Jun 24, 202215 min
Updated: May 22
This blog was last updated on June 21, 2023.
If you’re like most eCommerce companies, nearly 20% of the items you sell are returned each year. The top reasons: incorrect size/fit/color, damaged item, or “product not as depicted.”
While returns are an inevitable part of running an eCommerce business, there are ways to minimize returns—and to make the process a good experience.
This guide will teach you to create a return policy that keeps customers happy and even has the potential to increase conversions on your site when you start your business.
Why do you need a return policy?
What is a standard eCommerce return rate?
5 things to consider when creating your eCommerce return policy
How to write a return policy
6 types of return policies
Bonus: a closer look at 4 return policy examples
Don’t let returns get you down
Return policy FAQ
While U.S. federal and state laws do not require you to have a returns or refund policy (with the exception of defective items and “Cooling-off Period”), it’s a good idea to have one anyway.
As many as 67% of consumers want to see return policy information before completing a purchase—and a whopping 92% say they would buy from a company again if returns are easy, according to a report by Invesp.
In essence, your return policy helps your buyers feel secure. It compensates for the fact that consumers can’t try on or see your products themselves, plus sets the right expectations for post-purchase service. A clearly written (and generous) return policy is thereby an important factor for improving customer retention.
The average retailer incurs $166 million in returns for every $1 billion sales, according to NRF research, which breaks down return rates by industry:
Auto parts: 19.4%
Apparel: 12.2%
Home improvement: 11.5%
Housewares: 11.5%
Department stores: 11.4%
Footwear: 9.1%
Sporting goods: 7.6%
Beauty: 4.3%
Hard goods: 3.8%
There's evidence to suggest that smaller online stores have lower return rates, though a high return rate isn’t always indicative of an unhealthy business. Just like how a high-volume newsletter often sees more unsubscribes than a low-volume one, some larger companies have come to expect a high level of returns—even welcoming it with a lenient return policy.
Nevertheless, a return policy can be instrumental in minimizing certain types of returns. For instance, you could limit which of your items (e.g., regularly price versus sale items) are eligible for a return. Or, you could limit how returns are handled (e.g., receive store credit versus a refund).
Note that return rates will often spike during the holidays. This may be due to gift returns or bracketing, in which consumers buy multiple quantities of one item before deciding which one to keep.
When it comes to creating your return policy, there are several factors you’ll want to keep in mind. Depending on what stage your business is in, some of these will be higher priority than others.
More established eCommerce stores might be more concerned with standing out from their competitors. On the other hand, newer eCommerce stores may be more concerned with lowering the logistical burden to reduce overall costs.
Take some time to review the list below and prioritize what’s most important to your business.
Your competition - What return policies do your competitors offer? Can you deliver a similar or better experience by providing something different?
Your shipping costs - The size and weight of the products you ship significantly impacts the costs associated with shipping. For example, offering free shipping on large, heavy, or bulky items may not be a practical or sustainable business model (see: dropshipping).
Your customer's expectations - What policies and tools do you already have in place, and what might prospects expect based on your type of business and the deals they can find elsewhere?
Your profit margin - At what point are your profits negatively impacted by the return rate? Should you split the cost of returns with your customers or absorb the cost?
Your return logistics - How well do you handle the current returns volume? Can you do more, or would a reduction in returns be better?
Select a return policy template as a base starting point
Formulate the details of your return policy
Create a supporting FAQ
Establish a return management process
Make your return policy easy to find
For most eCommerce businesses in the early stages (see our guide on what is eCommerce), the limited return policy template is a good place to start. However, before implementing a new policy, always take time to review current and forecasted costs associated with returns. Doing so will help you avoid a situation where returns are killing your profit margins.
If you aren’t ready for a free return policy or if such a policy isn’t sustainable for your business, then don’t push it. Instead, select an approach that supports your business and meets your client’s expectations.
In most cases, you will use a combination of the above return policy templates for your business. As your company grows, work on making your return policy even more customer-centric.
Note: Each state has different guidelines on what’s considered a valid return policy. Make sure your policy conforms to those guidelines.
There are six main elements to include in your new policy. First, answer all the questions listed below to ensure you’ve addressed all possible scenarios. The more detailed you are, the fewer questions your customer service team has to answer. Plus, a well-written return policy helps you to be consistent and treat each return the same while saving your team valuable time.
Acceptable returns
Will you accept returns of all products or only defective ones?
Can sale items be returned or exchanged?
