How To Create A 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 mind.

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 business plan.

The advantages of a robust return policy

• Increase sales – around two thirds of visitors to your website will check your policy before buying anything³. A generous return policy may just be the reason a new customer chooses you 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, in the UK, trading regulations forbid sellers from saying they don’t accept returns.

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 abandon your site altogether. 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 returns experience⁴. Can you afford to lose that many return customers?

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How to create a return policy

So, what should you consider when creating your business’s return policy?

Time

Some retailers offer a standard 14-day timeframe for customers to return their items, whilst others are more generous – IKEA, for example, allows a whopping 365-day window!

A consumer survey by ReBound found that 63% of shoppers expect a return policy to be at least 30 days⁵, giving them an adequate amount of time to try on/experience the product. Really, though, it’s an individual decision for each retailer, depending on their products’ Lifecyle and their inventory levels. Some need to get stock returned and back on the shelves as soon as possible. Just always weigh this up against the value of having happy customers.

Cost

Research from Statista found that free returns are a leading motivator for online shoppers to buy directly from brands⁶. 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 businesses to process, and for some SMEs, 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 trial a free service for a short time to find the answer.

Competitors’ return policies

It’s time to do a little research. How long do your competitors allow their customers to return items? Do they charge for returns? If so, how much? If you 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 website/doesn’t suit me/found it cheaper elsewhere etc.] Over time, this data will allow you to address these pain points and ultimately reduce your returns rate.

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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 your business’s needs.

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 arrived to you 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.

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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 in which to make the return. But – this is not always feasible for retailers. You may wish to trial different return models 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 listings page, too. It will reassure indecisive buyers and push them to buy.

What should I avoid in a return policy?

Ditch the legal jargon. Keep your policy clear – but be thorough. This will save customers contacting you with extra questions, too.

Should I pay the shipping cost for my return policy?

This is an individual choice depending on your business and how many returns you receive. Whatever you decide, be sure to be clear about costs 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 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 answer.

For further advice and one-to-one guidance on ensuring a smooth return process for your customers, open a DHL Business Account.

References

1, 2, 3 – Invespcro, accessed January 2023

4 – Internet Retailing, May 2021

5 – ReBound, accessed January 2023

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