Holiday Hangover in January: Dealing with Online Shoppers’ Returns

Posted on January 9, 2010. Filed under: Other | Tags: , , , , |

We sell a variety of items including gifts and toys so November and December is an incredibly busy and lucrative time of year for us. We absolutely love it. But then comes January… the Holiday Hangover month as we call it. It’s the time of year when I wish I could just disconnect the phones and put a “Gone Ice Fishing” sign on the front door. Below are some tips about returns that we have learned throughout the years.

1. Customer Returns are inevitable so don’t put energy into fighting it. Instead put energy into preventing them (as much as possible) and dealing with them in the most efficient manner possible that will cost you the least time and money.

Regarding Prevention of returns, whenever we get a return back from a customer we always classify it as either “preventable” or “non-preventable” in an effort to prevent returns in the future. For example, the first year we were in business we learned a lot and we had many returns because we shipped the wrong item (a preventable return). In 2009, we shipped the right item 100% of the time. That didn’t just happen because of luck. We made it happen. Items that were very similiar, either in part number or color or some other attribute, were put in different locations (ie on different shelves or different parts of the warehouse) so it was not as likely that someone would pull the wrong item to begin with. We also made sure that everyone – from the person pulling the order, packaging the order, typing the label, etc – was very familiar with the products. And we now have a formal process of verifying each order before it is shipped. That way, if a mistake is made in pulling the order, there are many steps along the way where it could be “caught” before shipping to the customer. Since the person packaging has product-knowledge, it is less likely that the wrong item would be packaged up and the person typing the labels would recognize the difference between an item that is expected to weigh 1 pound versus an item that is expected to weigh 4 pounds.

2. Being firm is different than being confrontational. And it’s always better “keep it positive” by stating what you WILL do rather than what you WILL NOT do regarding returns.

It is absolutely positively critical that you have a stated return policy. And the return policy should be the most restrictive that you think you’d want because you can always be more accommodating on a return than your policy states. For example, on our Amazon Return Policy we state that we charge a restocking fee and we are very specific about the amount. However, if a customer returns the item in exactly the same condition as we sent it (unopened and undamaged) and in a reasonable time then we waive the restocking fee and let them know that we have done so. If the item comes back weeks after we have approved a return or has been opened then we follow through on charging a restocking fee.

And we do our best to avoid being confrontational with a customer but yet keep from being taken advantage of. For example, if a customer asks us to send them a prepaid label for a return we let them know that we can accommodate that request and also let them know we would just subtract the amount of the postage from the refund that would be due. Obviously, the customer was asking us to pay for return shipping in an indirect way but our response was one where we agreed to make the return easier for them (return label) without it costing us any more money and yet we were not directly confrontational. Instead of saying “no” to their request, we said “yes” but we did so in a way that didn’t cost us money.

If directly asked if we would pay the return shipping cost, we say “no” but in a polite manner without a long explanation. For example, our response would be “We will not pay the return shipping cost but once we receive your item back, we will process your return quickly so that you receive a refund promptly.” And if the customer presses further, you can always make a concession by offering to waive the restocking fee as long as the item is returned in the exact same condition as was sent. In that way, the cusotmer feels that they got a better offer (return shipping was not paid but the restocking fee was waived) for the return than was stated but in reality you would have been willing to issue a full product refund without them having to ask. Of course, if the customer is a repeat buyer who spends a great deal of money with you then sending a prepaid label and giving a 100% full refund would be well worth keeping the customer for the long-term.

3. Remember to focus on the aggregate of your transactions instead of each individual transaction and, whatever you do, don’t take it personally. Losing money on returns just means you made a little less profit. That is all.

Don’t get so wrapped up on trying to prevent losing money on any single transaction, especially where a return is involved, that you forget to look at the big picture. If you have to lose 5 cents in returns for every $100 profit you make, you could either chose to focus on the loss of 5 cents or the net profit of $99.95 . Recognizing that returns are a cost of doing business, just do what you can to keep that cost down. And even when you know that a customer is taking advantage of you and you’re going to come out on the losing end, don’t take it personally and get caught up emotionally. In the time you take to fight, and possibly win, against that one whacko customer you could have potentially made many more sales. It doesn’t make bottom-line sense to fight over the nickel only to lose the $100. Pick your fights wisely.

4. A “one-size fits all” Return Policy is not reasonable. Figure out the Return Policy that best works for you for the type of product you sell and on the venues where you sell.

I’ve read many articles written about Return Policies for online merchants that advocate creating a return policy where you agree to take back anything and everything no matter what. That is simply crazy in my opinion. Now, while it’s true that it may work while selling some particular products on some venues, it is really not reasonable for most sellers to state that they have this kind of liberal return policy. Even Amazon, who is considered by many to be the most customer-friendly shopping site online, does not have this type of return policy. Buy jewelry, a laptop, or a new DVD from Amazon and you can’t send the item back “no questions asked” and get a complete refund. Amazon has specifics about what they will take back and whether a restocking fee will be assessed. And Amazon won’t pay for return shipping if you simply changed your mind about the item.

