What happens when a customer returns an item they’ve purchased? That depends on a lot of factors. Maybe they’ll get a refund. Maybe the store will offer credit, or just maybe they will refuse the return entirely. Who decides? If the store has a return policy, then the terms of any returns or exchanges are laid out clearly in advance, eliminating questions in the minds of customers and staff.
What is a Return and Refund Policy?
What is a return and refund policy? A return and refund policy outlines the conditions under which customers can return or exchange items they have purchased. If you are looking at how to create a return policy, here are some of the basics it should include. A return policy lays out how long a customer has to return items, in what condition the items must be, if they need a receipt and whether they will receive cash or store credit. Without a return policy, there can be disagreements over when and what can be returned or exchanged at the store.
Why Your Business Needs a Return Policy
Why does your business need a return policy? A return policy can save business owners, their employees and their customers (both traditional clientele and online shoppers) plenty of headaches by defining when and how items can be returned or exchanged. A return policy benefits a small business in the following ways:
- Customer satisfaction – When customers know what to expect, and those expectations are met, overall customer satisfaction increases. Even if the policy doesn’t give them exactly what they want, customers will appreciate knowing the terms in advance.
- Organization – A store without a return policy won’t be able to consistently deliver the same experience to all of its customers. A return policy helps with organization, so the entire team stays on the same page and treats every customer equally.
- Empowered employees – A return policy empowers employees by ensuring they are informed of and following the proper procedures with every customer. Without a return and exchange policy, a store’s employees could be left guessing how to handle customer requests, and it’s unlikely they will all be handled consistently.
- Customer loyalty – Satisfied customers who know what to expect from a store’s return policy will become loyal customers. Customer trust is one of the hardest qualities for a small business to establish, and a return policy is a vital step in developing that relationship.
What to Include in a Return Policy
What should a small business include in its return policy? The precise formula will vary by store, and whether or not the merchant has eCommerce stores or a brick-and-mortar location. When creating a return policy, be sure to answer the following questions:
- How many days does a customer have to initiate a return?
- What methods must a customer use to initiate a return? For example, is there a specific return address, or must exchanges be made within a physical store?
- What condition must returned items be? Must packages be unopened, or can items be returned provided they are in original packaging? Must clothing be unworn? What if tags are no longer attached?
- Is a receipt required to return an item? What about an exchange?
- Are some items restricted from being returned? For example, a clothing retailer might restrict undergarments from being returned.
- How are refunds provided? Is cash offered in exchange for a returned item, or must the customer use store credit?
- Is the customer responsible for return shipping costs, or will the business pay for return shipping charges?
- When shipping returns, will the business provide the customer with prepaid shipping labels, or is the customer responsible for arranging for shipment?
- Are any restocking fees or other charges subtracted from refunded amounts?
Return Policy Examples from Big Brands
An effective return policy will inform customers what to expect if they need to exchange merchandise or if the stores offer refunds. The following big brands’ return and refund policies set adequate expectations, which increases customer loyalty. Take a look at these return policy examples from big brands:
Amazon has an extensive return policy, including specific standards for processing returns during the holiday season. You can see the entire policy here.
In its return policy, Nordstrom details how to return merchandise at a store, via curbside dropoff or through the mail.
Michaels provides a clear return policy for customers who do and don’t have a receipt.
4. Home Depot
Home Depot advertises its fast and friendly return policy.
5. Best Buy
Best Buy’s return policy sets rules for exchanging merchandise at a store or through the mail. The full policy can be found here.
Apple has a standard return policy and its own policy for returning items during the holiday season. The full returns and refunds policy can be found here.
Overstock.com boasts of its simple return process, so customers can shop online stores worry-free.
Store Return Policy Examples
While every online business and big brand has its own return policy, it’s important for stores to also have their own policies, which can be posted in the store and on its website. The following are examples of return policies for brick-and-mortar stores, posted to the retailers’ websites:
The Kohl’s return policy clearly states the timeframes customers must fall within to return and exchange merchandise.
Macy’s has updated its return policy to provide requirements for returning merchandise and requesting refunds during the holiday season.
10. Office Depot
Office Depot details its policy for returning merchandise in a store, as well as returning it by mail.
Small Business Return Policy Examples
Small businesses, too, create and post return policies to inspire trust within potential customers and loyalty from existing clientele. The following small businesses have posted effective return policies to their websites:
11. Advanced Auto Recyclers
Advanced Auto Recyclers, which deals in automotive parts and vehicle sales, details both its return policy and its limited warranties.
12. ProSound Gear
ProSound Gear promises a full refund within 30 days and either an exchange or store credit within 90 days of purchasing its recording equipment and music gear.
Dog.com details its 30-day return policy on it’s website… satisfaction guaranteed on its pet products.
