Returns cost retailers $890 billion in 2024, but they don’t have to be a loss. A well-crafted return policy can build customer trust, boost repeat purchases, and help you stand out from competitors.
Customers return items for all sorts of reasons. Maybe something arrived damaged, didn’t fit quite right, or just didn’t match their expectations. Some even order multiple sizes or styles to try at home and return the rest—a growing trend called bracketing.
Without a proper system for handling returns, including a clear return policy, these requests can eat up your time, energy, and money. The good news? It’s never too late to address the problem.
With a great return policy and the right system in place, you can transform returns from a dreaded task into an opportunity that generates new profits and increases customer loyalty.
What is a return policy?
A return policy is a set of rules you create to manage how customers return and exchange unwanted merchandise they’ve purchased. These policies tell customers what items can be returned and for what reasons, plus the time frame for returns.
From Apple’s strict 14-day return policy to Ikea's generous 365-day window, most major retailers offer generous return and refund policies—and your business should, too. When shoppers know they can easily send something back if it doesn’t work out, they’re much more likely to take a chance on trying something new—especially with clothing, homeware, or beauty products.
In the US alone, 48% of online shoppers have returned an item in the past 12 months. The most frequently returned products include clothing (25%), shoes (17%), and accessories (12%).
Today’s customers demand fast refunds and clear, transparent policies. Vague or strict return rules create friction and increase abandoned carts. Customers don’t want to pay to return items that don’t fit or products they simply don’t like—48% of retailers that implemented return fees saw an increase in customer complaints, 40% saw a decrease in sales, and 33% lost customers.
In 2025, trends like sustainability and automation have reshaped return expectations. Many customers are conscious of the environmental impact of their purchases, so they appreciate low-waste or carbon-neutral return options. At the same time, brands use AI-assisted return tools to streamline everything from generating shipping labels to auto-approving refund requests based on return history or item value.
Why have a return policy?
A fair return and exchange policy builds trust between you and your customers. Offering a clear way for customers to return purchased items can boost both conversions and repeat purchases.
Sure, giving customers full refunds means profit loss on individual orders. And yes, learning that someone disliked your product can sting—especially when you believe strongly in what you’re selling.
These concerns make it tempting to skip offering a comprehensive return policy altogether, hoping the problem will go away. But avoiding returns will hurt your business more than handling them will.
The pitfalls of a poor return policy
Over time, customer complaints about your return policy will start filtering onto social media. They show up as negative reviews, angry comments under your ads, and critical mentions in Google searches about your business. That’s when a poorly thought-out return policy begins damaging your reputation.
Once negative sentiment about your return policies spreads online, you’ll likely see conversions drop, and customer satisfaction plummet.
Processing every return manually and dealing with customers case-by-case also drains your resources. It’s expensive for your operations and exhausting for your customer service team. Without monitoring and optimizing these costs, return headaches can actually prevent you from scaling your business.
The advantages of a customer-centric return policy
Smart businesses know customer-centric return policies work as powerful marketing tools. That’s why many brands now advertise “free,” “easy,” and “no-hassle” returns. They know it’ll drive conversions and boost online sales.
A return policy that puts customers first often separates businesses with strong repeat purchase rates from those that rely on one-time buyers. As customer acquisition costs climb, more businesses are focusing on retention and increasing customer lifetime value.
While a return might not make your first sale profitable, a better customer experience leads to higher retention rates across every industry—and long-term revenue growth.
Your reputation gets the biggest boost from easy returns. According to a 2025 consumer survey, almost half of respondents trust customer reviews as much as personal recommendations. Positive reviews and word of mouth about smooth buying experiences is marketing that helps your business thrive.
Legal obligations for return policies
In many places, having a comprehensive return policy is the law. Depending on where your business operates (and where your customers live), you might be legally required to provide certain return rights, especially for online purchases.
For example, in the UK and the EU, customers get a 14-day cooling-off period for most online purchases. They can return items for any reason within two weeks of receiving them. In the US, rules vary by state, but many regions require businesses to clearly display their return policy, especially if it’s stricter than typical industry standards. In Australia, consumer law requires you to offer refunds or replacements for faulty items, regardless of what your written policy says.
Failing to meet these requirements can lead to fines, legal disputes, or forced refunds—often with added costs. Plus, it damages your reputation with customers, which is incredibly difficult to recover from.
Setting up a return management system
Whether you’re running an ecommerce business or a brick-and-mortar shop, you need a return management system to handle returns smoothly. It will also cut down the time you spend managing orders.