Do you sell handmade or customized items? If so, will you accept returns for these items?
Acceptable condition
Can items be returned or exchanged after they’ve been opened or used?
Do the items need to have tags still attached?
Do items need to come back in their original packaging?
Do certain types of members or shoppers have different return or exchange rules?
Return window
How long do customers have to send in their returns?
What happens if items are returned after that timeframe?
Available refund(s)
Will you send a replacement of the same product?
Will you send a similar product of equal or greater value if the original is no longer available?
Will you provide store credit in lieu of a cash refund?
Will you offer full cash refunds for returned items?
Return costs
Is there a return fee?
Is there a handling fee?
Will you offer a prepaid return label?
Does the cost of returns vary by country?
Does the cost of returns vary by product type?
Will you offer reduced fees for members or repeat customers?
Will an item ever be refunded or replaced without requiring the original item to be returned? If so, under what conditions?
Logistics
What address should customers send returns to?
Do you offer in-store returns in addition to online returns?
Do customers need to email support to initiate returns?
Do customers need to print their receipt and include it in the box?
What portions of the return process are self-service?
Create short paragraphs that discuss each of these six elements. Have other people read them to make sure your policy makes sense. In addition, include any other important details that are specifically relevant to your store.
When creating your policies, remember to write in a direct, yet kind way. For example, instead of writing "You must return items within 14 days or you will NOT receive your full refund," try something warmer like "Return items within 14 days to receive a full refund."
The best way to reduce questions about returns and free up customer service for other, more valuable tasks is to create an FAQ section. This helps customers to be more self-sufficient. It also helps to reduce friction within the sales cycle.
If you don’t know what information to include about your refund policy, ask your customer service team what questions they get asked the most. You can always add to your FAQ as you discover additional questions.
Make sure to create a process for your internal team to follow. Aside from needing to process returns quickly, you’ll want to be able to track the status of returns and offer the same level of visibility back to your customers who are anxiously awaiting resolution.
Returns management software can help you to simplify and centralize your activities. Solutions like Shippo and ShipStation—which integrate with Wix eCommerce—allow you to generate free return labels, offer self-service returns, and automate other steps of the process.
Within Wix, you can also cancel and refund orders paid via PayPal, Stripe, or Wix Payments, plus notify your customers via email.
If handling returns on your own isn’t ideal for your team, you can always speak with a third-party logistics provider (3PL) to handle return management for you. Just make sure your 3PL has a clear understanding of your policies, as well as what’s considered a returnable item versus not. A 3PL can take on the load of multiple after-sales activities, including shipping replacements to customers, determining which returned items can be resold, and chasing couriers for credit if items were damaged during transit.
Many state laws require your return policies to be clearly displayed in order to be considered valid—plus it’s just good practice.
List your return policy in several places throughout your website, including your:
Website footer
FAQ page
Product pages
Automated abandoned cart emails
Other automated emails where applicable
Within your website chat
As noted earlier, an easy-to-find (and easy-to-understand) return policy is essential for building customer trust and setting the right expectations.
Determining the best return policy strategy for your business may require some trial and error. So be prepared to make minor adjustments to see how your buyers (and your bottom line) respond. Let's look at some of the common policies that businesses adopt.
Use this policy with caution. A strict no-refund policy can deter buyers and cause a rift in brand trust. This approach should only be used in limited situations as noted below. If you opt for a no-refund policy, be especially detailed in your product descriptions and photos to ensure that buyers aren’t surprised by your item’s size, features, care instructions, and more.
Who it’s best for
Businesses specializing in low or bargain-price items where the cost of accepting returns would be prohibitive to the business model
Businesses specializing in refurbished, overstock, or closeout items
Businesses looking to sell items as-is
Going-out-of-business or inventory liquidation sales
Businesses with minimal profit margins, focusing on alternative methods to increase conversion rates
Pros
Maximizes profit per sale
Minimizes overhead costs associated with doing business
Fewer unplanned inventory fluctuations
Cons
Places all the risk on the buyer, which can deter them from completing a purchase
Presents a vibe of cheap or untrustworthy (possibly even if reasons are detailed and explained)
May cause an increased burden on customer service dealing with customers trying to demand a refund, return, or exchange
Doesn't inherently promote a positive customer experience
Live examples
Nova and Mali - Unique art projects and publishing
Crazy Handz - Hair extensions and other beauty accessories
Moon Flower Hemp - CBD and other hemp-based products
There are many ways to restrict or limit the type of returns you are willing to accept and the level of refund you will provide. Many companies that employ a limited return policy opt to only accept returns (and give full refunds) on damaged or dysfunctional items. All other items can be returned, but shipping is not included.
