How to create a return policy

A return policy is a must. Whether you allow returns or you don’t, a policy should be clear. There are statistics out there that around 10% of items purchased are returned and the number is even higher for online purchases, sometimes in the range of 25%. Having a clear policy sets expectations with your customers. If you don’t set expectations, there is a higher chance that customers will initiate a chargeback. Chargebacks harm your business.

What is a return policy?

A return policy is a clear set of rules that allow a customer to return previously purchased merchandise back to the retailer for an exchange, credit, or refund.

What to consider when creating a return policy?

Proof of purchase: does the customer need to prove they purchased the item from you. This protects retailers because it is possible that the item was not purchased from your store.

Time period: define the time period that people are able to return items. This might be two weeks or two months. There are some retailers that decide to go all out and not have a time period, like REI.

Item condition: you should define in your return policy whether you’re willing to accept items that are opened or even used.

Method of refund: when someone returns an item, define whether how you will return the funds. For example, if they paid with credit card, will you allow customers to receive cash back. It is very common that retailers will only return funds back in the form they were purchased, whether it was credit card, debit card, or cash.

Fees: if it is costly for you to accept returns, such as it was a custom built order, you may decide to accept returns with a fee. This is frequently called a restocking fee.

Implementing your return policy

The number one rule is be very clear. Make sure the rules you define are explicit. Don’t leave anything to an assumption.

Secondly, make sure your return policy is accessible. This means make it available on your website, have signage in your store, and put them on receipts. That should cover all your bases.

Lastly, train all your staff. Make sure they know the rules and are able to explain it well to customers.