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Orderhouse Blog

5 Ways Returns Processes and Policies Can Impact Profitability


"The purpose of a business is to create a customer that creates customers" ~ Shiv Singh

Whether it’s a purchase or return shoppers expect good value.  

Returns can impact an online retailers profitability when not managed properly. For the e-commerce industry, returns are a growing concern.  This happens by the cost of restocking goods, problems with damaged merchandise and poor customer service satisfaction.  Of the almost 8 billion packages shipped annually by UPS or FedEx, around 1% are reported as lost or damaged.  Without an established customer centric return policy, dissatisfied customers can hurt loyalty reducing future profitability.

By the data, over half of online shoppers are dissatisfied by ecommerce return processes. Having an established, visible plan in place helps retailers makes the process of product returns more seamless.  

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Nearly 70% of shoppers review a retailers return policy before deciding to purchase, even more reason to have policy standards in place is 81% of those researchers will only purchase if returns are free.  There is continuous pressure pushing retailers to challenge the markets with new offers such as free and easy return policies.

5 eCommerce returns policies affecting your bottom line

1) Clear stated policy 

With a majority of consumers using your eCommerce returns policy to make a decision about your brand, having an easy to find and accessible returns policy becomes paramount. Each website page should visibly display the retailers return policy, the homepage, product page, checkout, and confirmation email page and the policies written in easy to understand, unstilted language.  

2) Policy should be convenient for the customer, not the retailer

Have the ability to show flexibility to online shoppers, return timeframes, Exchanges and store credit, Alternate return locations or retailers. Customers can change their minds from the original purchase to when they return the item bought, and can help the customer save money by offering to exchange item for an item of lesser value.  Creates happier customer and better customer service in the final sale.

3)  Omnichannel return and pick up locations

Return to store location or other partner location Drop off pick up access points, charging less for transportation expenses, recipients to pick up their packages to one location eliminating “last mile delivery” free shipping costs on the retailer. If the location is also a retail store, that can even have a positive impact for a retailer who can benefit from additional sales from the customer at pick up.

4)  Free Return Shipping

Retailers must decide if as companie they will be able to absorb the cost of printing and paying for return labels, knowing that a portion of the products won’t be returned and the labels will go unused, but with 70% of shoppers wanting free returns that is what made the sale in the first place.  Trend is most ecommerce companies are providing this service to remain competitive.

5)  Set Brand apart by details

Research shows that at least 30% of all e-commerce orders end up being returned, as against just 8.89% of brick and mortar sales. Secure long term customers and loyalty by completing the sale on the return. Here are 3 ways retailers can use return sale opportunities to satisfy unhappy customers:

  • Educating, training staff about your product line personalizes the customer experience where Amazon experience can’t provide.  Amazon associates may lack technical experience and upgrade customer on brand line for increase sale opportunities.
  • Absorb the Mistakes made by operations staff.  Wrong items go out, offer a future sale coupon or another incentive to return for a future sale.
  • Other ways smaller retailers can pass savings onto the customer or grow profit is in reducing transportation costs by Offering a range of shipping options, ground, two day or overnight by negotiated rates with UPS as the ecommerce business grows. Transportation costs can be reduced by changing the box size, decreasing delivery costs per order.

Returns can no longer be managed as a retail back burner business operation, in ecommerce it plays key role in driving sales and profitability. The trend for smooth return processes for customers will remain top priority for online retailers.  By writing return policy it sets a standard shows your customers your commitment to your brand and quality customer service. retailers need to embrace and allocate resources and use policy to delight and retain customers for future profitability and growth.

Have more eCommerce questions?

We can answer them. If you’re looking for new ways to reach online consumers and grow your eCommerce business, contact Orderhouse today.

For more insight on end to end eCommerce strategy visit this resources page.

Topics: direct to consumer ecommerce influencer marketing ecommerce solutions DTC customer experience customer care ecommerce customer service customer service customer support shipping ecommerce sales ecommerce strategy omnichannel fulfillment