Ecommerce Return Best Practices: Minimize Loss & Grow Revenue

Returns.

For all Shopify founders — they’re an inevitable, logistical, and often expensive hurdle.

But for some — they’re an opportunity to build consumer connections, maintain sales and profits, and even scale through revenue-creating retention.

What makes the difference?

It’s all about who bothers to take the time to proactively implement best practices around the ecommerce return process.

You don’t have to be struggling with high return rates to start looking at how to address and eventually reduce returns. But if you are, this guide is a great place to start converting returns into a growth strategy.

Read on to learn:

• The facts of life: Why returns will happen at your ecommerce business
• Best return practices for Shopify founders
• How poor return management impacts your profit
• Tools for enforcing your upgraded return management systems

Returns in ecommerce: A fact of life for today's Shopify founder

Shopify gives today’s folks with an entrepreneurial spirit a vast opportunity to reach customers via ecommerce brands.

Higher return rates are a natural consequence of this heightened level of reach. This is exemplified in the fact that, as ecommerce sales go up, so does the rate of ecommerce returns. All while brick-and-mortar sales and return volume both trend downward.

But, unfortunately, returns also naturally impact your ability to forecast and keep your profit — and ensure scalability and stability in the competitive retail industry.

Nailing your Shopify returns process (aka your “reverse logistics”) is core to many important business strategies: enhancing customer satisfaction, retaining sales, making life easier for your customer service team, and lowering your overall return rate so you can keep more dollars in your pocket to drive growth.

Here’s how to start taking action now.

9 ecommerce returns best practices for SMBs

When you get proactive with the following tips, you can thoughtfully handle returns to minimize losses while maximizing revenue and retention.

1. Whip up a strong return policy

We won’t dig too deeply into this topic because there are lots of resources around the internet focused on this very task (here’s Shopify’s), but one of the best ways to reduce frivolous return requests and make sure legitimate ones go smoothly is by having a clear return policy in place.

At the least, you want to make sure it’s full of details like:

• Return timeframe: Specify how long customers have to make a return. Keep this fresh for upcoming holidays and other online shopping seasons.
• Item condition: Define the acceptable state of items for returns.
• Options: Do you offer full refunds, online credit, exchanges? Are there any specifications around which of these options customers can pursue, and when?
• Processes: Explain how and where customers can initiate any of the above options.

We’ll touch on this more throughout today’s tips, but it’s important you ensure this policy is easily accessible. Link it in your website’s footer, include it on product description pages, highlight it during checkout, and make it easy to reach through your first few post-purchase messages.

2. Offer free return shipping to create confidence (if you can swing it)

Whoever coined the phrase “the best things in life are free” probably wasn’t talking about return shipping — yet it still rings true for modern consumers.

For online shoppers, a free return policy is the second-most important factor in making a purchase, just behind free initial shipping.

Aside from the obvious appeal for shoppers, offering free return shipping may go a long way toward building consumer confidence.

It demonstrates you trust your customers and value the time and effort they put in choosing to purchase from your business—and it even reflects your confidence in the quality of your products.

For example, men’s clothing brand, Bonobos, offers free returns for orders shipped domestically.

However, in order for this strategy to work, you can’t be absolutely hemorrhaging returns. To combat that, pair this method with studying why your customers return things. When you can address the reasons, you can slow the stream of returns so you can actually afford to subsidize the ones that still happen.

On that note, let’s explore that topic next.

3. Analyze why returns happen

Getting to the bottom of why returns happen is pivotal to slowing them down. This can improve your profitability, streamline your operations efforts, and even make your future forecasts more accurate.

Plus, when you make the required changes to solve common return-inducing issues, you're likely to improve the customer experience you’re offering and save money on offerings that just aren’t a fit for your audience.

Here are some of the best data points to analyze to get to know your shoppers and their return patterns more intimately:

• Reasons for returns: What are the main issues that keep causing returns? Poor fit, mismatch with description, actual functionality defects, damage in the shipping process?
• Top return categories: Which product categories generate the highest return rates? It may be time to examine those more closely.
• Frequently returned products: Pinpoint which items have unusually high return rates. Is it for typical reasons? Or are they just not right for your target audience?
• High-return customer characteristics: Try to identify individuals or segments, like male shoppers over a certain age, with a high number of returns. What can you do to serve this group better?
• Preferred return outcomes: Did customers prefer refunds, exchanges, or credit? Focusing on the most popular method may make future returns less painful, and retain both profit and customers.

