E-commerce returns
Returns are a key part of the e-commerce customer experience. They may be a cost factor, but they also offer added value. A good return policy provides peace of mind to shoppers, which is why it's important to develop a process that suits your brand, budget and customers.
Why are e-commerce returns important?
Returns and exchanges have become an integral part of the e-commerce journey so they should be treated as such: a key service that helps define your brand. A good thing to keep in mind is that customers who send purchases back are also potential return shoppers. That's why it's important not to dismiss them, but to aim to provide a positive returns experience
Page overview
1. What makes a good e-commerce return policy?
An effective return policy strikes a balance between customer satisfaction and reduced costs through three basic principles:
It's cost-effective
You can't allow a returned product to be a financial drain, so get creative in keeping it affordable for your business by providing a selection of cost-effective return options.
It's easy
Shoppers expect the return and exchange process to be very easy, so take care to fulfil those expectations by making it simple and accessible. A customer should be able to easily get a return label and drop off the parcel locally.
It's often free
It's also a common customer expectation that they can exchange or return a purchase free-of-charge. If you need to charge a fee then make it clear in advance and explain why, or offer a range of options where possible.
2. Shipping returns internationally: choices and challenges
International cross-border returns are always more complex than returns within a single country or economic zone, for a number of reasons. When you set up your return shipping strategy, or adapt it for a new destination, you need to consider:
Country regulations
Customs authorities in some countries, such as Brazil, China and Indonesia, discourage returns with regulations that make it difficult to send goods back, or for the drawback of any duties and taxes. That's why it's always important to research regulations in advance before shipping somewhere new.
Refund and exchange options
Returns and exchanges go hand-in-hand. Some companies find refunding a return purchase to be the easiest administrative process, while others prefer to retain profits by encouraging exchanges instead. There are plenty of creative ways to prompt shoppers to turn a refund request into an exchange: by offering free return shipping on exchanges while charging a fee for return items, or by offering a higher value in store credit than the refund amount.
Product type
Your return strategy depends on the products you're selling. Certain e-commerce products have a higher chance of being returned, such as clothing, footwear, books, electronics, children's items, accessories (e.g. watches and jewelry), or health and beauty products.
On the other hand, some products, such as unique or high-value items (e.g. artisan or designer creations), are more suited to international shipping. To purchase such products, customers may be prepared to invest extra time and effort, known as 'shopper willingness', and may accept a more limited return policy.
Carrier choice
Will you use the same carrier for returns as you do for deliveries? Some businesses ship to customers with one carrier and do return shipments with another, or use separate carriers for domestic and international markets. Alternative carriers may offer services that are better suited to your returns needs, such as customs brokerage or consolidation, so it's worth investigating the different options.
Return paperwork
When a customer wants to return a purchase they need the shipping documents to send it back. Some companies include return labels in the original box or parcel, while others ask the customer to request a new shipping label or commercial invoice online and print it out.
The paper return label in the box can provide a better customer journey, as it's easy and accessible, but for the same reason it may also increase the returns percentage. Generating new shipping documents online means they are digitally available to the seller and customs – so they are aware of parcel contents and the shipment is digitally linked to any other relevant documents such as certifications.
Customer handover
How can the customer hand over return items? A high-value product may require courier pickup, while customers can drop-off lower-value items at a local parcel point – this is usually the preferred and more affordable option.
Duty drawback and duty relief
When a product is shipped internationally, customs duties and taxes are often paid when it enters the receiver's country. When the unused product exits the country on its way back to the seller, a refund of those charges – known as duty drawback – will need to be claimed from customs. If the seller paid the duties and taxes (under DDP Incoterms®), then they'll need to make the claim. If the customer paid (DAP or DDU Incoterms®) then they'll need to request the refund themselves.
Similarly, the seller needs to avoid paying import fees on a returned product re-entering their own country by requesting duty relief from their local customs authority.
