Last Updated: February 2024
Returns are inevitable in ecommerce no matter what products or services you sell. In fact, the ecommerce return rate was as high as 42% last year according to a Shopify study.
That’s why handling returns systematically is vital to growing an ecommerce business.
If you run a dropshipping store, we have listed the 5 best return policy strategies to handle dropshipping returns and reduce them.
Consider your suppliers’ policies while writing the return policy
Your dropshipping returns policy should follow the suppliers’ return conditions and policies. Before drafting your returns policy, evaluate your dropshipping suppliers’ policy. This will help you manage returns smoothly without any issues in the future.
You should be sure about:
- Whether they accept returns at all?
- Do they offer free return shipping?
- What is the time window for returns?
Furthermore, we would suggest you partner with dropshipping suppliers with flexible returns and shipping policies. Instead of saving a few dollars from your customers, you should partner with authentic suppliers that accept returns.
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Set a PO box to accept returns
Return costs can eat all of your revenue if you accept free returns and ask your customers to ship back to your international supplier. As per studies, managing returns can cost about 17% of the prime cost, while some researchers estimate it as high as 30%.
Instead, you can set a PO box to accept returns and then ship them in bulk to your supplier. This would allow you to save return costs by a significant rate as you will ship returned products in bulk. But make sure to initiate refunds to customers as soon as you receive the products as they prefer quick refunds.
Another benefit of using a PO box is your privacy. Accepting returns to the PO box ensures that your personal mail is kept secret.
However, this practice might not be cost-effective in the case of large items like furniture or home appliances. It would be better and more affordable to let your customers ship large items directly to your supplier.
Tailor your policies to keep customers satisfied
It is not necessary that you need strictly abide by to return policies and costs of your dropshipping suppliers. That’s because your policy is useless if your customers don’t feel satisfied with it.
For example, you can offer free returns shipping if your profit margins are good enough. Suppose you sell car perfume that costs $30 and you sell it for $50. And your drop shipper charges $6 in return shipping and restocking costs. If you think profit margins are good enough, you can offer free returns to your customers by paying the costs of the return yourself.
This will reduce your profit margins but you can advertise your free returns policy to generate high sales and brand value.
Let your customers keep the products
This practice, known as “Returnless Refunds” is viable if you sell one-time-use products, food items, fragile items, personal care products, etc. Also, if the return shipping is expensive or the cost is more than the value of the product, you should let your customers keep the products.
Additionally, you will ensure a great customer experience and make them feel trusted. This policy is highly variable and you should not advertise it in advance as it can also encourage people to exploit your return policy.
You should draft a separate policy to accept returnless refunds.
Here are some practices to avoid refund fraud:
- Require your customers to provide OTP at the time of delivery.
- Require “open-box delivery” where the product is unboxed in front of the delivery agent.
- Ask your customers to send pictures of received products in case of the damaged or wrong product received.
Allowing your customers to exchange products instead of returning them is an old but gold strategy to reduce returns cost and save generated revenue. Exchanges are especially popular in the online apparel industry because customers often face issues with size, color, and variants.
But only providing an option to exchange is not enough, you need to encourage customers to opt for exchanging products.
- Incentivize exchanges: Offer store credits, exclusive discount coupons, complementary products, etc.
- Allow exchanging with different products: Customers can buy any product and need to pay the adjusted price.
- Providing a self-service portal: Empower your customers with a self-service portal where they can opt for exchanges within a few clicks.
Take a look at this great example:
Bonus Tip: Use Saufter for Automated Returns/Exchanges
Using automated returns software will make handling returns quite easy for you, ensuring customer satisfaction at the same time by providing instant service to customers. Furthermore, it will save you time and increase productivity.
Here are some of the key benefits of using Saufter to handle ecommerce returns:
- 24/7 returns/exchanges: Your customers will get a self-service portal to return or exchange products anywhere anytime.
- Modify/track orders: Empower your customers to modify orders and track them anytime using the portal.
- Highly customizable: Set custom rules and conditions to accept and reject return requests.
- Track key returns metrics: A dedicated dashboard you can use to track your return rates, exchange rates, and customer satisfaction.
- Proactive order scanning: Saufter scans your orders for delivery delay issues so you can handle them proactively.
- Automatic return labels: Return labels are automatically generated as a request is created. Your customers and team can download it in one click.
No credit card is required
Dropshipping is indeed a different and typical ecommerce model where you have partial control over returns but can be reduced and managed efficiently by adopting the best return policy strategies. The strategies mentioned in this post are the best to start managing your dropshipping returns and reduce them.
Additionally, you should invest in ecommerce returns software that can help you manage and automate dropshipping returns.