The [2022] Ultimate Guide to Shopify Returns and Exchanges

Andrej Janev
Jan 11, 2024
5 min read

People act very differently online than they do in real life, and that applies to the way they buy as much as it does anything else.When people buy something from a brick-and-mortar store it’s usually final, baring the occasional return or exchange. When people buy products from an ecommerce store, it’s much more likely that they’ll decide to return them or exchange them for something else.Being able to interact with a product physically - to touch it, turn it around, play around with the features and use it - is a lot different from seeing it on a screen. That’s why Shopify returns and exchanges happen more often than physical, in-store retail.In this guide, we’ll go over how to process returns for Shopify orders,  how to make a return policy for your own Shopify store, and why you should consider using a Shopify returns app instead.

How Manual Returns Work on Shopify

Processing returns is more complicated than just purchasing an item.Purchases are straightforward and linear. The customer sees an item they want, clicks on it, adds it to their cart, pays for it at checkout, and gets their original order delivered to them within a few days to a week. It’s a mostly automatic process that happens without you having to supervise it.Returns are different. They are much, much harder to automate, are time-consuming and labor-intensive to do manually, hurt your Shopify store’s profitability, and can hurt your brand’s online reputation if handled poorly.Returns and refunds eat into your Shopify store’s ROI and also happen more frequently than brick-and-mortar retail. Online retailers account for over $400 billion in lost sales in the US per year and have a return rate of over 20% (compared to brick-and-mortar stores which have a 9% return rate).[optin-monster-inline slug="uslger3nuqsjh1dxdgii"]For one thing, they happen in drastically different ways depending on the returned items. The returns process for consumable items like food and beverages and small items like jewelry are different from how you process returns for large furniture or expensive electronics.Even so, free returns on the Shopify platform are just as much a part of your buyer’s journey as the initial purchase - and they are just as important for your brand. The good news is that prompt communication with your customers and seamless returns processing will help customer retention and encourage shoppers to buy from you again.Refunds take up to 10 business days to be processed and credited back to the customer and can only be sent to the original payment method unless the customer paid with a gift card. You can also issue a gift card for the same amount, or offer store credit if you use a third-party app.You can either issue a full refund or a partial refund of the payment. You may issue a refund without returning an item, but you can't create a return after a Shopify refund has been issued.There are two ways you can manage your customer’s returns on Shopify manually: through the Shopify admin dashboard, or the Shopify POS.

How to Make Returns on the Shopify Dashboard

Using the Shopify admin dashboard, you can refund an order that has at least one line item that hasn’t been refunded. If no items have been refunded, refund and restock the item instead.

Shopify returns happen in the orders tab. Shopify has a great video tutorial on how to issue refunds on the admin dashboard which you can follow here, but the basic steps are as follows:

  1. Click the order you want to refund
  2. Click Return Items
  3. Enter the number of each item you want to return
  4. Choose your Return Shipping Option, and select one of three choices:
  5. Create Return Label: if you want to make your own shipping label for your customer from scratch. If your primary location is in the United States, you can print them in the admin dashboard. If it isn’t in the United States, you need to print your labels via a carrier or shipping app
  6. Upload Return Label: to give your customer your own return label. You can also add your tracking number and shipping carrier here if you have them
  7. No Return Shipping: to create a return without any shipping information
  8.   Click Create Return
How to issue a refund on shopify

How to Issue Returns from the Shopify POS

If your Shopify store has a physical brick-and-mortar location, you can also issue returns via the Shopify POS if a customer chooses to return their original order at your store. You can also give them a whole cart discount or discount a specific order

Shopify has another video tutorial for POS refunds you can view here, or you can follow the steps below:

  1. On the Shopify POS home screen, tap the icon with three horizontal lines
  2. Click the Orders tab
  3. Click on the order line item being returned
  4. Tap Return
  5. Enter the quantity of each item you’re refunding
  6. Click Next
  7. If the customer used more than one payment method, you can split the refund between the payment methods they used by clicking Edit in the amount to refund section, then enter the amount to be refunded for each payment method, whether a full or partial refund

Why Your Shopify Store Needs a Return Policy

Item refunds are inevitable. They are painful, they are messy, and they hurt your business. The purpose of a return policy is to minimize that damage and to keep your Shopify store’s return rate as low as possible.In a perfect world, every customer who buys from you will be happy with their purchase and would never ask to give their items back. Sadly, this is not the case. Returns are a fact of running an online ecommerce business.Return policies outline clear procedures for how free returns are handled on your online store, and what conditions need to be met for the customer to be entitled to a return. They also define the time frame over which returns are accepted (30, 60, or 90 days).Strictly speaking, you don’t have to make a return policy, but it’s strongly within your best interests as a business owner to have one anyway, and is considered best practice when managing an ecommerce store. You have no legal obligation to make one unlike a privacy policy, but returns are going to happen frequently and often, and you need to deal with them in a standardized, repeatable way to keep your losses to a minimum.