A return management system lets customers start a return, receive a prepaid label, and ship items back without eating up your time. The system also tracks returns by adding approved items back to your inventory and monitoring how returns affect your bottom line.
Communicate your return policy, process those returns directly on your store’s site, and use Shopify to manage everything behind the scenes.
With Shopify, you can:
- Create a self-service return process: Clearly show customers the best way to contact you about returns—whether that’s via email, phone, or messenger.
- Send automated notifications: Keep customers updated with automatic messages throughout the return process.
- Send shipping labels: Use Shopify Shipping to automatically email return shipping labels to customers as soon as they create a return request. You’ll also get carrier discounts for both outbound and return shipping. Return labels are “pay on scan,” so you’re only charged when customers actually use them.
- Restock inventory: Track returns from customers, add returned items back to your inventory, and make them available for sale again.
- Refund customers: Once items are returned, refund customers to their original payment method with one click.
Return labels are automatically emailed to customers as soon as you click “Create return.”
You can manage returns directly from the original order, keeping all order history in one place. Once you receive returned items, you can send refunds to buyers using their original payment method.
Using automation in your return process
Automation helps you handle returns faster, smarter, and with far less manual work—and today’s AI-powered return solutions go far beyond generating shipping labels. They can:
- Instantly approve low-risk returns based on customer history, order value, and return patterns
- Flag suspicious activity to help reduce fraud and abuse from high-volume returners
- Auto-suggest the best resolution—like refunds, exchanges, or store credit—based on your stock levels, customer preferences, and business rules
- Communicate with customers in real time using chatbots that answer return questions, guide customers through the process, or even start returns directly through SMS or live chat
Some platforms also connect with your inventory and logistics tools. Once a return gets approved, the system can notify your warehouse team, update stock levels, and trigger refunds before items even arrive back.
💡 Tip: Use Shopify Flow to automate your return process. Automatically flag high-risk returns, process refunds based on your predefined rules, and send real-time updates to customers.
Take this course to learn how to create a customer-friendly return policy, share it on your store, and build a process that makes managing returns easy behind the scenes.
How to write a return policy (+ free return policy template)
With retailers expecting 16.9% of online purchases to be returned, writing a comprehensive return policy isn’t optional—it’s essential. People want to know exactly what happens if something doesn’t work out. The more upfront you are, the more confident they’ll feel buying from you.
Here’s a simple checklist to help you create a return policy that’s fair, clear, and customer-friendly:
- Return window: How long do customers have to return items? Be specific—whether it’s 14, 30, or 60 days. If you offer extended returns during holidays or promotions, mention that too.
- Condition of items: What can be returned and in what condition? Let people know if items need to be unused, still in original packaging, or if certain items (like final sale or hygiene products) are off-limits.
- Refund, exchange, or store credit: Spell out what customers can expect in return for their unwanted items. Will they get a full refund? Can they swap sizes? Is store credit an option?
- How to start a return: Make it easy to start the process. Do customers need to email your support team? Fill out a form? Use a returns portal?
- Shipping costs: Who covers return shipping—you or the customer? If you offer free returns (even under certain conditions), make that crystal clear.
- Processing time: Let customers know how long it takes to process returns and issue refunds.
- Contact details: If someone gets stuck or has questions, where should they go? Include a friendly way to reach out—email, live chat, or phone.
- Exceptions or special circumstances: Cover the edge cases like damaged items, gifts, or international returns so there are no surprises.
💡 Tip: Use Shopify’s return policy generator to set up a system for handling returns, and create a formal policy that clearly communicates your rules to customers. A written return policy lets you treat all requests consistently and avoid handling things case by case, which often costs more and takes longer.
Note: If your store uses other sales channels, remember that these marketplaces often have their own return policies. What you state in your return policy may not apply when using these channels.
Ecommerce return policy template
Below is a free return policy template you can adapt to fit your business. Just replace the bolded text with your own policy details and use the lists above as a guide so you don’t forget any important information.
| If you’re looking to return or exchange your order for whatever reason, we’re here to help! We offer free returns within 30 days of purchase. You can return your product for store credit, a different product, or a refund to the original payment method. | |
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Please note the following exceptions to our return and refund policy:
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To start a return, please complete the following steps: Your steps should be laid out clearly, linking to relevant pages, such as your online portal.
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Additional Information: The following are add-ons with more information that you may want to include:
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Customizing your return policy by product category
What works for a pair of jeans won’t make sense for skin care, electronics, or made-to-order furniture. That’s why it’s smart to tailor your return policy by product category.
