Refunds can be a nightmare for small businesses, but these 10 best practices will help you see them in a different light.

Refunds are one of the biggest annoyances for digital business owners, but learning how to apply ecommerce returns best practices right isn’t just a case of damage limitation. When done correctly, a good returns policy might even help spur business growth. The urge to act defensively when it comes to forging a refunds policy is understandable. If you’re an online retailer in the UAE, you’ll know that a high number of returns can hurt your business in many ways, including;

Shipping, restocking and manpower costs taking a chunk out of your revenue
Wasting staff hours dealing with returns instead of progressive tasks
Hitting your reputation in terms of negative customer experience and feedback.

Yet, rather than view your ecommerce returns as a one-way ticket to doom and gloom for your business, it may instead be useful to see a modern and progressive returns process as a gateway to building a better reputation.

A returns policy that suits your business type while both treating customers with respect and guarding against return fraud can even be a growth factor, especially for small ecommerce businesses.

This is especially true in the UAE, where 30% of online shopping sales are returned each year, according to a CNNB/YouGov survey. This is likely because 4 out of 10 UAE internet sales are items you need to try on or apply in person (i.e. clothing, footwear, and homeware) to know if it’s for you. And that’s before we even get on to electronics.

It means UAE customers, more than ever, are looking for a refund policy and a top customer service team that will prompt them to choose your business over rivals.

But rather than seeing this as a burden, it’s time for Direct to Consumer (D2C) retailers to strike by creating a modern, thoughtful and flexible returns process fit for the digital era.

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Why choosing the right returns policy is important for your business

We are entering unprecedented times in the online retail market.

In the UAE alone, ecommerce has expanded rapidly since the start of the pandemic, with many brick-and-mortar stores joining the ranks of ecommerce brands to form a competitive digital marketplace.

As a UAE retailer, getting your ecommerce returns best practices right can help build your brand’s appeal and even forge a competitive advantage over rivals. Customers may remember a smooth refunds process, but a problematic one lingers in the mind longer.

As a business owner, it’s on you to ensure that your customers get a positive returns experience, which could lead to more sales and even referrals.

From a business perspective, a smart refunds process, made up of both preventative and remedial measures, also helps to keep business costs down. It minimizes the amount of staff hours needed for repackaging and reshelving products, cuts down on third-party logistics costs, and keeps cash flow flowing. This, in turn, frees up time and funds that you can put toward business growth activities, rather than chasing your tail with reprocessed items.

In short, reframing refunds as something that can help your business meet its targets, rather than an existential threat, looks to be increasingly useful in a combative online retail industry. The trick is finding out what type of progressive returns policy suits your firm, and how you can put it into action.

How to choose a returns policy that’s right for your business

The wide variety of online businesses out there today means that no two ecommerce return policies are identical.

Retail leaders need to factor in several aspects of their business in order to arrive at a refunds process that works best for them and their customers.

Size of business

Often the stage that your business is at will determine what type of refunds protocol to go for. It’s all very well for large enterprises like Amazon to offer wholesale free returns, but they can also afford to do so with revenue levels way beyond what smaller retailers can dream of.

Small D2C companies, then, may find this cost too high to absorb and opt for a strict returns process that seeks to limit the financial damage of refunds.

Many companies, however, find a happy medium by being firm but fair, offering customers certain benefits built into their returns policy – such as digital wallet credit, free product exchanges, and gift cards – but also seeking to protect their business bottom line.

Type of products

Clothing and apparel may rank highly among the most returned items in the UAE, but that’s only because they’re relatively light and easy to pack. Ecommerce stores that specialize in bulkier products, like white goods, will find that offering free return shipping simply isn’t so feasible. This is where alternatives such as store credit and/or exchanges come into play, with a surcharge for shipping unwanted (yet undamaged) items.

Reasons for returns

Customers have various reasons for returning products, depending on the industry. A returns policy, then, will need to reflect this.

A clothing retailer may be more lenient when it comes to measurements as a ‘good fit’ on a human body is more subjective than, say, the straightforward dimensions of a TV or computer screen.

Non-shipping costs

It’s not just the cost of transporting goods that come into play, but associated costs that affect what type of policy you draw up.

With large products come larger storage and restocking costs, and you may need to pay warehouse staff more to handle them. Their size also adds to already considerable challenges of same-day deliveries.

A balancing act is required between handling these expenses and keeping your customers happy. Strict returns protocols may keep your bank manager happy, but at what cost to your brand’s reputation?

