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My concern is that certain industries traditionally have a low profit margin, making a liberal return/refund policies very difficult. Any thoughts on what the right balance is between customer service and generating income?
there has been a recent case in germany for instance ruling that ebay was not an auction and infact was covered by normal mail order rules which are (in germany) that the customer may return legally goods that have been bought 'unseen'
this also applies in the UK
(ps this is my understanding i'm not a lawyer!)
If your customer sees an unwieldy return policy, it will cause hesitation, and that can dramatically lower your conversion rates.
I've seen several of our merchants change from a 15% restocking fee return policy to a "you just have to pay return shipping" policy, and their sales increased as much as 10%.
As a whole, most e-commerce customers don't return products, but feel that the ABILITY to do so is vital. It's like a buffet... nobody ever eats $10 worth of food, but they like that they could if they wanted to. :-)
Also a thing to remember is a full refund is cheaper than a disguntled customer doing a chargeback.
If I was selling a low-margin product I would use a beefy returns policy to increase my margin.
Online businesses need to have a solid return/refund policy - your customer just won't buy otherwise.
However, there are steps to reduce the return rate:
1. Require a Return Merchandize Authorization (RMA). Your customers would need to contact you via email or phone to get this form that they need to fill out. Remember to include "reason for return" - this way, you can track & address the reason in the future.
2. Full cash back vs. store credit
For high value items, you may want to limit the cash back to a certain period say 30 days, after which it's only store credit.
3. Require insurance on shipping
For high value or fragile items, require your customer to send it back UPS or postal with shipping insurance. This way, if it breaks while in transit, you're covered.
4. Have a troubleshooting FAQ
Since you're selling "complex" items (i.e. things that require installation), you may want start or beef up a troubleshooting FAQ.
That's it for now - anyone got any more tips?
Any thoughts on processing returns from international customers? For USA merchant, I would exclude Canada and Mexico, since the cost of shipping is low. But I am talking about customers on other continents or overseas. The cost of shipping can be significant if the item is a high-ticket item or it is heavy.
.oO(doesn't lunch where my crew munches)Oo. :)
[consumer hat on]
Although I rarely ever return something, when I have needed it, the store didn't have a 15% restock fee. I know this becasue a restock fee = no order from me in the first instance.
[consumer hat off]
Your customer should pay for the shipping back to you, of course. Unless you have to deal with customs clearance on the return, there is no more cost for you to get the shipment back (right?). Then you can issue a refund.
The issue is if you have to send a replacement - here, you may want to work out the cost of shipping with your customer - they may not want to pay for shipping twice (once for the original order, and another one for the replacement). I think as good business practice, the merchant should pick up this cost.
Yes, ideally that is what I would like to do. Picking up the cost of Express Mail shipping for a high-ticket item can be very expensive though. It cuts into the profit margin and most times one has to pay out of pocket to re-ship an exchange or replacement.
Refunding the purchase sounds like a better option since one would be minimizing the loss.
This is a common misconception. People have 7 days in which to return an order subject to a lot of exceptions. Animals, perishables, and various other goods are excluded. So are bespoke computer systems, any other built-to-order product, opened computer software etc.
Customers have too many rights in the UK, IMHO. And they are surprisingly quick to claim ones that they don't have. If you are selling custom built products you don't need to take any of their "I have a right to return it within 7 days" rubbish. Not even if their usually semi-informed local trading standards tells you so.
(Unless the goods are faulty, not as described or not fit for the purpose. But, don't tell them under what conditions they are entitled to a refund because suddenly the "unwanted goods" will become "faulty" - the UK customer is one of the most crooked in the world according to a recent survey). Get them to first email you the reason for the return as it's more difficult to change the reason once they've committed to it in an email/fax.
Sorry if I sound cynical, guys. I've just been ripped off by customers to the tune of another £600. That makes it £15,000 so far this year :(. That's a small percentage of our turnover but it still hurts.
Chances are, even then, you will still get customers who chargeback their purchases with complete disregard to store's refund policy.
So, you may unnecessarily inconvenience / scare away bona fide customers while not deterring the troublesome ones.
But, who knows? Every sector is different, what works for you may not work for others.