Did you know that 67% of consumers will check an online retailer’s return policy before committing to a purchase?1 Having a clear and simple return and refund policy in place is essential for your business to attract and retain customers. Read on as we guide you through how to write a small business return policy.
What is a small business return policy?
A small business return policy is a set of rules laying out for what reasons and within what timeframe a retailer will accept returns. Customers may want to return a product to your business for many reasons, including if it is damaged, if it doesn’t fit them, or simply because they’ve changed their minds.
Why your small business needs a return policy
As much of a pain as they are to deal with, there’s no escaping returns. Around 30% of all products ordered online are returned to the sender2 (for some sectors, like apparel, the rate is even higher!) Whatever your business is selling, you’re likely going to have to deal with a fair few returns, so it’s important to make the issue a key part of your small business plan and policy.
The advantages of a robust return policy
Increase sales – around 88% of European shoppers consider the return policy before buying anything. A generous return policy may just be the reason a new customer chooses your small business over a close competitor.
Build trust with customers – a return policy on your website creates a sense of professionalism.
Less admin and stress – a clear and thorough return policy will reduce the number of customers contacting you with questions, saving your business time. And in business, time equals money!
- Legal compliance – depending on which country you’re selling from, it may be a legal requirement to have a return policy. For example, Ireland is covered by the EU Consumer Rights Directive, which means that consumers have the right to return a product and receive a refund within the 14-day cooling period2.
The dangers of a poor return policy
If a customer has to read through a complex return policy on your website – or worse, have to take the time to contact your business with a question that isn’t answered already – they will become frustrated and may leave your site altogether, racking up your cart abandonment and bounce rates. Remember, a competitor’s website is always just a couple of clicks away!
84% of consumers will not shop again with a retailer after a bad return experience3. For a small business in Ireland, that can be a significant risk, especially since a poor return policy may lead to lost sales and a damaged reputation.
What to consider when creating a small business return policy
So, what should you consider when creating your small business’s return policy?
Time
Some retailers offer a standard 14-day timeframe for customers to return their items, whilst others are more generous. For example, while the standard return timeframe for Marks & Spencer Ireland is 35 days, the company has promotions for specific purchases, extending the limits to 100 days!
A consumer survey by ReBound found that 63% of shoppers expect a return policy to be at least 30 days4, giving them an adequate amount of time to try on/experience the product. Really, though, it’s an individual decision for each retailer or small business, depending on their products’ lifecycle and their inventory levels. Some need to get stock returned and back on the shelves as soon as possible. As always, weigh this up against the value of meeting customer expectations.
Cost
Research from Statista found that free returns are a leading motivator for online shoppers to buy directly from brands5. Yet, recently a host of well-known brands have had to begin charging customers for returns due to the sheer number they receive.
Returns can be extremely expensive for anyone to process, and for some small businesses, it’s simply not doable. You will need to carefully consider whether the cost of offering free returns is exceeded by the extra sales you generate. You could try including a free service to your return policy for a short time to find the answer.
Competitors’ return policies
It’s time to do a little research and perform competitor analysis on return policies. How long do your competitors allow their customers to return items? Do they charge for returns? If so, how much? If your small business can match, or even better, beat, their offering, you will attract these customers through your digital doors.
Return form
You may wish to take the opportunity to learn a little more about why your customers are returning their items. When they initiate a return, you could ask them to say why they are returning the item [not as described on the website/doesn’t suit me/found it cheaper elsewhere etc.] Over time, this data will allow you to address these pain points through your improved return policy and ultimately reduce the returns rate of your small business.
Small business return policy template
There’s a lot to consider, so we’ve laid out an example return policy below, which you can edit and tailor to the needs of your small business.
Return policy
Returns must be sent back to us within [X] days of the purchase date. Products must be unused, in their original packaging and with tags attached.
How to generate a return
To return an item, process a [free*] return label here. We will send you your shipping label via email. Print it off and stick it to the front of the package. Take the package to [a post office/DHL Service Point, etc.] and retain a proof of purchase receipt for your records. [$XX will be taken off your refund to pay for the shipping.]
