfamiliar with the product – There are also occasions where a customer finds a product they fancy on your store with written description and they make a quick purchase only to find that they are unable to setup or use the product effectively resulting in their desire to return the product. As a dropshipping store you can prevent this from happening by creating a how to videos for your product or including video links that rightly explain how to use the product.
Wardrobing – You will find customers who come to shop on your online store with the intention to use the product once or twice then return them afterwards, or those who are just shopping the product to figure out something and return the product when they are done. This is a common abusive act especially with fashion goods popularly known as wardrobing. Because there is no way to decipher a customer’s buying intentions, wardrobing is something that is difficult to manage. Following a hard-line return policy will solve this of course but it will also affect other customers with genuine reasons for returns.
Writing and presenting good return policy
When writing a return policy, apart from key things that should be included which we will state in a bit, the presentation is also as important as well. You want to use a tone that is friendly enough not to scare your customers away when they read your return policy, but at the same time you want to make them know that it is a serious part of your business rules of engagement if we must call it that. Clear understandable terms should be used in the language of your target market. Some stores provide this in English and couple of other languages when they are selling in multiple regions.
Avoid the temptation of copying and pasting another store’s return policy as they may not align well with your dropshipping business strategy and goals. Consider your overall business plan and then adopt a return policy that matches them.
Clearly outline what should be expected by customers seeking return. Here you should decide what customers get back when they seek a return; will this be only replacement of the product purchased, will it be an outright refund when the customer returns the product to you and you have confirmed it is all in good condition? Remember this choice have to align properly to your business goals as not to cause your business unbearable loss.
State your expectations from the customer so they know what they need to comply with so as to have a smooth return experience. In clear terms let your customers know the procedures to follow to get their return or exchange or refund. If you require them to use your packaging or include the order slip this must be clearly stated to them as well. The time frame that the return request must be made and the time from that the product must be received in order to honour their request should be clearly communicated.
The cost of the return is of key importance to you as well as to your customers. It must be clearly stated in your return policy who is the customer is to bear the cost or part of the cost for shipping or if you will be bearing all the cost of shipping for the return. Here you can set rules whereby if an error resulting in the need for return is caused by your dropshipping store you can bear all the shipping cost for the return but if it is the other way around then the customer will burden the full cost for the reverse logistics.
Finally keep customers informed on the status of their return. This is something that customers appreciate very much and it can go a long way to raise the reputation of your dropshipping store. Let customers know through emails that you have received their return request and update them in a timely manner on when the exchanged product will get to them in a situation where they have requested an exchange.
Returns for online stores are inevitable but they can be well managed. You stand a better chance of executing your returns with almost zero stress on you and your margins when you work in partnership with a professional dropshipping supplier no matter where your market is located. it will save you cost, time and provide you with all the tools necessary to manage returns like a big ecommerce player. Your customer service should be such that its simple for customers to find and understand your return policy. Customers who need to return an item should have very few hurdles to deal with in doing so. Always think of the advantages of a customer-first return policy, as well as the costs associated with such a strategy.