Why is Return Policy Important For E-commerce Business

3PL, Ecommerce, Manufacturing, Retail, Returns Management

Return policy levels the field for e-commerce customers because it assures them that they can make online purchases and try out the products, knowing they can always return them if things don’t work out when running a business online.

This article delves into how the return policy has become a critical tool for e-commerce platforms.

The Background of Return Policy

Before the internet, brick-and-mortar stores reigned supreme.

However, with the advent of the internet, a significant shift occurred, dethroning brick-and-mortar stores and ushering in the era of retail e-commerce sales. This shift towards the provision of services online allowed people and businesses to buy and sell goods through e-commerce platforms.

In physical retail, customers can walk into a store and be sure that what they ordered was what they got. This meant that supply chains just had to ensure the shelves were properly stocked and customers would buy. For fashion and electronic brands, customers could try them out in the store to be sure they had the perfect fit and size or were working as advertised.

However, with the rise of electronic commerce, that was no longer relevant.

Customers could conveniently get these products delivered to their doorstep, but that “check” factor was gone. It is at this point where reverse logistics and returns management become crucial. They enable customers to return products that were not up to their expectations — be it the wrong size, or the wrong order. A whopping 25% of returns are due to wrong products being sent out. But beyond returning the purchased products, customers had to know when, how, and where they could return the products.

The returns policy was developed as a guide for e-commerce platforms to enhance the customer’s online shopping with the reverse logistics process.

Understanding The Nature of E-commerce and Online Retail

In its basic form, ecommerce platforms are online stores or marketplaces that conveniently deliver purchased goods and services to the customer’s doorstep.

The nature of this store means that customers have to go on the internet, visit the platform, pick out what they want, and then pay for it. All through the comfort of their phone or any other electronic device.

However, the customers are making this choice based on the description provided by the ecommerce company. Unfortunately, as most customers have come to realize, those descriptions can be prone to errors. So you have cases of customers ordering one thing and getting something else.

In an ideal world, there is no reason for customers to continue patronizing any e-commerce or mobile commerce platforms if there is no option of a return in case the products do not match.

What is a Return Policy

A return policy is a guide that documents the nature of products that can be returned, how they can be returned, when they can be returned, and what customers must do to return them.

The returns policy may vary between businesses and industries and the type of customers. For instance, the electronics industry will have a different policy template to that of the fashion industry. The returns policy for business-to-business will be different from that of business-to-consumer. General guidelines must be followed when drafting the returns policy. It must have a return window, eligible items for return, return condition, refund nature, and process (could be store credits, cash back, or discounts), and return fees, if any.

The returns policy sets the tone for customers’ engagement with the company’s reverse logistics operations.

Why is The Return Policy Critical To Ecommerce Business

The returns policy serves the customers and the business because it sets the rule for engagement with reverse logistics. That means customers cannot just return any product, and businesses have a streamlined returns management system that allows them to reintegrate returned goods into the supply chain. The following are why the returns policy is so important to e-commerce platforms.

Risk Mitigation For Customers in Online Purchases

The returns policy reduces purchase hesitation for e-commerce customers.

Customers want convenient shopping via online channels, but they are also weary of losing money. That is where the returns policy plays a key role. A well-detailed returns policy will ensure that e-commerce customers know how and when they can return products. This will eliminate some fears, such as wrong product or fit because they know they can always return the product if things do not work out. The returns policy is an effective tool for building trust with customers.

Increases Customer Satisfaction and Customer Loyalty

92% of customers will buy or patronize the e-commerce platform if the returns process is easy.

A well-drafted and positioned returns policy makes it easy for customers to engage in the returns process. It also provides all the necessary information that will enhance transparency in the returns process. Some of this information may include return fees (if any) and how long it will take to resolve the returns process. All these go a long way to eliminating customers’ anxiety with the returns process.

However, beyond the policy, the business has to ensure they keep to their promises on the return policy. These are what increase customer loyalty and satisfaction.

Encourages Experimentation

A detailed returns policy on the e-commerce platform will encourage customers to experiment with other items in the online store.

As mentioned earlier, customers love online retail’s convenient style of shopping, but they do not want to lose money. A well-crafted return policy will encourage them to experiment or try out many other products on the e-commerce sites, knowing they can always return the product if they do not like it. For the business, this could mean more online sales and a boost in revenue.

The trick is to ensure quality products across the board; this way, there will be fewer returns from the “experimentation”.

Fraud Prevention

Unfortunately, the option of returns has exposed many e-commerce platforms and online retail sales to returns fraud.

The return policy can be set up to prevent these by including return requirements such as limits of returns, original packaging, limited window of returns, and, in some cases, fees. When the return policy is well-detailed, it will close up loopholes exploited by fraudsters, thereby giving the business some form of protection.

Optimizes Returns Process

The return policy helps the business or e-commerce site optimize the entire returns process because of the structure it provides.

Through this structure, businesses can streamline the sorting process and coordinate the inventory management process more effectively. Then, there is also improved sustainability practice through proper disposal that doesn’t harm the environment. The returns policy ensures businesses do not have to lose money on damaged goods.

The Role of ReverseLogix in Drafting The Perfect Return Policy

For e-commerce platforms, reverse logistics is the bridge that gets customers over the hump with respect to uncertainties and purchase anxieties they may have.

However, the return policy is the vehicle these customers will often use to get over it. A well-detailed return policy holds a lot of advantages, as detailed in this article, which is why it is vital to get it right. And that is possible with ReverseLogix. Our returns management will streamline returns processing, deepen operational efficiencies, and reduce costs associated with returns using best-in-class reverse logistics management. More importantly, ReverseLogix will help you inform and draft an effective return policy for your customer base.

View our pricing plans or schedule a demo with ReverseLogix.

Frequently Asked Questions

Q1: Can a good return policy really boost sales?

Yes! 67% of customers will check a store’s return policy before buying. Knowing and understanding the returns process helps get many of these customers over the hump.

Q2: What happens if I don’t have a return policy?

Customers may hesitate to buy without a clear return policy, leading to lost sales and low e-commerce transactions. The reverse logistics process may also suffer unnecessary returns and face customer service issues like questions about returning items. All of these can be prevented with a returns policy.

Q3: How can I make my return policy customer-friendly?

Follow these steps to make the return policy more customer-friendly: 
use clear and concise language
offer a reasonable return window
be flexible whenever possible.

Q4: How can returns policies be abused?

Some customers might exploit lenient policies for practices like “wardrobing” (wearing an item and returning it). Restocking fees can deter such behavior.