4. Free return shipping too expensive? Make exchanges irresistible

Even once you’ve gathered the above data to try to reduce returns, you still may not be financially prepared to offer free return shipping.

And that’s OK. But what you can do is pivot your focus to exchanges versus outright returns. This will make consumers happy while protecting your bottom line.

It’s all about finding ways to encourage shoppers to consider exchanges. The key is making this option more compelling. Here’s how:

• Clearly highlight exchanges and their value — faster turnaround time and less hassle for shoppers — in your ecommerce return policy.
• Offer bonuses like a discount or shop credit for exchanges.
• During the return flow, offer exchange options and tailored recommendations to steer customers toward that option.
• Make the exchange process super easy, and include information for starting an exchange both in-package and online.
• Send prepaid shipping labels for exchanges only along with each package.
• Set a longer exchange window so consumers don’t panic and just go straight for the return.

5. Optimize the return experience with modern customer support

As we mentioned, some returns are a fact of life. Managing the ones you do have to deal with in a way that doesn’t cost you an arm and a leg demands organization — especially in today’s omnichannel shopping environment.

OpenDesk is a cutting-edge all-in-one customer service platform that centralizes communications. OpenDesk connects your customer channels and uses AI to prioritize tickets in a single, intuitive inbox. That way, your Shopify returns get smoother and your chances to upsell, cross-sell, and retain customers get stronger.

OpenDesk also deploys personalizable AI to help you quickly answer customer queries. And, our unique metrics dashboard makes it possible to explore exactly what causes the most customer support tickets — so you can solve issues proactively to get ahead of returns and reduce agent workload.

Transform your return experience with smarter support when you sign up for a free OpenDesk trial.

6. Focus on return sustainability

Environmental concerns are increasingly important to customers. Your carbon footprint, especially when it comes to shipping and managing returned items, must become a key focus of your return strategy if you want to capture the growing share of consumers who care.

How can you adopt sustainable return practices to reduce your environmental impact?

Start by minimizing wasteful packaging. Additionally, when shoppers return a product, reintegrate them into your sales supply chain if possible, rather than contributing to landfill waste. You may also choose to offer some shipping options that offset the emissions associated with transportation.

Building these changes into your return policy and process not only supports the planet but also resonates with eco-conscious consumers.

7. Extend the care into packing and shipping

Is there anything more irritating than getting a return for something that happened after a purchase left your care?

Not so fast — you should take some responsibility for the state your items arrive in. It may not be your fault, but it is your problem to try to mitigate.

While the delivery carrier does play a significant role in how your products arrive, there are steps you can take to minimize the risk of shipping-related issues:

• Inspect each item right before it's dispatched to ensure it’s in perfect condition.
• Don't skimp on the protective materials (bonus points if they’re sustainable!) for delicate items.
• Label fragile packages clearly to alert carriers about breakable contents — and show shoppers you tried.
• Again, don’t get cheap. Choose appropriately sized packaging that allows you to use the best amount of padding but also prevents items from moving around too much and breaking up during transit.

8. Upgrade your post-purchase communication

Who cares what happens after a shopper hits that “Complete Purchase” button? You should — if your goal is mitigating returns and their associated costs.

The post-purchase experience is your last stand against costly returns. It’s your time to provide education to ensure expectations align with reality and continue to deliver excellent experiences that keep consumers smiling.

This is also prime time to build loyalty, which leads to increased profit.

It’s no secret that retaining existing customers is more cost-effective than acquiring new ones. In addition, 76% of consumers will spend more with a company when they’re part of its loyalty program.

Full circle, post-purchase communication boosts profit both by reducing returns and driving sales.

Here’s how to tackle that communication plan:

• Create a strategic transactional email sequence: Send a purchase confirmation, shipping update, and delivery follow-up to keep customers informed and engaged.
• Automate value-adding follow-up emails: Provide tips, suggest complementary products, link to helpful articles and forums, request reviews, and offer exclusive discounts to boost engagement and loyalty.
• Make yourself accessible: In every email, make sure shoppers know the fastest and easiest way(s) to reach you should they need support.
• Ask for and act on feedback: Gather customer feedback through surveys or reviews and use it to enhance your products and services, showing customers their opinions matter.

9. Get more detailed with product descriptions

Clear, accurate, and creative product descriptions are essential to setting the right expectations — thus reducing returns.

When customers receive products that differ from what they anticipated, the likelihood of a return, understandably, skyrockets.