Reducing the accepted time frame on returns can also help reduce costs while minimizing the buyer's risk level. But be careful that the return timeframe you select is reasonable. Too short of a return window can frustrate your customers, hindering the overall experience. And psychologically, a longer return window may reduce “impulse returns” from consumers who otherwise might feel pressured to make a final decision quickly.
Some businesses opt to split the cost of return shipping with the buyer. Or you can accept returns, but in your return policy, state that you deduct return shipping charges from the total refund amount.
Who it’s best for
Online stores that need to keep return rates and associated costs low
Startup or small businesses looking to be competitive but still keep expenses in check
Companies looking to reduce the total number of returns
Pros
Removes a moderate level of buyer purchase hesitations
Reduces buyer's perceived level of risk
Can be customized to support the needs of the business
Easy to scale as the business grows
Most flexible for startup and smaller businesses
Cons
May not fully meet buyer expectations if industry standards or competing businesses offer more lenient policies
Does not fully remove all risk from the buyer
Live examples
Southwest Candle - Soap and candle supply
Mass Musik - Musical instruments and pro audio equipment
BBJ Wraps - Wholesale flower packaging merchant
If you already sell low-priced products, a large number of returns can quickly become too costly for your business. To minimize this cost, offer store credit or an easy exchange process. For example, if someone requests to return an item and lists "size" as the reason, you can offer a different size as an exchange.
However, keep in mind that it's still important to include restrictions on what is accepted for exchange (such as ticketed, unused, or unopened items). In addition, return fraud and the return of unsellable items could still cost your company.
Who it’s best for
Boutiques or clothing stores with lower profit margins
Businesses selling hand-made or one-of-a-kind items
Established online brands
Brick-and-mortar businesses
Pros
Helps minimize bracketing
Reduces buyer's perceived level of risk
Encourages repeat business
Provides extra opportunity to engage with the customer and provide a better overall customer experience
Reduces high inventory fluctuations
Minimizes receiving, repackaging, restocking overhead
Cons
Disgruntled shoppers may feel trapped by the policy
Excellent customer service becomes key to keeping customers happy
Puts more pressure on the customer to carefully consider purchases
smaller new customer average shopping cart sizes
Live examples
The G.O.A.T. Clothing Line - Georgia-based brick-and-mortar store offering fashionable hoodies and shirts
Sweet Elaine Boutique - Apparel and accessories for women
Rather than covering the entire return cost, you could offer a minimal flat-fee return shipping charge. This allows you to split some of the return costs with your customer. Again, keep the fee to a minimum so as not to deter prospective customers.
Offering low-cost shipping labels can be another way to implement a flat return fee. Alternatively, you could offer a different rate based on size, weight, or quantity ranges for returned items. For example, a single item return could be a flat rate of $3.99. However, a return including two or more items could have an $8.99 flat-rate fee.
Keep in mind that large, heavy, or bulky items cost more to ship. Therefore, creating a separate return fee or policy for items that cost more to ship may be appropriate.
Who it’s best for
Online stores looking to keep return rates and associated costs low
Startup or small businesses wanting to be competitive while keeping expenses in check
Companies looking to reduce the total number of returns
Pros
Allows the business to split the cost with the consumer
Reduces buyer's perceived level of risk
Supports the needs of the business
Cons
May not fully meet buyer expectations if industry standards or competing businesses offer more lenient policies
Does not fully remove all risk from the buyer
Not ideal for businesses with widely varying product types or sizes
Live examples
Massage Chair Max - Massage chair manufacturer
Alpine Home Air - Heating and cooling products
The expectation of free shipping and free returns is at an all-time high among consumers. This is especially true for high-ticket items like furniture and electronics. By offering free returns, you could greatly offset price-based buying obstacles.
However, if you already offer free shipping on purchases, it may not be feasible to cover the full price of return shipping as well. If that’s the case, try offering free return shipping as a membership loyalty perk.
Wix’s eCommerce features include an integrated membership area that allows you to reward returning customers. And while it may seem counterintuitive to offer free shipping to users that shop the most (and return the most), it’s a high-valued perk that could keep customers coming back. Even with free return shipping, the lifetime value of a repeat customer is much higher than the value of a customer that only shops once or twice.
