This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional.
According to Canada Post, most Canadian shoppers review an online merchant’s return policy before adding products to their cart. But that doesn’t mean returns or requests to exchange a product never happen.
Returns are a normal and expected part of running a retail business — especially if you offer online shopping — but if it seems like the number of returns you’ve been processing has increased recently, you’re not wrong. There isn’t much data on how much Canadian shoppers return annually, but the consensus is that they’re close to keeping up with their American counterparts.
What is known suggests that Canadians return up to 30% of their retail purchases, and those returns cost retailers as much as 21% of the sale’s original charges. If your profit margin is just 50%, and you lose 20% to returns, it doesn’t take long to eat into your overall profits — especially if you have to foot the costs of return shipping, too. Many Canadian retailers opt to add a fee to returned purchases to help offset these growing costs.
While no retailer looks forward to a customer return, viewing it as an opportunity instead of a liability can help improve your business. A staggering 80% of shoppers want free returns shipping, while only 1 in 4 of Canada’s top online retailers offer free shipping. The good news is that consumers have realized retailers’ pain and are willing to compromise. In-store returns for items bought while shopping online eliminate return shipping charges and are a great way to meet and convert an online shopper, especially if they received the item as a gift and aren’t familiar with your store. The key is to make the process customer-centric, with flexible policies that help build ongoing relationships and foster customer loyalty.
How to write a return policy
To improve customer confidence, make it easy to return your goods. A comprehensive and transparent policy establishes rules and timelines for returning or exchanging unwanted products. Additionally, consult federal and provincial return and refund regulations before you create your policy. While your return policy will reflect the type of products you sell, consider including the following information:
Items accepted for returns. Decide what items can be returned, what type of refund you’ll process (back to the card, in-store credit, etc.), what items can be exchanged, and the condition required for returns and exchanges. For example, you may accept returns of items in their original condition, such as in a sealed box or with tags attached. You may also decide to require a receipt for a return and an exchange without a receipt. You can also identify items considered “final sale,” such as something custom-made, personalized, or deeply discounted for liquidation.
The window for return. For example, Canada doesn’t require businesses to accept returns at all, but you can still create your own policy, allowing returns up to 30, 60, or 90 days from the date of purchase. Or you could offer a combination, such as returns within 30 days and exchanges or store credit within 60 days. You can also have unique timelines for holidays. Many retailers extend the deadline for returns and exchanges until after the holiday season to account for gift-giving. Some retailers also opt to have open-ended return policies, letting customers return or exchange products for extended periods of time or with no deadline at all. Most importantly, you are upfront and transparent about your policy so customers can review it when deciding what to purchase and where.
The type of refund. Decide how you will compensate the customer for the return and the documentation needed, such as a receipt or an order number. Like every part of your return policy, what is permissible may vary according to federal and state laws. For example, you can provide a full refund to the original form of payment; you can exchange the return for the same item, such as a different size or colour; or you can give the customer store credit. Determine if you’ll charge restocking fees, which are common with electronics. Connect the type of refund you provide to your timeline or the documentation the customer needs to provide. If the customer is a member of your loyalty program, you can connect the purchase there, too.
The process for completing the return. Your business operations will impact your return policy, including whether you’re brick-and-mortar only, online-only, or a combination of both. You may accept items in your store or ship them to your eCommerce warehouse. The return policy should state who pays for shipping if you accept mailed returns. You can also encourage exchanges by paying for return shipping when the customer swaps out the product instead of requesting a refund. Some retailers include return labels in their packaging to make returns quicker and easier for customers.
Creating your policy is only the beginning — now, you must alert your customers about how it works.
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How to implement a return policy
Once you’ve created a concise and comprehensive return policy, ensure you implement it consistently across your company. Inform your customers about your policy, and make it clear. You should post it in your store, such as a sign behind your checkout station, or laminate it on your counter. Add a Returns page to your website and include the process in your FAQ section. Include your policy on your online ordering pages for customers to view before checking out. You can print your return policy at the bottom of your receipts, include it in email order confirmations, and even place it at the bottom of customer loyalty sales emails. By publishing your policy in various areas, you reduce the risk of confusion for your customers and avoid disappointment later, which can negatively impact the customer experience.
Your return policy should be considered part of your overall customer service training. Make sure your associates understand how to accept a return. Some retailers only allow managers to process returns, which can help reduce return fraud. However, during busy seasons you may want to ensure that having this manager-only policy doesn’t slow down business or inconvenience shoppers who’ve driven to your physical store, which can leave a lasting, negative impression.
Choose a POS system that allows you to process returns and exchanges efficiently. You want to choose software that adds the product back to your inventory if the item is salable. If the item is damaged, however, you want the option to skip the restocking process, so you don’t inadvertently sell an item online that isn’t available for delivery.
Common return questions and issues
Consider collecting information from the customer and asking the reason for the return, which can help you improve service and even cut down on potential future returns.
Common questions you might ask are:
- Is the return due to an improper fit?
- Was the item too big or small?
- Did the customer not like the item?
- Did they find the product at another retailer for a different price?
- Was the item damaged?
- Did your warehouse ship the wrong product?
Capturing this information can provide some insight into your product selection and operations. Damaged or incorrect items could indicate problems in your warehouse, either in receiving inventory from your vendors or in your shipping processes. If you see a lot of items returned for improper fit, that could indicate a need for better sizing charts. Review your returns data when you order inventory in the future to ensure that you’re offering products your customers like.
Returns and exchanges can be viewed as a sales opportunity, especially during the holidays when the customer may be new to your store. The easier you make it, the greater the chance you’ll encourage customers to continue shopping at your store for future purchases.