How to make a winning ecommerce return policy: best practices and examples

Article detail for Actionable insights for your store:

When you’re thinking about conversion rate optimization, returns probably aren’t the first thing to pop into your mind.

But they should be.

Here’s why: returns are an essential component for any ecommerce retailer. Whether you like it or not, your return policy directly impacts sales. In fact, an inconvenient return policy deters 80% of shoppers from making a purchase at your store.

The rise in ecommerce shopping over the past few years has made returns more common than ever. While the brick-and-mortar return rate hovers around 9%, the average ecommerce return rate is more than double that at 20%. And during the holidays, returns surge up to 30%, or even as high as 50% depending on the industry.

The truth is, the cost of a bad ecommerce returns policy can be substantial. As a merchant, one of your key challenges is to find the balance between offering a customer-friendly return policy and limiting your exposure to handling costs from a profitability perspective.

While returns can feel painful to merchants, there are still opportunities to win the hearts of your customers and bring them back for future purchases. 

Let’s dive into exactly how you can do that with a few return policy best practices.

Quick overview: What’s an ecommerce return policy?

Simply, a return and exchange policy is a set of rules on how customers can return or exchange unwanted or defective products that they purchased from a business. 

Every company’s return policy will be different, but common information you’ll see is what can be returned, the timeline the customer has to return it, how they should return it, and how they will be refunded. 

Why is it important? Because 60% of customers include looking at a brand's return policy as part of their purchase decision, according to V12. So write it well, make it detailed, and make it discoverable.

Information to include in your return and refund policy

A return policy is a fine balancing act: it needs to be lenient enough to encourage visitors to buy, but it needs enough limitations so customers won’t take advantage of it.

No matter what, you’ll want a policy that’s transparent and flexible. Customers hate hidden fees and will abandon their purchases if they find them.

Reasons for Cart Abandonment

Remember, for online shoppers a return policy is also their insurance policy. A good policy encourages conversions while also fostering customer loyalty. This is why 92% of customers are more likely to buy from the store again if returns are easy.

If you’re struggling to determine the best policy for your business, a good place to start is with Shopify’s handy return policy template. You can easily adjust it to fit your needs.

Where to place your return policy on your online store

There are several best practices on where you should share your return policy. 

Some businesses make the mistake of hiding it in difficult places for the customer to find, which only hurts your business in the long run because it feels disingenuous to customers. (Not to mention, there’s a legal requirement for return policies to be easily accessible on online stores.) 

The hard truth is, you will get returns. It’s natural for every brand. So make the experience easy for customers to find the information they need to properly return an item. 

Here are a few places you should highlight your return policy:

  • Create a specific page on your website with FAQs and information about your return policy. Put a link to this page in your footer.
  • Include it on your product pages and in your product descriptions, so customers don’t have to exit the page on a product they’re interested in just to find it.
  • Add it in your emails (like your welcome flow or cart abandonment flows) to make customers aware before they even decide to purchase. 
  • Put it on your cart and checkout page so customers don’t abandon their cart trying to find it.
  • Add it near the end of your homepage, so as customers scroll down they learn about your return policy.
  • If your offer is amazing (e.g. Free Shipping & Returns), promote it with a banner.
  • Consider placing next to the add-to-cart button, and/or the checkout button.

Tip: If there are items where your return policy is different (because of a promotion, for example), you must make that clear to customers. Here’s an example from American Tall, stating clearly on the PDP that there are no returns because the item is on sale.

Screenshot of American Tall's product page on a pair of dark jeans that are on sale

What causes returns in the first place? 

Since shoppers don’t have the luxury of trying on items or seeing them in person prior to purchasing, they buy blindly knowing a liberal return policy will save them.

That being said, even the most descriptive product pages can’t stop returns from happening. And here are some of the most common reasons consumers might return a product:

  • Size: Merchants in the apparel industry feel the most pain here: up to 40% of shoppers send back an item simply because it wasn’t the right size.
  • Damages and Defects: Up to 20% of returns are due to damaged goods. And even if the items are in tip-top shape, customers may not be impressed with the quality of the product once it arrives at their doorstep.
  • Product Images: Photography plays a huge role in the conversion process and images can be misleading if done poorly. According to this study, 22% of returns are due to an item appearing differently in person than it does in a picture.
  • Mis-shipments: Mistakes happen, and at a high cost to merchants: an alarming 23% of customers are shipped the wrong item.