10 e-commerce returns best practices to follow in 2023

Now we’ve looked at why creating the right refund process is important for your business, and which type might be best suited to it, we can now delve into the best returns practices that will help make it a reality.

Like with any business action, these practices should be preventative as well as remedial, giving you the flexibility to both minimize and handle the impact of customer returns.

Describe products very clearly

One of the biggest drivers of online returns are poorly worded or incorrect product pages that mislead the buyer into making the wrong purchase decision. Online purchases have many advantages over in-store buying, but the ability to see, feel and try on the products is not one of them. To compensate, digital retailers should provide as much information about the item as possible, including:

Its size and weight dimensions
Its exact color, to the closest shade (a color chart is useful here)
The products materials
Any specific care or handling instructions

Going a step further, Augmented Reality (AR) technology is capable of virtually showing exactly what the product would look like on a person or in a home via 3D models. Interactive 360-degree images and videos allow them to rotate the product and view it from multiple angles.

A little time and money can go a long way here, with the potential cost saving of returns much higher.

2. create a returns policy with marketing in mind

When done well, a product returns policy can even be used as a marketing tool.

Take the example of Ikea: their 365-day return or exchange policy for unopened items may seem crazy, but they’ve actually been quite clever.

Shopify statistics show that over 95% of customers expect a post-purchase return period within 60 days from retailers, so the chances of them returning their product after this time is very low.

IKEA’s policy doesn’t cost them that much more than a normal 30- or 60-day return window, but the publicity they get from such a generous offer is worth its weight in gold.

When we consider how important your online store’s return policy is to UAE shoppers, it makes sense to tailor it to their preferences.

Using a detailed buyer persona will help you come up with a thoughtful policy that not only builds customer loyalty, but also improves your online conversion rate.

Whichever features it has, your policy should also reflect your brand’s image and tone of voice so that you appear consistent and form a positive first impression to new customers.

3. Offer free returns shipping (where viable)

Free returns shipping presents us with a dilemma.

Yes, the likes of Amazon have raised the bar in customer expectations for sending products back at no charge, but offering at least one type of free refunds shipping is an extremely powerful tool.

For smaller businesses, offering free refunds shipping as part of a specific process rather than a wholesale measure is a sensible way to go. As an owner, you could create a policy where all exchanges or store credit purchase returns come with no-cost shipping, and then make this a central part of your refunds advertising. While absorbing this cost may still be tough, you could earn the cost back several times over if you end up keeping the customer.

4. Focus on clarity

Nothing irritates customers more than difficult and wordy refund terms. At best, they confuse potential buyers, at worst it may seem like you’re trying to pull the wool over their eyes.

US online retailer Zappo offers a great example of clear and concise wording that sums up its Rapid Returns policy in just 20 words. In just one easy-to read sentence, customers know they’ll get their refund as soon as the United States Postal Service scans the package.

Zappo’s clear and concise Rapid Refunds policy

Going for similar language in your business’s refund policy not only avoids complications with returns, but also makes you appear as a straightforward seller that doesn’t mess people around.

5. Flexibility is key

Another way of using your refunds policy to boost brand image is to make it as flexible as possible.

Much of the time customers are happy to accept alternatives to cashback if it means they still get value from the deal. Product exchanges are particularly useful if they ordered the wrong thing, or perhaps a store credit/gift card that they can only spend with you. While both of these involve a small cost to the business, it stops them from spending money at a rival.

Common sense is also essential. If you have a physical storefront, perhaps it makes more sense for a customer to return the product in person, so this option should always be available. Not only does this save on shipping costs, but they also get to experience positive customer service face-to-face instead of from behind a computer screen.

6. Make your returns policy as visible as possible

Once you’ve come up with a clear, flexible policy that suits both you and your target customer, it would be a shame to hide it away; damaging, even. Many cases of cart abandonment at checkout are down to the customer not being able to track down your returns policy. A study by Baymard Econsultancy found that 80% of abandonment occurs because of the ‘lack of a good return policy’.

The onus, then, is on you as the retailer to showcase your policy with flashing lights. Link it to product descriptions, feature it on social media posts, add it to your customer support chatbot scripts, include it in your FAQs: anything to keep it just one click away from any stage of their buyer journey.

Not only will your cart abandonment rate fall, but the chances of returns, too, as customers are kept fully aware of buying terms and conditions.

7. Track your policy’s performance

As a business owner, you’ll know the importance of monitoring performance in all aspects of your business. Doing so with your returns policy will not only allow you to tweak certain elements of it as you go along, but also predict what will happen in the future.