To minimize this risk, consider adding these critical elements to every product description on your Shopify site:

• Weight and dimensions: This can help customers visualize the product’s size, how it may feel to use, and how it should fit within their space.
• Material details: Specify what products are made of so you’re on the same page as shoppers when it comes to their expectations around feel, quality, and durability.
• Size guides: For clothing and other things that can be worn, offer detailed size charts. It’s also helpful to include actual item measurements, as well as details on the size worn by the model to help customers imagine how it will look on them.
• Instructions: You don’t have to get too detailed — but for something that might require instructions give consumers a rundown so they understand the key features and functionality they’re paying for.
• Return policy: Include some quick return/exchange details on the product page, but also make the link to your full return policy easy to find.
• Reviews: These aren’t necessarily part of the description, but it’s great to include them as another way to help shoppers imagine the purchase in their real life and generate a little social proof.

Where can poor return management impact my bottom line?

So, what’s the big deal with return management?

We’ll show you — come along to explore the key areas where poor return practices can cost your business.

Customer support strain

Returns most often lead to a big influx of customer inquiries, from questions about policies to requests for tracking updates.

Without putting steps in place to mitigate returns, you can overwhelm your support team and take them from a profit center to a cost machine. At that point, your options stink both ways — you can either shell out to hire more agents, or you can suffer the fallout of dissatisfied customers from longer response times.

Labor and operations costs

Every returned item requires time and labor to process, inspect, restock, and ensure inventory management is up to date. This cost adds up quickly, and almost invisibly.

Additionally, the inventory disruptions caused by returns complicate forecasts and restocking plans, making for even more “hidden costs” down the road.

Cost of damaged goods

Returns can arrive damaged or in unusable condition for a number of reasons.

Some products will be beyond repair, making them a complete loss and an expense to your business. Salvageable items may be worth repairing, but there are added costs associated with this process.

Impact on the customer experience

A clear, hassle-free return or exchange experience fosters a great customer experience, increasing the likelihood of repeat purchases. On the flip side, a cumbersome or costly process can frustrate customers, deterring them from buying again.

Meeting or exceeding customer expectations in this area is essential for maximizing lifetime value.

Drag on brand reputation

Customers frequently share their frustrations on their own social media pages or in your reviews section.

There’s little you can do about this, aside from ensuring every interaction with your ecommerce brand is thoughtful and customer-centric, including returns.

A well-managed online return process prevents this negative press that can drag down your reputation as an online retailer and hit you where it hurts — in the bank account.

What's a reasonable ecommerce return rate?

Brick-and-mortar shops see return rates in the 8% to 10% range, while ecommerce businesses come in much higher at just over 18%.

We recommend every business find the percentage of their sales that result in returns. Then, you can figure out where you compare to this benchmark and whether it’s time to really worry about returns. In addition, this number can help you forecast future returns, and plan how many sales you realistically need to stay profitable.

Calculating your return rate as a percentage is simple: (Units returned/units sold) x 100 = return rate %.

For example, if you sold 500 items and 100 were returned, that would look like: (100/500) x 100 = 20% return rate.

Tools to handle ecommerce returns on Shopify

Luckily for Shopify business owners, the Shopify app store is rich with plug-and-play tools for managing returns and exchanges.

We highly encourage you to check out the pricing, reviews, and features of several before choosing yours, but here are a few good options you can start with:

• AfterShip: Use this shipping helper to automate returns, save time, and recapture revenue. Offers branded return pages, automated updates, exchange options, and carrier management — all within a single portal.
• Return Prime: A return app that helps manage returns, exchanges, and refunds in one place. Features include automated approvals, customizable workflows, return labels, ecommerce shop credit refunds, and seamless logistics integration.
• Loop: Automate returns to reduce costs and drive loyalty with this Shopify app. It includes a customizable returns portal, instant exchanges, bonus credit, fraud protection, and insights to optimize the return process and customer experience.

Try OpenDesk to manage & reduce returns in your ecommerce business

Returns don’t have to be a total drain on your ecommerce business.

They may be a necessary evil, but you have the power to flip them into a unique strategic advantage.

Creating and enforcing a clear and modern policy, analyzing and acting on return data, focusing on what happens after the purchase, and getting smarter with your customer support tooling — every single step strengthens your brand and positions returns for profitability.

Speaking of customer support, providing this all-important team with retention-focused tech is the best way to empower them to manage increasing return requests.

Ready to power up response times, enable human-centric automation, and even create actionable insights for all-around better support and return experiences?

There’s nothing stopping you from getting on OpenDesk’s waitlist today!