Minimizes Customer Complaints

A clear Shopify returns policy with unambiguous rules and easy-to-understand language also clears up confusion and answers commonly asked questions. This is helpful when disputes arise and customers are unhappy with what they purchased.A returns policy is also necessary (or at least extremely helpful) for certain special cases like when a customer buys too much of an item and wants to return one or more.

More Streamlined Ecommerce Workflows

A Shopify returns policy isn’t just about customer service and dispute resolution - it also a best practice that makes life significantly easier for you as a business owner.Handling return and exchange requests on a case-by-case basis leads to inconsistency and needlessly wasted money and operations hours. A 2020 survey from Pitney Bowes showed that 54% of buyers are unlikely to buy a product if the Shopify retailers have a poorly-worded or unclear returns policy.

Improved Customer Satisfaction

Returns don’t necessarily have to be all bad for your online store though. If you do them right, your returns and exchange process can create opportunities to build trust between your customers and your brand, and a solid Shopify returns policy will help with that.Even though returns lead to a short-term loss of revenue, they can lead to repeat purchases in the long run if they are handled smoothly. An Invesp survey showed that 92% of customers would buy from a brand again if the returns process is easy.On the flip side, poor Shopify returns management leads to negative reviews and negative comments on social media and your Google listings. Once they’re up there, the damage is often permanent because bad reviews have a way of getting around. User reviews are hard to appeal even with a good online reputation management process. After all, the internet is forever.

What to Consider When Making Your Own Shopify Returns Policy

How your policy is worded is just as important as what it actually says. Use simple, clear, and easy-to-understand language that doesn’t use any complicated rules or conditions.Keep your target audience in mind and make sure that your returns policy makes sense for your ecommerce customers as well. What kinds of items do you sell? Who do you sell to? How likely is it that they’ll need to return their items?

Where to Display Your Return Policy

Make your returns policy easily visible on your website so that your customer has access to it before every purchase. This will keep customer disputes to a minimum if your returns policy is visible before every purchase. Do not make your customer have to dig through your website to find your returns policy - it’s not fair on them, and not a good look for you.A few places you can include your Shopify returns policy include:

  • Your website footer
  • Your terms and conditions agreement
  • The FAQ page
  • Your order confirmation emails
  • Your website support live chat

What Your Return Policy Should Include

Your refund policy will vary greatly depending on your business, who your customers are, and what kinds of products they sell, but generally speaking, your returns policy should contain:

  • How many days your customer can return a product (within 30, 60, or 90 days)
  • What items can be returned or exchanged, and which ones are a final sale
  • What items are non-refundable
  • Condition of the item needed to return it
  • What returned items can be exchanged for
  • How to initiate a return shipment or exchange (email address to contact, web page to visit, etc.)

Other Considerations For Your Return Policy

Another thing to be mindful of is the product logistics of your business, and how your returns policy should accommodate for it:

  • Average monthly sell-through: how frequently do you move inventory, and how often do you need to restock?
  • Do your vendors offer flexibility when restocking?
  • What do your competitors’ return policies look like?
  • Product lifecycle: are your products consumable or one-time purchases

Most Common Reasons for Ecommerce Returns

To account for the most likely scenarios in which returns are unavoidable or unnecessary, it’s useful to keep in mind the most commonly-occuring reasons why they happen. Some are the responsibility of the merchant, some fall to the customer, and others are just the result of circumstances that neither have any control over.

Doesn’t Match Item Description

As the adage goes, the customer is always right - or at least they usually are. 65% of the time, it’s the merchant or store owner who is responsible for returns, not the customer, because something about the product description was inaccurate, incomplete, or misleading. You can account for this by including comprehensive product descriptions alongside high-quality images that accurately reflect the product.

Impulse Purchases

People on the internet are prone to be fickle and change behaviors and opinions frequently. They see an item that’s on sale, something in their instinct tells them to snatch it up while they have the chance, then they think better of it once they actually have it in their hands. The ease and convenience of online shopping contribute to this as well.

