Can Your Return Process Make You Money?
A guest post, written by Daniel Guttenberg of Automated RMAs and Returns app team. They offer a return management solution that pays for itself many times over by making returns easy for customers and error-free on the back-end.
Returns is a fact of life for every business, including eCommerce businesses. Products break or malfunction, sizing errors are common, packing mistakes lead to the wrong product being delivered, and sometimes customers simply aren't as enthusiastic when their package arrives as they were when they ordered it.
Returns are a fact of life for every business, including eCommerce businesses. Products break or malfunction, sizing errors are common, packing mistakes lead to the wrong product being delivered, and sometimes customers simply aren't as enthusiastic when their package arrives as they were when they ordered it.
You're used to handling returns, and hopefully, you've accepted them as one of the costs of doing business. But accepting returns and making the most of them are two very different things. Many Shopify entrepreneurs are letting inefficiencies and missed opportunities cost them big in the returns department.
We think that should change, and we've introduced a new tool to make it happen.
How Returns Can Lead to Profits
An extensive bit of research from a marketing Ph.D. candidate at the University of Texas at Dallas shed some surprising light on the impact of return policies on purchase decisions. By examining more than twenty previous research studies from a variety of fields, the researchers found that easy return processes without a lot of strings attached led to significantly higher purchase rates: customers are absolutely considering return policies before they make a purchase.
This makes perfect sense, of course. Especially in eCommerce, where customers can't interact with the products they're buying beyond what they see on your Shopify site, customers want to know that they can get their money back if something goes wrong or isn't as expected. The more lenient your return policy and the more streamlined your return process, the more likely you are to make an initial sale.
The study also found that allowing returns for long periods—say, a money-back guarantee that lasts for 30 days instead of 10—leads to fewer returns. This might seem counterintuitive the more time you give your customers to make the return, the more opportunities they have to do it. But in reality, shorter return windows force customers to make the choice they feel is safest. If they don't absolutely love the product at Day 9 and they can't return it after Day 10, they're more likely to pack it up and ship it back. If they have until Day 30 to decide, they might get more used to it, might care less about returning it, or might simply forget about it.
So how do you translate these insights into profits for your Shopify store? To start with, you need a robust tool that integrates with your existing Shopify data, automatically identifying specific customers and their orders no matter how long ago they made the purchase. This tool should also be able to track your returns and your inventory, and automatically adjust relevant figures in your Shopify bookkeeping. For customers, you need to be able to generate printable shipping labels to make the return process as simple as possible.
A fully-automated, information-rich return process lets you set a lenient return policy that encourages sales and reduces return rates, while at the same time freeing up your time and resources to focus on other ways to grow and improve your business. Not a bad deal, huh? And it's easier to achieve than you think.
Giving eCommerce Entrepreneurs Amazon-Like Return Powers
As much as independent eCommerce entrepreneurs might grumble about Amazon—and with good reason—there's no denying that their return process is awesome, from the customer perspective. Log in, select the order, click the return button and choose a reason, then pull up a printable shipping label and you're done. Amazon has made the return process as easy as possible, just like the research suggests, and there's no question that it helps drive their sales and revenue.
With the soon to be updated Automated RMAs and Returns app for Shopify, you can give your customers the same streamlined process and do a lot more to boost your business.
For starters, customers don't even have to log in to make a return. With nothing but their email address and order number, they can generate a shipping label for their return. You can set up a customizable "reason for return" box, too, as an option or a requirement, to capture valuable feedback that can help guide your business.
You can also customize the rules for returns to your heart's content. Say you have a custom-made item that isn't eligible for return. Simply create a rule that excludes that item, and you can direct your customer to a friendly explanation of your policy instead of generating a return label.
If you want to exclude all sales items from return eligibility, you can create a pricing rule, e.g. no items with a price ending in .97 can be returned. Set all of your sale prices to end in .97 (and make sure your other prices don't), and customers won't be able to return anything they bought on sale, even if the item is added or the price changed after you add the rule. As soon as the product goes back to the non-sale price, purchases will become eligible for returns based on your other policy parameters: the app looks at each individual purchase, so it knows when the purchase was made and how much each customer paid.
When a product isn't eligible for a free return, the Automated RMAs and Returns app's Stripe integration allows customers to pay any shipping and/or restocking fees for the return. After payment, a return label is generated just as with free returns, and payments go through your existing Shopify account. Because the process is fully automated, the only time you'll even notice the returns is when you tally up your income.
There's more back-end goodness to this app, too. If you're drop-shipping and/or using multiple warehouses and distributors to fill your orders, keeping the logistics of your returns straight can be a nightmare. Using product or variant IDs or other rules you determine, the Automated RMAs and Returns app can assign return destinations to the right link in your distribution chain, letting you restock and resell as efficiently as possible using services such as Returnbase.
And all without you needing to lift a finger.
The right return policy and process can help your business make money. The right tool can make returns an automated and effortless part of your business. When returns no longer give you a headache, you can be more lenient with your return policy, encouraging more purchases and actually reducing your return rate.