For example:
- Clothing and shoes often have higher return rates (wrong size, poor fit, buyer’s remorse), so a generous, easy return process is essential. Consider offering free returns or exchanges and making size swaps simple.
- Beauty and personal care items, especially opened products, may not be returnable due to hygiene concerns. Set clear boundaries and consider offering store credit or a satisfaction guarantee instead.
- Electronics might need a more structured process—requiring original packaging, serial numbers, or a restocking fee. You might also want to include information about manufacturer warranties or technical support before approving returns.
- Custom, made-to-order, or personalized items usually can’t be returned unless they arrive damaged or defective.
- Digital products or downloads often fall under “final sale,” but customers still appreciate clarity about what they’re buying and whether refunds are possible in special cases.
The key is staying transparent and consistent within each product type. If your return process differs depending on what’s being purchased, create clear categories or FAQs to guide customers through it.
Where to put a standard return policy
Having a well-written return policy isn’t enough—you need to make sure customers see it before they buy. While some customers may be unsatisfied with your store’s return policy, hiding it in fine print only breaks trust. Telling a frustrated customer they can’t return an item marked as final sale after the fact won’t resolve their frustration.
Include links to your return policy in several easy-to-find locations throughout your website. This saves you time going back and forth with customers who missed the policy. Key places to list your return policy include:
- Your website footer
- Website banner
- FAQ page
- Product page
- Order notification emails
- Website chat
One great return policy example comes from online clothing retailer Chubbies. The brand includes return questions in its website chat window, letting customers start a return with one click.
Mobile optimization for return policies
Shopping on mobile is fast becoming standard. Whether browsing during lunch breaks or making late-night purchases from the couch, your return experience needs to be just as smooth on smartphones as it is on desktop.
Here’s what a mobile-friendly return experience should include:
- Easy-to-find return info that’s accessible from product pages, order confirmations, and your main menu.
- Responsive design so your return portal and forms work on any screen size.
- Tap-friendly navigation with buttons, drop-downs, and links that are easy to use without pinching and zooming.
- No printer required, so customers can generate digital QR codes or use in-store drop-offs when possible.
- Instant updates via SMS or email, so customers know when their return is received and when their refund is processed.
💡 Tip: Use a dedicated Shopify app like Loop or ReturnZap to create an easy return experience on any device.
Strategies for more profitable returns
One unavoidable reality of a solid return policy and system? It’s not cheap. While you might cut customer service hours using apps, shipping fees and restocking costs can still hurt your profitability.
But there are ways to minimize losses while still offering a fair return policy to customers. Here are some return policy best practices for 2025:
1. Turn returns into exchanges
The difference between returns and exchanges becomes crystal clear when you look at profitability. When customers return products for refunds, you usually lose money on customer acquisition and return shipping costs. Plus, you need to refund any profit made on the original order.
With exchanges, the loss is often less painful. Assuming your product margins are strong, offering replacement products instead of full refunds can keep your cash flow positive.
A common way to encourage exchanges over returns? Only offer free return shipping if customers choose to exchange the product.
2. Offer store credit
Another way to keep losses from full refunds to a minimum: offer store credit.
Presented with the three options above, store credit may appeal more to customers who plan to order from you again. While the benefits aren’t as immediate as an exchange, store credit can encourage customers to spend the same amount (or more) in a later transaction.
Convincing customers to give your brand a second chance with store credit can also improve lifetime value—they’re more likely to come back and buy again if they’re satisfied the second time around.
3. Sell product warranties
When customers return products for refunds, you risk not being able to resell the returned item.
It can take up to two weeks for a product to re-enter stock after a return starts, and the time spent in transit and unpacking may leave it damaged. If the product (or its original packaging) is expensive, replacing it might not be affordable.
For pricier items, consider selling product warranties to customers. Third-party warranties protect your business against paying to replace damaged products and help you avoid disputes over who’s to blame.
You can sell warranties through apps like Clyde, which you can add to your store to easily give your customers the option of protecting their order.
Warranties can also create a new revenue stream for your business, since providers offer commission on all premiums sold. Your customers get longer-term protection, and your business collects extra revenue instead of paying for damaged goods.
4. Upsell or cross-sell on exchange requests
Another best practice for ecommerce returns is offering to upsell or cross-sell on exchange requests. While exchanges are usually more profitable than returns, their profitability can be narrow depending on the product and its margins. If exchanges are still costly, consider upselling or cross-selling.
When customers come back to use their store credit, there’s an opportunity to show them new products they didn’t buy the first time—products that complement what they’re exchanging for.