Creating a return policy is a very important part of establishing an online business. Having a “I’ll take back anything and everything and give you 100% back and pay your return shipping, even if is 2 years from now” might be a part of your selling strategy and it may work for some sellers. If I sold a different type product and I thought it was right, I’d be willing to offer that type of return policy. But know that it is also possible to have a “No Returns Accepted” policy and make it work, too. Before deciding on an extreme Return Policy, like taking everything back no questions asked or not accepting returns under any circumstance, if I were a new ecommerce seller or were selling a product I had never sold before, the first thing I’d do is check out my competitor’s return policies. On eBay, I have different return policies for the different products I sell. I do have a selling ID where I state No Returns Are Accepted and I’ve made that work quite well. Rarely do I have someone buy something and want to return it but when I do, I work with the customer and will consider taking the item back and giving a full refund as long as the product is unopened. But I have said No to a return request before on that account. On another selling ID I state that I’ll take back the item within 7 days for a full refund with no reason needed just as long as the item is returned in original condition. Different types of products and different venues will lead to a wide variety of acceptable return policies. There really is no one-size-fits-all return policy for ecommerce.

5. Handling returns is one way that your company can outshine the competition in a big way. Whatever you do, respond quickly but first, assess each return as either a “No Fault Return” or a “Return with Cause” and make sure your response appropriately addresses the type of return.

It’s relatively easy to take an order and ship it. And you won’t likely hear from a customer when you have done what they expected from the transaction. It’s when the buyer needs customer service from you that you have the opportunity to shine. Prior to the sale, customers sometimes have specific and unusual needs and as long as you can deliver on what you promised that addresses those specific needs, you are a hero. And the buyer will often sing your praises to others especially in the form of feedback left on a 3rd party platform. Deal with a return after the sale and you can still be “the good guy”. Returns don’t have to be a negative experience for the buyer unless you make it so.

When a buyer expresses a desire to return an item, make sure you get enough information to determine whether they have cause to return the item — such as they received the wrong item (a blue widget instead of a green widget) or the item was damaged in transit — or whether you have a “No Fault Return” to deal with. In the case where the customer has a good reason to return the item that has nothing to do with simply not wanting the item that was received then you must do everything possible to make it right and take care of the problem very quickly. Offer to send a prepaid label for the wrong item and send out the correct item right away or tell them you’ll file a claim with the carrier and then make sure to get an undamaged item to them in a timely manner. For a “No Fault Return”, be sure to respond with specific instructions to the buyer (ie please make sure to return the item with all original packaging and send to this address below) in a timely manner. Customers don’t like having to return items they purchased online but they really don’t like being given unclear or imcomplete instructions and they really really don’t like having the return process drawn out so that it takes weeks or months to get their money back.

Returns are not a pleasant part of the online shopping experience for either the buyer or the seller. But the return process can range from a mildly uncomfortable experience to an incredibly painful drama-filled event and it is the ecommerce merchant that mostly determines how painful or painless the process will be for both parties. An ecommerce merchant who states their return policies in sufficient detail prior to the purchase, who responds promptly to a customer’s request for a return and gives clear instructions, and who keeps the communication professional and business-like will find that they can get through the Holiday Hangover month of January without too much misery.

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5 Responses to “Holiday Hangover in January: Dealing with Online Shoppers’ Returns”

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Hey Brews,
Glad you had a good Christmas Season. I missed your posts for a while!
Good article on returns and it is refreshing ( as always ) to read someone’s articles that has passion for what they do.
You are a good role model for self employed people.
Have a great 2010 and keep up the great work!

Thanks a bunch for the kind words. And I’m wishing you a wonderful 2010 as well.

Bravo. I’d like to nominate TheBrewsNews to the ebay board of directors. (If the position were offered, would you accept it?)

This post reminds me of a place I used to work. The boss was a bit eccentric and this, coupled with his extreme stubbornness, made for an interesting customer service policy.

The boss proclaimed there were three customers- an A Customer, the holy grail, lots of disposable income and thus all profit for us, and almost no service from us. Then there was the B Customer, perhaps a struggling college student or young graduate who might someday become an A Customer so we were told to give them a little extra service. Then there was the C customer.

Short of bodily throwing the C Customer out on their ass, we were encouraged to dole out all types of punishment on them as we saw fit. By law, we could not refuse to serve them, but were given free reign to abuse them at every turn. The boss felt they were a drain… seeking freebies, adjustments on things they’d not bought, and just generally trying to mooch off us, those loss leaders that had brought us so many A and B customers. In the nickel scenario you describe above, he would have fought the customer to the last nail.
He had an oft-repeated motto to explain away the constant lawsuits that were levelled at him due to this behavior: “You aren’t a man until your father dies, and you aren’t a business ’till you’ve been sued.”

While I would not recommend this approach today, we certainly had lots of fun back then. But now, as ebay’s “C” customer, I suspect karma has found me!

It’s an honor just to be nominated. 🙂

I’d be curious to know if the place you used to work is still in business.

It is- but only as an esoteric boutique, a sub-sub-niche offshoot of the original, catering only to the aforementioned ‘A’ customers. It no longer services equipment, so much as egos 😉

I wanted no “part” of it.

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