Building the Right Return Policy for Your Brand

67 percent of shoppers would not consider shopping with a brand that doesn’t offer clear info about how to return items.

We’ve all shopped online before, so we understand how attractive it is to see a well-defined, lenient return policy. 

Yet as e-commerce business owners, you also know how expensive returns management can be, especially when Amazon Prime’s free returns are what you’re competing with.

Plus, you always have to look out for those unruly customers who try and take advantage of the return policy and end up costing you big time. Recent data shows that retailers are likely losing out on $10.30 for every $100 of merchandise returned to return fraud. 

Like all business decisions, your return policy should toe the line between impressing your shoppers and protecting your bottom line. How do you do that? Here are some factors to consider.

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Cost considerations

Before you decide to offer free returns to your shoppers, you need to consider the cost factors.

Transportation

According to Deloitte, transportation costs can make up around 60 percent of total reverse logistics costs. You can always try and negotiate better rates or diversify your carriers, or you can offer free returns for customers who bring their returned items to a convenient drop-off location.

Return triage logistics

One of the difficult things about return logistics is deciding how to handle returned inventory. After all, there are various conditions you may receive packages. 

While some items can be packaged and sold as new, many might need to be sold to a second-market seller, recycled, or refurbished for resale.

Depending on what type of product you sell, returns inspection & triage could run you around 10 to 40 USD on average. 

Loss of materials

Only about 30 percent of all returned goods are able to be resold. Around 25 percent of that ends up in the landfill, with the remainder mostly donated or sold to liquidators.

These figures are distressing enough from an environmental standpoint. Adding in the loss of perfectly good inventory for your brand, and the picture gets even more frustrating.

Returns logistics is an inefficient and wasteful process. When you are determining your policy, remember that offering free shipping leads to more unnecessary waste and costs your business a considerable amount.

Return windows

There are laws in different countries for minimum return windows for goods sold online, for instance, 14 days in the EU. You need to check this before you create your return policy, and whenever you decide to take your brand abroad into new markets.

Local laws aren’t the only thing to contend with in creating your return policy: you need to have a frank chat with whoever is going to manage your returns process. Their capabilities will dictate what you can do as far as returns.

For instance, IKEA offers a return window of one year for unopened merchandise. That means that your returns management facility will receive some very old items, which cannot be repacked and resold. Your returns management facility will have to figure out how to dispose of that item, or break down and reuse certain parts of it.

If you offer something closer to a 30-day window, it's much more likely that the majority of product returns will be eligible for resale. 

Creating your policy

Brands with bulky items

If you sell bulkier items, you will want to take a couple things into consideration when crafting your return policy.

First, bulky items are difficult and expensive to ship. Since they are large and cumbersome, they are also difficult for customers to return. If you are selling something like furniture or appliances, providing a longer return window of a couple of months or more could be a great way to entice shoppers to take a risk on an item. 

However, you have to make the policy quite strict to avoid being taken advantage of; if you are allowing a longer return policy, you may need to stipulate that the item must not be unwrapped or bear any signs of use in order to qualify for return. 

Return window considerations, Ikea

Related: Why Reverse Logistics is Crucial to Sustainability and Good for Your Business

Brands with expensive/luxury items

If you are selling high-end products, customers will expect high-end customer service. That means offering a little bit more leeway and convenience for the return policy…but how much is too much?

High-end department store Nordstrom offers returns on items forever, even those that have been worn and used. However, even haute couture brands stick to the standard 30-day unworn undamaged policy. Some luxury brands even offer nothing but store credit.

A great way to offer a luxury returns experience while avoiding getting taken advantage of by scammers is to offer extended return policies to “high-value customers”, or VIPS, who have proven themselves worthy by being repeat customers or signing up for some kind of membership.

Brands with small & inexpensive items

If you are selling smaller/low-cost orders, you will probably want to opt for a 30-day window. Still, the 30-day window leaves something to be desired.

 In order to save money and make the process more efficient, make sure you write a clear policy to reduce return instances and designate a return dropoff point to make logistics more efficient.

Final tip? Work with a logistics provider who can help you perfect the returns process

If the prospect of managing your returns has you losing sleep, you are not alone. Return management can be a stressful part of the logistics journey, and the best thing you can do is work with a logistics partner who can take some of that stress off of your shoulders.

At CBIP, we are ready to optimize your return logistics. As a 4PL, we don’t actually own any of the return facilities or any other warehouse we work with.

Instead, we partner up with different providers all over the globe, and we link to them using our in-house tech platform, Bundle. That way, when our e-commerce brand client needs to find a return management facility in Germany, we have them covered. 

Interested in finding out more about a less stressful return logistics experience? Reach out today for a free logistics consultation.