Furthermore, returns may be amplified by the rise of mobile buying. A poor mobile user experience makes it more difficult to see product photos and descriptions in detail.

10 best practices with your returns and exchanges

Every return policy will differ from brand to brand—as it should. The products you sell and your customers are different, meaning your policy needs to be customized to how your online store operates. 

However, there are still best practices that every brand should keep in mind, including the following:

1. Take a peek at your competitors

Approach your return policy the same way you would approach any promotional offer: look at what your competitors are doing.

Do they offer full refunds or store credit? Do they offer free return shipping? How many days do customers have to return a purchase? If your competitors offer lenient return policies, chances are a strict policy on your end will hurt your business.

2. Set clear guidelines and expectations 

Now that you’ve tackled what your return policy should include, you’ll need to write it out and structure it in a way that makes sense for shoppers. 

Two words of advice when it comes to this phase: details matter.

Be as concise and clear as you can. Use plain language, call attention to any important dates, and be sure to include any special requirements (e.g. proof of purchase).

American Tall’s policy is written clearly on its product page. Using a drop-down menu, customers can see the return policy information related to their country.

Screen recording showing American Tall's return policy on their product page3. Offer free returns

The pricing of a return can be a real turn-off for customers, especially if they're paying for pricey shipping fees just to give back an item that didn't turn out to be what they wanted.

Remember, customers love the word free. And store owners are listening: around half of online stores now offer free return shipping.

Studies show that 66% of online shoppers will review a store’s returns and refunds policy before deciding on a purchase. Of that number, 81% will only go ahead with the purchase if the store offers free returns.

Although you might cringe at the thought of adding another cost to your business, think about the benefits:

A $10 return shipping cost to you might make the difference between a one-time purchaser and a lifetime customer.

The value of a lifetime customer is worth much more than a $10 shipping cost—especially for small businesses.

Bonus: Offer to send customers a return shipping label to make it even easier for them.

4. Be flexible

Strict return policies have been shown to harm net sales, rather than encourage them. Stores with a strict policy show almost a 9% reduction in sales compared to stores with more lenient return policies.

So what’s the takeaway? Customer-friendly return policies encourage store conversions, especially at higher price points. So be flexible, be helpful, and make sure that offering your customers a good experience is your top priority.

5. Provide great customer service

A customer-friendly return policy is part of a great customer service experience. If you make returns easy, you’re likely to benefit from it.

One benefit to having a clear return policy is that it reduces the number of support questions you get about returns because customers won’t need to rely on your reps to figure out how to do it. 

But even if customers do need to reach out to your customer service team, be kind and make their experience easy. The same rule applies to customer service—a bad experience can ruin a relationship forever. 

Customers appreciate good customer service, and they are more likely to leave a review when they’ve had an awesome experience with your store. Plus, as we mentioned earlier, 92% of customers are likely to buy from the store again if returns are easy.

6. Play the automation game with your returns process

There’s no getting around it: returns drain resources.

One of the best ways to handle product returns is by automating your returns order fulfillment process. It helps free up your valuable time, so you can focus on other areas of your business.

Here are a few ways to automate returns:

  • Make it easy for customers to request a refund without contacting customer support.
  • Send emails to your customers with status updates. when an item is received, when a refund has been issued, or when a new item has been shipped (bonus points if you give them a tracking number).

These can easily be done with the help of an app. 

For merchants on Shopify, a leading app in this space is Return Magic. This app has a lot of useful features, including multiple refund methods, advanced reporting, and automation for return labels and emails.

7. Be empathetic toward customers

Returns can start as a negative customer experience, but you can easily use them as an opportunity to encourage customers to shop with you again!

Try sending an automated email 72 hours after a return; express your apologies and offer them a discount on another purchase. This is a nice touch that shows you care, while also encouraging them to buy again.

Remember, just because a customer didn’t like one item doesn’t mean they won’t buy another!

8. Make it easily discoverable 

Your store’s return policy must be easy to find so visitors are aware of their options. Reinforcing the message throughout the shopping journey gives peace of mind to customers—and it doesn’t make them have to work hard to find the info they need to get to the decision stage.

Linjer and Right Channel Radios both showcase their Return Policies on product pages: 

Linjer Return Policy

right channel radios return policy

9. Monitor your metrics

Finally, make sure you monitor your data to gauge how the updated return policy is impacting your ecommerce business.

