Return and Refund Policy
Return policies can vary between industries and stores, but here are a few specific things you should specify to make yours as clear as possible.
[Other specific products that cannot be returned and possible reason]
To return a product, send the product back to [address] via [mail or shipping company], along with proof of purchase and your details. We will send a confirmation email once we have received your returned item(s). Customers are responsible for all shipping costs, along with a restocking fee of [$X].
For customer support or additional questions, you can contact us at [contact details].
Return Policy for Small Businesses: Tips and Examples [2023]
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BYAshley HagueFebruary 19, 2023DisclaimerWhat Is a Return Policy?Why Does Your Business Need a Return Policy?What to Include in a Return PolicyWhat Items Can Be ReturnedExchange vs. RefundReasons for ReturnsTime Frame for ReturnsType of RefundDocumentation NeededThe Return ProcessFree Return Policy Template How Can You Issue Refunds? The Bottom Line: Create the Right Return Policy for Your Business Sharing is caring
Working to create a return policy for a small business can seem daunting and costly at first. In my experience, though, not having a return policy can actually have a negative impact on your business as customers may perceive your business as untrustworthy.
While it can require a bit of upfront work, setting up a clear return policy and system for dealing with these situations can take pressure off you and give you time to focus on other aspects of the business.
When crafting your return policy, it’s important to get the details right, or else you may find yourself losing time and money. I’ll show you what you need to include in your return policy to gain your customers’ trust while protecting your business.
Keep Track of Payments and Refunds the Easy Way
Pay.com lets you accept a wide variety of payment methods on your website. You can keep track of all your customers and transactions on our convenient Pay Dashboard, and easily issue full or partial refunds if necessary.
What Is a Return Policy?
A return policy is a set of guidelines that a business makes to outline the exact terms and conditions around the return or exchange of products. Service providers also use them, but they generally have more subjective criteria.
A return policy allows you to refer to the preset rules if a customer asks for a refund. This way, you can treat all requests the same, without exception. If you don’t have a clear policy, customers may try to argue with you, which can lead to headaches and other difficulties.
There are generally no legal requirements on accepting returns, but in some locations, you are legally required to state your policy clearly in store and online, where customers can easily access it. In certain states (California for instance), if you don’t have an accessible policy, then customers have the automatic right to a refund up to 30 days after purchase.
Why Does Your Business Need a Return Policy?
A return policy for a small online business allows you to stay organized and be transparent with your customers. Especially in ecommerce, it takes the uncertainty out of the shopping experience and builds your customers’ sense of confidence in you.
It’s tempting for small business owners to implement a no-returns policy, as each return represents a loss in revenue. Additionally, you probably think highly of your product, and it can be hard not to take returns personally when customers aren’t happy.
However, a no-returns policy is not a smart business decision for most businesses. Many customers today will not buy from companies without some sort of return or exchange policy, especially when shopping online.
Return policies are particularly important in industries like fashion, where customers want to know they can exchange or return items that don’t fit. If you have a fashion-related business and don’t offer returns or exchanges, people may be uncomfortable purchasing from you.
Additionally, if there’s an issue with an order and a customer is seeking a refund, not having a clear process can alienate them from doing further business with you. It can also push them to negatively review your business, or steer other potential customers away.
I recommend you set up a simple and straightforward policy and outline the limitations around it. This is crucial when running a small online business and can:
- Improve customer loyalty and satisfaction, as customers feel valued and respected when issues are handled quickly and easily.
- Help you and your employees stay organized and on top of issues, as a detailed return process ensures nothing falls through the cracks.
- Prevent against return fraud, as a clear policy prevents people from returning products they bought elsewhere or with fabricated receipts.
To determine the best policy for your business, look at your competitors to see what they offer. If they offer better or more streamlined processes, you may lose out on potential business.
What to Include in a Return Policy
Since there’s no obligatory standard return policy for small businesses, you’re responsible for creating a policy that works for you. Most consumers prefer simplicity, so it’s a good idea to keep it short and use clear language that is easy to understand. Leave no room for interpretation, as that may cause customers to try to skirt the policy.