*With DHL, you can offer a free, pre-paid shipping label to customers. You, as the receiver, will then be charged for the shipment.
Refunds
Once we have received your item, we will initiate a return. Please allow at least [X] days from our receipt of the return for the refund to be processed. Money will be sent to your original method of payment. We will email you once your return has been processed.
Damaged goods
In the event a product arrives damaged, please contact our customer service team at [email address]. A full refund will be issued, including the cost of shipping.
Restrictions
We cannot accept returns of [e.g. food/make-up/earrings] due to safety/hygiene reasons.
Exchange policy
If you need to exchange an item for a different size or colour, please contact our customer service team within [X] days of receiving your order. We will be happy to assist you with the exchange process, subject to stock availability in our Ireland warehouse. Please note that the customer is responsible for the cost of return shipping for exchanges.
Best practices for writing a return policy
Now that you have a small business return policy template to work with, let's talk about some best practices to make sure your policy is crystal clear and customer-friendly. To build trust and encourage sales rack up your shipping, you can follow these tips:
Keep it legal
Before you finalise the return policy for your small business, make sure it aligns with Irish consumer law. There are specific regulations around refunds and returns, so it's worth double-checking to avoid any legal headaches down the road.
Put it in plain terms
Nobody wants to decipher a return policy written in complicated legal jargon. Use clear, straightforward language that everyone can understand. As much as possible, make the writing seem like your small business is having a conversation with your customer.
Don't just copy and paste
While our small business return policy example is a great starting point, remember to tailor it to your specific business needs. Every business is unique, and your return policy should reflect that.
Make it easy to find
Your return policy shouldn't be a hidden treasure, so make sure it's easily accessible on your website. For example, you can include it in your website footer, order confirmation emails, and even on your checkout page. The easier it is to find, the less time your small business will spend answering customer queries.
How to make profits from your returns
Return policies don't have to drain your small business in Ireland. As a savvy business owner, you can still turn returns into a revenue stream with a few smart strategies:
Restocking fees
Consider implementing reasonable restocking fees in your return policy to cover the processing costs and help offset expenses related to inspecting, repackaging, and restocking returned items. However, be mindful of setting fees too high, as this could discourage customers from choosing your small business.
Cross-selling and upselling
Profits can go beyond your return policy. When a customer initiates a return, seize the opportunity to suggest alternative products or upgrades. For example, if a customer returns a dress, you could recommend a similar item in a different style or colour, potentially leading to a higher-value purchase for your small business.
Customer loyalty
A smooth and efficient return process can enhance customer satisfaction and foster loyalty for your small business. By providing a clear policy and a positive return experience, you encourage repeat business and build a strong reputation in the Irish market.
Selling refurbished items
Consider refurbishing returned items and reselling them at a discounted price. This can be a profitable strategy for certain product categories, allowing you to recover value from returned merchandise.
Return Policy FAQs
What is a reasonable return policy?
Consumers would love to always be offered a free return service with a generous window of time to make the return. But – this is not always feasible for retailers and many small businesses. You may wish to try different return models for your policy to find a middle ground that keeps your customers happy and your bottom line healthy! Be sure to gather customer feedback about the service to help you improve it where you can.
Where should I put a return policy on my website?
As returns are such an incentive to buyers, be sure to put your return policy in several places throughout your website, including the footer and the FAQ page. If you are offering the golden free returns, it’s worth displaying a FREE RETURNS banner on each product listing page, too. It will reassure indecisive buyers to choose your small business and push them to buy.
What should I avoid in a return policy?
Ditch the legal jargon. Keep your return policy clear – but be thorough. This will save customers from contacting your small business with extra questions, too.
Should I pay the shipping cost for my return policy?
This is an individual choice, depending on your small business and how many returns you receive. Whatever you decide, be sure to be clear about costs in your policy and throughout the buyer’s journey – hidden fees are a sure way to break trust with your customers.
Are you allowed to have a no-refund policy?
The legalities and policies around consumer returns vary by country. Do some research around your market’s laws to ensure you comply. A quick search on Google will find you the appropriate answer for your small business.
For further advice and one-to-one guidance on ensuring a smooth return process for your customers, open a DHL Business Account.