Below are a few key metrics to look at:

  • Conversion Rate
  • Return Rate
  • Average Cart Size
  • Customer Service contacts
  • Qualitative customer feedback

It’ll take some testing to see what works. Keep an eye on the numbers, and it’ll help inform future policy adjustments.

10. Update it for the holidays

Holiday shopping now starts as early as November 1, and you’ll need to reassess your return policy to account for gifts.

Keep in mind more than a third of consumers who first shop on an ecommerce site during the holidays will make a repeat purchase within the same season, so converting those visitors is important. 

A temporary holiday return policy adjustment (such as an extended return window) will help reduce frustration and provide the assurance a shopper needs to make the purchase.

January is the peak season for returns, but your holiday return strategy needs to start as soon as your holiday shopping promotions begin.

Here are a few ways to prepare your policy for the holidays:

  • Extend your return deadline, so customers have enough time after Christmas to return gifts. Consider setting a standard date, like January 31st (at the earliest), so customers have time after Christmas to return items.
  • Make your policy specific to purchases made within a given timeframe, such as Nov. 1 to Dec. 25.
  • Consider offering instant refunds, store credit, or automated real-time exchanges to retain that customer’s business.

It’s also important to inform your customer service lead of any policy changes so they’re prepared to answer customers’ questions.

3 ways online retailers can make returns more profitable

Not every return has to mean money lost. While customers are giving an item back and likely expecting a refund, a return is your opportunity to engage with customers in a way that they leave feeling satisfied and interested in purchasing from you again.

Let’s check out three ways to make returns more profitable for your business.

1. Promote your exchange policy to give customers a choice

There are various reasons why a customer may request a return, and some of them can easily be treated with an exchange instead. Incorrect sizing and color preferences are a good case for the customer to simply exchange the item rather than request a full refund.

Include information about exchanges (if you offer them) with your return policy. You need to make sure customers know that it exists and how it works, so they don’t automatically apply for a refund instead. 

2. Create a custom email or SMS flow to engage customers after the return

Just because a customer made a return doesn’t mean your relationship with them met its end. In fact, there’s a 64% chance that customers may make another purchase after they’ve returned something—but that’s if your return experience is a good one. 

If you continue to offer great customer service and share valuable content, there’s a chance they’ll come back for a future purchase. After a customer requests a return, put them in a custom email or SMS flow to follow up with them about the experience. 

In 3-4 parts, update customers about their return/exchange so they know when they can expect their refund, thank the customer for shopping with you in the first place, share a survey to collect feedback about the experience, and upsell other items that may be better suited for the customer.

3. Make it easy to return so customers are confident to buy from you again

One of the best ways to make a profit from your online returns is to make the experience so good that customers come back in the future. But the truth is one bad experience can ruin your relationship with customers for good. 

47% of customers will actually switch to a different brand because of a bad customer experience, according to Microsoft

So what should you do? Help customers return their items so it's as easy as possible to do so.  Those customers won’t be scared to purchase from you again, knowing they can trust your returns process will be easy in the future too.

Return policy examples from ecommerce stores

1. Velour Lashes

Velour Lashes communicates its return policy at every step of the shopping journey. Their choice of words, “The Velour Promise”  evokes emotion and fosters a sense of trust for customers.

Screenshot of Velour Lashes product page that highlights its return policy

Once visitors reach the checkout page, the policy is clearly stated right above the order summary.

Screenshot of Velour Lashes' product page that highlights its return policy2. Cocokind

Knowing that every skin type is unique, Cocokind offers a flexible return policy giving full refunds within 30 days of delivery. They also use returns as an opportunity for feedback and ask customers to let them know how they can improve their products.

Screenshot of Cocokind's return policy3. Supply

On every web page, Supply has a content block above its footer that shares its shipping policy and warranty guarantee, making it extremely easy for customers to find information about it no matter what page they’re on.

Screenshot of Supply's content block that shares its returns policy

Additionally, their dedicated page is an example of a great return policy. With a COVID-19 update, a clear section for U.S. shoppers and international shoppers, and customs information, they’re leaving no stone unturned. 

Customers are bound to find what they need on a page like this:

Video of Supply's return policy page

A good returns policy = happy customers

So what’s the key takeaway of all this? Your return policy shouldn’t be overlooked. 

A hassle-free return policy for online purchases is an important aspect of your business that can help increase your conversion rate and build customer loyalty, especially when you think in terms of lifetime customer value. 

If you make the return process easy and friendly, you’ll maintain a happy customer base and make more sales in the long run.