A free returns shipping policy may work as a promotional measure for a fledgling start-up trying to build a customer base, but could start to become a drain for a more established business. Maybe you can trim a day or two off your expected return processing time and use it as a carrot to generate more sales, for example. Tracking performance (and costs) in this way is vital if you want to keep your returns policy fresh and ready to withstand changing market demands.

8. Study legal requirements

Much of what you put into a refund policy is out of your business’s hands.

The UAE, like most developed countries, has a robust consumer protection program in place which insists on giving customers a refund if they receive a defective product, for example.

You might even use consumer laws as a way of going above and beyond legal expectations. Perhaps you’ll guarantee a quicker delivery time than required, or you’ll upgrade a faulty item to a more expensive alternative, such is your confidence in the quality of your products.

The law is designed to protect businesses, too, so referring to it in your terms and conditions is important if you want to safeguard your own interests. Working with a lawyer while constructing your returns policy is the safest way of covering all legal bases.

9. Guard against fraud

A flexible returns policy is a positive thing to have, but it is open to abuse from return fraudsters.

Like in the USA, where almost 6%, or $25.2bn, of returns were fraudulent in 2020, UAE retailers must deal with scammers who threaten to bite into their profit margins.

Here, common-sense preventative measures are the most effective, including:

Taking photos of items as proof of delivery
Only processing returns that come with a receipt to stop people returning stolen merchandise
Insisting that items have an original tag or seal

On top of this, modern logistics platforms come with features that make fraud prevention easier, including the ability to upload photos of deliveries and an electronic customer signature to an automated supply chain process.

This way, everyone involved knows the status of the delivery or return, and can detect when suspicious activity occurs.

10. Keep the customer in the loop

In the internet age, knowledge is power, and online shoppers just like anyone else, want to be in the know. When it comes to deliveries and refunds, D2C companies can use this demand to their advantage by keeping customers involved at every stage of the process.

Last-mile tracking is an increasingly popular service that lets the customer see real-time GPS updates of the package's location. They can chat with the courier about delivery time frames, so they know exactly when to be at home to receive the item. Delivery success rates increase dramatically as a result, while the odds of a refund drop.

Even if a refund does occur, the same technology can help make this a seamless process for all parties. Again, the driver knows exactly where and when to pick up the returned products, and can be quickly in and out of the property in just seconds.

Modern digital logistics platforms are helping technology like this become commonplace with in-built last-mile tracking features that reduce the chances of hiccups and improve the level of customer satisfaction.

How digital logistics platforms are revolutionizing ecommerce returns

Online retailers in the UAE may take a look at the above ecommerce returns best practices and take a deep gulp.

Just how much will it cost to implement these measures, and how long? Fortunately, the current new wave of internet technology is driving the creation of new digital solutions that are reshaping the logistics industry.

In terms of ecommerce returns, installing the right return management software can help streamline your refunds process in a simple and affordable way, by allowing your company to access the following features.

Automated inventory returns management

Updating stock levels used to be one of the big downsides of retail refunds, with warehouse managers getting lost amidst a bundle of paperwork and spreadsheets.

A logistics platform’s automated inventory management solves this at a stroke by letting businesses automate their stock counts, including self-operated labeling and bar-coding.

Not only does this speed up orders, but it also reduces the chance of the customer getting the wrong product, a common issue that causes refunds in the first place.

Last-mile tracking

Many refunds occur because of poor communication between the courier and customer, which means no one is at home to receive the item: often, the disgruntled buyer will simply cancel the transaction and claim the refund.

Last-mile tracking technology built into online delivery platforms keeps everyone in the picture. Customers receive live GPS updates of the courier’s location via a dedicated app, as well as real-time delivery statuses to keep them fully in the loop along the whole fulfillment process.

When it comes to sending items back, smart labeling means they don’t even need to print return shipping labels, or package the item, just have it ready for when the courier arrives.

Smart routing

In the past, poorly planned routes led to couriers arriving later than scheduled and missing the customer being at home.

Logistics platforms harness the power of smart technology to get around this. Using Natural Language Processing (NLP) and deep learning techniques to predict a customer’s address, the system then feeds the data into routing, batching and dispatching algorithms that build smart routes for the courier.

The result is a quicker, more efficient delivery service, a much lower chance of missed deliveries and, as a result, lower ecommerce return rates.

Want to create a refunds policy that not only builds your reputation but also boosts your bottom line? Sign up with swftbox in just five minutes to streamline your returns process and empower you and your customers.

10 Best Practices for Ecommerce Returns in 2023