Transit time and cost
How soon do you want to get your product back? Rapid return of an item costs more. This decision often depends on the product: you may want a summer skirt returned quickly so it can still be sold in the same season, while a book or large equipment can move more slowly.
If the items are not time-sensitive, a popular international shipping option is 'consolidated returns' – this is when returned parcels are gathered together in the carrier's warehouse and then shipped/reimported in a single bulk shipment. Consolidation is slower but cheaper, and requires a high volume of goods, so is most viable in markets with a high number of returns.
Return destination
Where does a returned product go? Back to the warehouse in the original country or to a new location? If a customer wants to return a low-value item, sometimes it may not be cost-effective to ship it back to the seller's country, or to request duty drawback from customs. In such cases the seller may need to find an alternative approach. Options include consolidated returns, using a distribution center in the destination country or even issuing a (partial) refund without receiving the goods back.
Keeping a returned product in the destination country for the next customer can be a convenient way to avoid repeating the customs process. For example, an Italian coffee machine maker may keep a returned machine in the US ready for the next sale. This approach is based more on business strategy, however, as it can require warehouse services such as grading, inspection, repair, repacking, or reselling. Using a third-party logistics partner (3PL), or fulfillment center, in a new region or country is also always an option.
3. What is the international e-commerce return process?
Imagine you're a French designer brand selling internationally online – here's an example of the process you need to follow for a garment sent to the US to be returned to France.
- Purchase – a shopper in the US buys a dress and T-shirt from your webshop. They're shipped from France to the US. The customer receives the parcel and decides to keep the T-shirt but return the dress because it's the wrong size.
- Return request – the customer visits your webshop to request a refund for the dress within the returns period.
- Generate shipping label – your webshop generates a return label and/or commercial invoice just for the dress, which the customer can print out.
- Drop-off – the customer packs the dress back in the original box, attaches the return label and invoice and takes the parcel to a local drop-off point.
- Duty drawback – the carrier picks up the parcel and takes it to a shipping hub. The carrier's customs broker requests a refund of the duties and taxes that were paid to US customs when the dress entered the country. This must happen before it passes back through US customs.
- Duty relief – the carrier flies the parcel back from the US to France. The shipment is now being reimported into the EU. The shipping documents must explicitly state that it's a return shipment so your carrier can ask French customs for an exemption from paying duties and taxes on the dress (re)entering France.
- Arrival at warehouse – the carrier delivers the dress to your warehouse where it is checked and returned to stock.
4. What are some e-commerce returns best practices?
E-commerce returns management is quite an art, with several factors to remember when developing your strategy:
- Prevent returns in the first place – provide detailed product descriptions and accurate photos on the webshop itself. Multiple images, correct colors, correct sizing or dimensions, and an ingredient/material list will help customers know what to expect.
- Help customers understand your e-commerce return policy – make it accessible and reader-friendly on your website.
- Make returns or exchanges free – if possible. This may increase costs but also lower the threshold for customers to make a purchase.
- Treat returns as an important value-added service – supported by quality customer communication that matches your brand values.
- Manage returns in the most efficient way – which may mean different processes for different products and countries.
- Study the habits of your customers – make use of big data to learn where returns are coming from. Identify high-returning items and find ways to reduce them by improving the product profile or by promoting them differently.
- Analyse the returnability of products – find out which products you can afford to have returned or investigate other solutions.
- Customize your policy to the destination – If the customs authority in a new country blocks or complicates returns then you can always adapt your policy for that location. You could reduce return options or move the responsibility onto the customer, which – of course – should be communicated clearly.
This website is designed to provide general information related to shipping. If you’re unsure of the shipping requirements that apply to you, check with your carrier. Make sure to check the rules and regulations of the country you’re shipping from and to prior to shipping. You can find this information on government websites.
The information provided on this page does not constitute legal, tax, finance, accounting, or trade advice, but is designed to provide general information relating to business and commerce. The Shipping Channel content, information, and services are not a substitute for obtaining the advice of a competent professional, for example a licensed attorney, law firm, accountant, or financial adviser.