The small business Save-on-Crafts.com details its return conditions and return procedure in the return policy for its online crafts store.
Store Credit Return Policy Example
Some businesses are known for their outstanding return policies, a feat which inspires customer loyalty and attracts shoppers who know the store will stand by its products. Retailers can add additional flexibility to their return policies by offering store credit.
15. American Eagle
American Eagle is know for its generous return policy, which offers customers a refund with proof of purchase at any time, and even offers store credit to customers who do not have their receipt.
How do I Write a Return Policy?
No two return policies should be exactly alike, so all small business owners should write their own returns and exchange policy to meet the needs of their customers while protecting their own interests. So, how do you write a return policy? Be sure the policy includes the following sections:
- Returns – Does the store accept returned items? How many days does a customer have to initiate a return, and in what condition will items be accepted? Be specific in describing what items can be returned and what is required to accept them, including packaging details, receipts, etc.
- Exchanges – Does the store have different requirements for returns when the customer is requesting an exchange than when they want a refund? Be sure and detail the requirements for customers who want to receive store credit or goods in exchange for their returned merchandise.
- Refunds – What is required for a customer to receive a refund for their returned items? Are refunds offered, and must the money be refunded to the customer’s original form of payment, even if that isn’t cash?
- Shipping – eCommerce businesses must determine how they will handle shipping for returns and exchanges. Will the small business send the customer a prepaid shipping label, or will it require the customer to send back items to a specific address? Who will pay for the shipping? Will the business pay for the costs of the return, or will the cost be subtracted from the customer’s refund? Does the business place time restrictions on return shipping?
- Warranties – If the business sells products with warranties, then it return policy must describe how those warranties will be handled, as well as any restrictions placed on them.
Return Policy Template
Unsure how to structure your small business return policy? A variety of templates and tools are available online to serve as a model, or you can take a look at the following return and refund policy template:
Thank you for your purchase. We hope you are happy with your products. However, if you are not completely satisfied with your purchase, you can return it to us for a full refund or store credit. Please see below for more information on our return and exchange policy.
All returns must be postmarked within thirty-one (31) days of the purchase date. All returned items must be in new and unused condition with original tags and labels attached. Boxed items can be opened, but all packaging must be included.
To return an item, place it securily in its original packaging and include your proof of purchase, then mail your return to the following address:
Small Biz, Inc.
PO Box 55555
Anytown, NY 55555
Please note, customers are responsible for all return shipping charges. We recommend that you use a trackable method to mail your return. You may also use the prepaid shipping label we’ve enclosed with your package. If you use the prepaid shipping label, $4.95 will be deducted from your refund or store credit to cover shipping charges.
After we receive your returned item and inspect its condition, we will process your refund or exchange. Refunds will be sent to your original method of payment. Please allow at least fifteen (15) days from our receipt of your item to process your return. Refunds might take 1-2 billing cycles to post to your credit card statement, depending on your bank. We will notify you by email when your return has been processed.
Undergarments and digital purchases cannot be returned. Please contact us to arrange for a refund or exchange defective or damaged products otherwise ineligible for return.
Please note a 5% restocking fee will be charged for all returns. All sales are final on discounted items, and they cannot be returned.
Questions or concerns about our return policy? Please contact us at (555)555-5555 or firstname.lastname@example.org
Where do I put a return policy on my website?
In addition to physically posting your return policy inside your brick-and-mortar store, it’s important for it to appear on your small business’ website. You can post the return and exchange policy at the bottom of your company homepage, in the footer area. You also can dedicate a specific page within your company website to the return policy. Be sure customers can find the page by placing a link to it at the bottom of the home page or in the website’s menu.
What should I avoid in my return policy?
Your return policy should be easy for the average customer to understand. Avoid industry jargon and complex language that might cause your customer to seek a dictionary. Avoid harsh language that will discourage customers from returning unwanted items. For example, avoid language such as “you must,” “you are required,” or “we are not responsible.” Remember, more than half of online shoppers say they completely avoid stores that have strict return policies.
Should I offer store credit in my return policy?
It’s a great idea to offer store credit in your return policy for a variety of reasons. By offering store credit, you have more flexibility to receive returned items, such as an opened package, for which you otherwise wouldn’t offer a full refund. Offering store credit also gives customers more option when patronizing your store. A store credit option can prevent some returns, such as those that occur when a price decreases or an item goes on sale elsewhere, while building customer loyalty.
Who pays the shipping costs to return a product?
Who pays the shipping costs to return a product? The answer is the discretion of the store, but most companies only pay for shipping costs to return an item if the product was damaged or defective. If the customer chooses to return a product for any other reason, the return shipping costs typically are subtracted from any refund, or customers can arrange for and pay for shipping on their own. Each business can choose if it wants to provide return labels or require customers to purchase their own.