How to define your returns policies

In any retail business having a concrete policy on returns is very important; this could ensure the loss is minimal due to returns.

It is very difficult to consider all aspects of returns in your policies especially when one is selling multiple sku's that are different in nature from one another, there are however ways to derive policies based on the type of return.

Returning a defective item

A defective item basically means that the manufacturer is at fault, the policy should be written in such a way that the item can be easily returned back to the shipper before refunding or replacing the item for the customer.

  • Differentiate between defective and damaged item - In most cases the customer cannot be the best judge between a defective piece and a damaged item. It is very important for the customer to notify your customer service within 24 hrs of receiving the item.
  • Returning a defective item - Depending on the nature of the defect our policy should advice the customer of replacing parts if that could solve the problem, also the customer should maintain the original packing in order to be able to return the item in extreme cases.
  • Send replacement or refund - All returns due to defective item being shipped should go through the customer service team; there are many instances where the customer has not assembled the item correctly and assumes the item to be defective. Upon returning such an item the manufacturer will not reimburse the retailer and will be a total loss to the company.
  • Include Instruction Manual/Warranty papers - It is very important to include instruction manuals for all sku's, we can also have the manuals available online against each item. Warranty papers would make the customers comfortable in keeping the item on a long run and hence increase sales.

Returns on damaged goods

  • Refuse shipment - This is the safest and the most important thing that the policy should instruct the customers to do when they receive a visibly damaged item. This will ensure that a claim can be filed with the carrier and the customer can receive a replacement.
  • Notification of damaged item - The policy should inform customers to maintain the original packing, in cases of concealed damage pictures showing the damage upon arrival could be of great help in getting reimbursed fromt he carrier. Customers should notify us within 24 hrs of receiving damaged item, this is important because many carriers have a cut off time before they could accept claims.
  • Contact customer service - Customers should call in to report damage, this will confirm to us that the damage is upon arrival and not because of misuse of the product. We could request relevant documents (pictures etc.); provide a unique return authorization number. There is also a good chance to convince the customer to keep the item for a discount If the damage is very minor. Remember, the key is to reduce returns, the longer  a return issue is open the more loss to the company.

Wrong item shipped

This could be a win-win situation for the customer; the only parameter is to ensure the customer did receive the wrong item.

  • Order confirmation e-mail -  It is very important for any retailer to send an order confirmation email that mentions the item number and the qty ordered, the policy should request the customer to mail in the order confirmation email or fax in if they received a physical copy.
  • Notification - Some times customer's claim the item to be wrong due to some minor difference in the color, this mostly happens in online retailing. In such cases a talented customer service team could convince the customer and help him/her with relevant options.

Customer satisfaction returns

This is a good way to earn customer appreciation by allowing the end user to try the product and return for refund if not satisfied.

  • Specify time period/condition of item - Customer could try out the item for a specified period of time before deciding to return for a refund, he/she needs to ensure that the item is in "new or like new condition" and is in its original packing. All such returns should be subject to inspection and deduct costs for shipping and re-stocking fees if any.
  • Non returnable products - Some items can't be returned after using them, for example a CD or items that come in direct contact with the body (chest strap). Such items need to have an indication that they need to be returned  without being used.
  • Low value items - There is absolutely no use returning an item that values less than $50, the whole returns procedure could eat all your costs increasing the loss on that item. The customer service team could play a good role in convincing the customer to keep the item or have him discard the item and reduce the loss.


The policy could be derived individually per sku or could have a general returns policy, in any case we should always remember that the customer is the King and he should be comfortable with the returns procedure that will enable him to come back and give more business. Handling returns issues cannot be completely automated, it requires human intervention as there is a lot of negotiation that will reduce your loss due to return...All the best...

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