Make sure to adjust your shipping policy for returns. In cases where customers cover shipping costs, consider letting them add more products to their cart to reach a free shipping threshold. Upselling is also easier when you know the reason for the exchange—you can make personalized recommendations for higher-priced items that address needs that weren’t satisfied on their first purchase.
For example, if a customer is returning a digital camera because it was too heavy, you can recommend a lighter-weight version that might cost more but resolves the weight issue with their first order.
💡 Tip: Check out the Shopify App Store and you’ll find plenty of apps to upsell or cross-sell related products at checkout.
5. Implement a sustainable returns practice
Customers are increasingly concerned with the environmental cost of returns—extra shipping emissions, repackaging, and the unfortunate reality many returned items can’t be resold.
Here are a few ways to make your returns greener:
- Offer exchanges or store credit first: Encouraging customers to swap items instead of getting full refunds reduces unnecessary shipping and keeps revenue in your business.
- Use returnless refunds for low-cost items: If it doesn’t make financial or environmental sense to ship something back, let customers keep it or donate it instead. This approach can save on logistics and increase goodwill.
- Partner with eco-friendly logistics providers: Look for carriers that offer carbon-neutral shipping or consolidated return services to reduce emissions.
- Resell, refurbish, or recycle returned products: Instead of sending non-resellable items to landfill, work with partners who specialize in “recommerce” or textile recycling.
- Be transparent: Let your customers know what steps you're taking to reduce waste in your returns process.
💡 Tip: Make every return shipment carbon-neutral with Shopify Planet. Show your commitment to sustainability by automatically offsetting each return shipment's carbon footprint.
Return policy examples from successful brands
Here are some real-life return policy pages from well-known brands across different industries:
Clothing: Gymshark
High return rates are common in fashion due to fit and style issues. Gymshark’s return policy outlines a 30-day return window for items purchased online or in-store, with clear guidelines on which products are eligible for return—like unworn and unwashed items—and notes exceptions like underwear and personalized items due to hygiene reasons.
Electronics: Kulala
Electronics brands often deal with technical issues and warranty concerns. Gadget brand Kulala combines its return and warranty policies on the same page via a series of FAQs. Customers can click a drop-down menu to answer their questions and find out how they can return products, reducing friction and helping customers troubleshoot before returning.
Homeware: Haus
Furniture returns can be costly and logistically tricky, so it’s important to set firm policies around who pays for return shipping. Haus makes it clear in its return policy what customers need to do if they want to return an item—and that they’ll need to pay for shipping.
Subscription: Spacegoods
Spacegoods sells subscription mushroom blends. Its short, sweet return policy avoids overcomplicating returns, telling customers exactly how they can return or exchange unwanted products without any fuss.
Food and drink: Verve Coffee
Verve Coffee Roaster’s return policy page is laid out like an FAQ. Customers can click the question they want answered and find out more about how to return products they don’t want or that aren’t right, increasing trust and boosting their chances of retaining customers.
Make the most of your return and refund policy
No matter how much effort you put into your products and customer experience, you’ll eventually encounter the odd upset customer.
How you approach these unsatisfied customers is crucial for your brand’s staying power. Companies that make return requests painless are far more likely to retain customers and have them come back to buy again—or better yet, tell their friends.
Writing a clear return policy that connects to a well-thought-out return and exchange system—and regularly updating both—helps you cut costs and turn bad customer experiences into long-term profit and customer loyalty.
💡 Need help streamlining your returns? Shopify offers built-in tools and third-party apps to help you create a seamless, customer-friendly return process from start to finish. Explore Shopify’s return management solutions to make handling returns easier.
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Return policy FAQ
Is a return a refund?
No. A return is when a customer sends an item back to your store or warehouse. They usually have to return an item before they get a refund. A refund means giving customers all or some of their money back for an unwanted item.
What is a return and refund policy?
A return and refund policy is an agreement between customers and your business regarding returns and refunds. It should outline:
- How many days they have to return a product
- How you give refunds—whether through credit card, debit card, or replacement
- Who pays the shipping charges for returns
- What you offer refunds for
- How many business days it takes to receive a refund
Are refunds legally required?
Depending on your country and state laws, your policy can technically refuse both refunds and returns. But a no-return policy can make customers distrust your brand and abandon purchases.
How do I make a return policy?
- Be clear and concise when writing your return policy
- Don't demand things from your customers
- Make your return policy easy to find and access on your website
- Make sure your teams know your return and refund policy
- Take responsibility for mistakes
- Give examples of your policy in action