Return policies can vary between industries and stores, but here are a few specific things you should specify to make yours as clear as possible.
What Items Can Be Returned
It’s common to have limitations around what can or can’t be returned. You may decide not to offer returns or exchanges for sale or clearance products, as they can be considered “final sale.” You might not accept returns on food or perishables.
You can also set limitations around the returned items’ condition. For example, a store may stipulate that undergarments or swim suits cannot be returned due to matters of hygiene, or that tech products must be in the original, unopened packaging.
Exchange vs. Refund
In some cases, instead of offering refunds, you may offer to exchange a product for a similarly priced one. This is common for clothing, when a customer may simply need a different size or prefer a different color.
You might offer a mix of refund-eligible and exchange-only items. In this case, it’s important to specify which product types fall under what category.
Reasons for Returns
While some stores might only allow a product to be returned if it’s defective or if the business made an error, others may have a “no questions asked” approach to returns and refunds, as long as the products haven’t been used.
Offering a more liberal return policy can increase customer satisfaction, especially in industries where returns are common. However, it can also lead to a greater loss of profitability and increase your workload in sorting and processing refunds.
Time Frame for Returns
Most return policies have a clear time frame. The typical time limit can be anything between 14 and 60 days after purchase, depending on the product type, whether it was bought online or in-person, and how long shipping can take.
Some businesses offer longer return time frames around the holiday season, recognizing that many products will be given as gifts. This allows the recipient an extended time frame to exchange or return a gift if it’s not right for them.
Type of Refund
Some businesses only give store credit if someone returns an item, while others will refund cash or issue a refund via the customer’s credit card or other payment methods. You could offer one of these options or even both.
An interesting tactic online retailer Cubbies uses is offering additional value when someone chooses store credit over a cash refund. If the original purchase amount was $50, they might offer store credit worth $55, to entice customers to choose that option. This can be a win-win, as the customer feels like they’re getting a deal and you are retaining their business.
Documentation Needed
Most businesses require a receipt or other proof of purchase before they’ll give a customer a refund. Some stores may still let a customer exchange an item if they’ve lost the receipt, while others won’t even allow that. In addition, many brick-and-mortar stores require the original card used to make the purchase, for identification purposes.
Ecommerce stores that accept payments online will typically have records of all their transactions, so proof of purchase may not be necessary. Some online businesses may still ask to see the customer’s receipt or email confirmation.
The Return Processespecially important for online stores that don’t have physical locations for customers to bring the items they want to return. You should specify whether you or the customer pays for return shipping, any additional fees such as restocking fees, and the refund processing time frame.
, accessing a pre-paid label for shipping (if your business pays the return shipping costs), and the address of where to send the item for return.
Free Return Policy Template
We’ve created a sample return policy for small businesses you can use as a template. Simply fill in your own details and customize as needed.
[Business Name] Return Policy
We work to ensure our customers are satisfied with their purchases. If you are unhappy with your purchase [for any reason], we’ll be happy to return or exchange the product within [X days of purchase] for [a full refund, an exchange, or store credit.]
To make a return:
- Items must be [unopened/unused/unworn]
- Items must still be in their original packaging with all tags attached
- Items must not be damaged or show signs of wear
- must have a receipt or other proof of purchase
Please note that we cannot accept returns or exchanges of clearance or sale items. We also cannot accept returns of:
- [Other specific products that cannot be returned and possible reason]
To return a product, send the product back to [address] via [mail or shipping company], along with proof of purchase and your details. We will send a confirmation email once we have received your returned item(s). Customers are responsible for all shipping costs, along with a restocking fee of [$X].
For customer support or additional questions, you can contact us at [contact details].
A Return and Refund policy usually consists of:Return and Refund policy usually consists of:
- Terms of return (i.e. number of days)
- State of return (e.g. unworn)
- Reason for return (e.g. damaged or wrong product)
- Process for return (i.e. how to initiate a return, how to contact customer service)
- Process of refund (i.e. terms of refund, duration, payment details)