Before implementing a free returns policy, diligently review potential costs. Consumers don't like losing perks, so you’ll want to avoid a situation where you need to retract free returns.
One of the best ways to test a free returns policy on your website is to promote it as a limited-time offer during the off-season. Set the expectation that it's temporary versus permanent. A temporary promotion gives you time to gather the necessary data and determine if it's a sustainable policy.
Who it’s best for
Businesses specializing in high-ticket items
Established companies with higher profit margins
Apparel and clothing brands
Pros
Favored among consumers, especially when purchasing apparel
Removes all risk from the buyer
Eliminates several buying obstacles
Builds trust
Sets the tone that your business is serious and well established
Larger average shopping cart sizes
Serves as a competitive differentiator
Cons
Risky to retract once implemented
Requires proper staffing and dedicated return management
May encourage bracketing
Higher fluctuations in inventory during holidays
Higher shipping costs (larger orders will be more costly to ship)
Slower returns processing due to increased volume
Live examples
Vintage Jewelry Company - Brick-and-mortar and online jewelry business
A returnless refund policy grants a refund to a customer without requiring the original item to be returned. This might not seem like a great way to deal with returns at first. However, depending on the type of products you sell or the condition they’re in (e.g., items damaged upon arrival), it could save you money.
Not to mention that the energy required to manufacture, package, and transport items from location to location creates a substantial carbon footprint—approximately 15 million metric tons of carbon dioxide each year. Returnless refunds can dually serve to protect the environment.
Showcasing that you’re an environmentally-conscious business can create additional opportunities to differentiate your brand from your competition.
Who it’s best for
Businesses specializing in low or bargain-price items where the cost of accepting returns would be prohibitive to the business model
Established companies with higher profit margins
Overstock businesses with substantially discounted sales
Special circumstances (e.g., product arrives defective)
Pros
Saves the consumers the hassle of making a returns
Serves as a competitive differentiator
Cons
Only applies to products that would cost more to transport back to your business than they’re worth
Could lead to return fraud (returns are usually based on an honor system)
Not usually advertised and often involves direct engagement between the business and the consumer to let them know a replacement is on its way or a refund is being processed and no return is necessary
To help you get the creative juices flowing, here are four return policy examples that have worked well for several Wix merchants.
What this policy features: Kaekoo's return policy doesn't allow returns of their Honeycomb Shelves, which are handcrafted to order. They also don't allow returns of sale items. Beyond those caveats, they allow returns of items in new condition when shipped within 14 days and they don't cover the cost of return shipping.
What you can learn from it: The store encourages customers to contact them before initiating a return to discover the cause for dissatisfaction and hopefully resolve it without the need for a return. This policy is an excellent example for smaller stores selling luxury or specialty products.
What this policy features: Kaxi offers clear, simple instructions to customers. Products in new condition can be returned within 15 days, and if received after, store credit will be issued. The customer is responsible for shipping costs, and the customer must email support to initiate the return.
What you can learn from it: This policy is a great example for newer eCommerce stores, especially ones that don't require trying on items. It's also smart in that it requires emailing support to start the return process because this gives the seller the chance to collect feedback and resolve the issue in a personalized way.
What this policy features: Unless the products are defective, returns are not accepted. The store offers just one product, and they offer sizing information to make it easy for customers to buy one that fits.
What you can learn from it: If you're not ready to offer returns, you don't have to. If you have a unique and innovative product like this, there's a chance that your audience won't be deterred from making a purchase, even if they can't return products.
What this policy features: This policy features ways to please customers while still covering the cost of returns. There's a shipping fee and a handling fee for returns so that the store is able to offer refunds without this eating into their profits substantially.
What you can learn from this policy: Offer a shipping label and a reasonable deduction ($5.99) to satisfy customers' expectations and make returns easy. This policy also offers free store credit and exchanges with no shipping or handling fee.
Returns are an inevitable part of business. However, the tips above should help you to more clearly communicate your position on returns, cut costs, and handle post-purchase activities more efficiently.
Your return policy could double up as your competitive differentiator and not only keep current customers happy—but keep them coming back.
Don't have an online store yet? Create your eCommerce website today and learn how to sell online.
Brielle Gordon
Marketing Writer, Wix eCommerce
Brielle is a Colorado native with a passion for innovation and helping to mobilize entrepreneurs. Brielle is a marketing writer for Wix eCommerce, which powers over 700k online stores worldwide.
Allison Lee
Editor, Wix eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.