Wrong Size or Fit

Clothing accounts for 26% of all ecommerce returns, followed by shoes. It’s hard to gauge whether a t-shirt or a top will fit you by looking at it from just a product image, so it’s easy for shoppers to get the incorrect size or measurements they need. You can help get the correct size by including detailed product descriptions and sizing charts.

Product Defective or Damaged on Delivery

It’s not uncommon for items to be delivered to a customer with parts broken or missing. Accidents will happen - packages get dropped, items get bumped along as delivery trucks are in transit. If they happen frequently, that may indicate that there’s an issue with the carrier or delivery service you’re using. Be sure to inspect items and pack them carefully before shipping them out.

Benefits of Shopify Return Apps

Handling returns on Shopify manually is inefficient, costly, creates a poor customer experience, and is a poor use of your time as a busy entrepreneur.It will save you time, money, and resources if you automate as much of the returns process as possible rather than returning each order manually yourself. That’s what Shopify return apps are for.

Makes Your Shopify Business Scalable

The problem is that the native Shopify app doesn't allow for automated returns. That means you have to manually process every single return yourself or else train your customer service team or staff to do it for you. Doing returns this way makes it non-scalable and makes it impossible for you to expand your business to a potentially global market.Manual returns are also prone to human error. Returns and exchanges have more complexity and factors than straightforward purchases. They leave more room for you and your customer service team to make mistakes that can leave a customer livid and make you look bad.

Better Customer Experience

Return apps aren’t just better for your business, but they’re better for your customer too. Making a customer request returns themselves or making them wait for you to process their return request and give them a shipping label makes it more likely that they’ll request a refund - which will dig significantly into your ROI.The manual method of Shopify returns and exchanges requires a customer service team that offers real-time support solution to interact with customers, resolve disputes, and send shipping labels. Automating these tasks with a Shopify return app frees up solves a lot of these issues within minutes and gives you more bandwidth you can otherwise use for higher-level tasks, like making a better experience for your customers or optimizing your Shopify app.

Benefits of using a returns management app

What to Look For in the Best Returns Management Apps

So far we’ve established that you need a returns policy that gives you and your great support team a standardized, repeatable way of processing returns and exchanges and that a returns management app removes a lot of the needless busy work and mundane labor that you would otherwise spend doing returns manually.All well and good, but what features should you look for when choosing from the best returns management apps? Here are some of the things you should look out for, and why they’re helpful:

Shopify Integration

This one is self-explanatory. If you're hosting your ecommerce store on Shopify then you need to have a returns management app that works with it. That includes syncing with your inventory management system so that you don't have to manually update your inventory every time an order is processed.

Automatic Notifications

The best returns management apps will tell your customer what’s going on at every step of the returns process so they can know when to expect their new item or see their money back in their account. The returns app should send your customer automated text and email updates when the return has been sent by the carrier, is on its way back to you, and when it’s been inspected and received.

Self-Service Customer Portal

With a returns app, you can set up conditional rules that will automate your return workflows. Ideally, it should have a web portal with your Shopify store’s branding and a system that automatically sends your customer the right shipping label appropriate for the item they’re returning.Moreover, the returns app should give the customer control over how they want to handle the return process so they can print out their own label and ship it at their own convenience.

Flexible Exchange Options

When a customer initiates a return on your Shopify store, the returns app should clearly list what items can be exchanged in place of a return and full refund. The returns app can create a pathway for your customers to discover other items they might like instead rather than just asking for their money back - which would result in a loss for you.Many of the best return apps for Shopify orders offer a one-click exchange, where customers can swap out one item for another with just a button press.

Get Your Shopify Return Policy Straight, Right Out of the Gate

Shopify Refunds and exchanges aren’t fun, and they aren’t profitable, but all business owners need to deal with them from time to time. You can make the best of them by taking steps to keep from happening as little as possible, and creating a positive customer experience when they do.Outlining clear procedures for returns and exchanges that are easily accessible and automated to the greatest extent possible will keep profit and inventory loss to a minimum, keep your customers satisfied, and turn an otherwise awkward and uncomfortable customer interaction into a positive purchase experience.Rich Returns offers a customer-centered returns process guided by a clear and streamlined returns policy and integrates with the Shopify platform. Add Rich Returns to your Shopify store, so your customers can keep returning to buy more instead of returning what they bought.

Andrej Janev
April 17, 2024
6 min read