Return Shipping: How Do I Price and Implement a Strategy to Handle Returns?

Return Shipping: How Do I Price and Implement a Strategy to Handle Returns?

How to set up a return shipping policy and implement it

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Question

I’m new to ecommerce, and while I’ve got my shipping mostly handled, I still don’t have a defined return shipping strategy. I know the “big guys” can offer free return shipping, but I’m just not there—and I’m not even sure how the logistics would work. Do I print a return label for every order? What if they’re only returning one item, not all of them? Any guidance you can offer in terms of what I need to know, and how to put it into practice, would be great.

Answer

Shipping has one of the steeper learning curves out there when it comes to starting an ecommerce business, and it’s also a core part of your business. Your shipping policies and prices can be the difference between converting a visitor to a customer and an abandoned cart—and that very much includes return shipping.

You can have the best product pages in the world, but no matter the industry or niche, there’s going to be some cases where a customer gets their product in-hand and decides that it’s not right for them. Even if the reasons for a return have nothing to do with you or your product, you still need to be set up to handle them.

But understandably, return shipping can seem like a bit of a black box from the outside looking in. What’s the best way to implement it, and how can you figure out the best approach for your business?

Sharon ReedsTo get the expert’s take on this, we turned to Sharon Reeds, co-founder of Intuitive Shipping, a shipping calculation app for Shopify that lets merchants fully customize how their shipping is calculated and displayed at checkout.

She shared her thoughts on what every ecommerce merchant should know before settling on a return shipping strategy—from how to price your return shipping, to the best way to preempt tricky customer service situations.

What’s the best pricing option for your business?

There’s no one right answer when it comes to pricing your return shipping, but there are a few standard options you have to choose from.

“There's really three main ways you can offer return shipping,” says Sharon.

  1. Your customer can pay the full cost of the return shipping,
  2. You can pay the full cost of the return shipping,
  3. Or a combination of the two.

For newer merchants, or those just starting to figure out how returns will work for their business, Sharon elaborates that a combination strategy can be a great way to set expectations and make customers feel confident with their returns without needing to absorb the full cost.

“Offering a flat rate for return shipping is similar to offering flat rate shipping, but on returns. With this strategy, you can offer a return shipping option where the burden isn't on either side, it gets split between the two. It’s a good compromise for your customers, and they know exactly how much a return will cost them before they buy.”

To figure out which return shipping option is best for your business, it boils down to a few key questions:

  • Which options are financially feasible? This includes how often you anticipate getting a return, as well as general information about your margins and your shipping costs.
  • Which option do you want to offer? This is focused on the competitive environment and your customer service strategy, within the subset of affordable options you just identified.

Now it’s time for logistics

Once you’ve figured out how you want to price your return shipping, you can move on to deciding your process for accepting a return. According to Sharon, your process will flow out of the pricing options you chose.

“It's going to vary based on if you're offering free returns on all orders, or if you're doing subsidized return shipping,” says Sharon. “If you're making the customer pay for return shipping, it's going to be their responsibility to take that box or poly bag, whatever you shipped in, back to their post office to have it shipped.”

“If you're offering free return shipping on all orders, you're going to want to include a prepaid label in the box or poly bag, because you want to remove as many steps as possible for them. This also saves you time, because you won’t need to send something over that could have been automated when you were already packing up their order. The customer also has one less step, because they're like, you know what, I don't like these pieces, they can just slap the label right on the box and drop it off.”

To print off those labels, you can use one of these Shopify apps:

When you’re splitting or sharing the cost of the return shipping with your customers, however, you’ll want to add in a step to make sure everything is clear before they send their items back.

“If you're doing a subsidized return, I would recommend having an email step in place. That's because, to be frank, a lot of people won’t notice the terms of the return when they’re buying an item,” says Sharon. “Think of it this way: if you send the return label pre-printed, your customer will likely see it and assume that the shipping is covered. When they send their return and see that money has been deducted from their total, they’ll be wondering, ‘Why is there money missing?’”

That’s where extra communication can actually help you deliver a better, clearer overall experience.

“The extra step is a place for you to remind them that the return shipping rate will be taken off their total return. Adding an extra step in this case can actually help make sure you’re delivering a better customer experience.”

What about multiple-item orders?

With all this talk of printing labels ahead of time, it’s entirely possible that you’re left with one outstanding logistics question: what if someone orders five items, and returns one? Will you be charged for the full cost of shipping five items when your customer returns only one in the same packaging?

Sharon was quick to reassure us that’s usually not the case.

“With prepaid return labels, they're prepaid in the sense that it's already set up, but you don't get charged for that label until it's actually scanned by your carrier,” says Sharon.

That’s why the packaging you use to ship your items can be a make-or-break factor in the affordability of your return shipping strategy.

“If you’re shipping one item back in a big box, it doesn't matter if there's five items or just one, because carriers charge by dimensional weight. That's why a lot of clothing retailers, for example, are using poly bags. If somebody originally had five dresses and they're returning just one, it's going to be a smaller size and weight, and you're going to be charged less for it.”

Poly bags, or poly mailers, aren’t just for clothing brands. If you think they might be a fit for your products, Sharon has some additional advice: using a poly mailer doesn’t mean you have to compromise on your unboxing experience. You can still get branded materials that will work with your return shipping strategy and keep your shipping costs down.

“One great place that I recently came across for branded shipping materials is called Treemarc. They’re great because they have a lower base order amount. Most places have a 1,000 minimum and if you're starting out you're like, ‘Oh shoot, I can't afford this,’ but Treemarc offers a minimum order size of just 250 on their custom poly mailers.

If you’re shopping around, StickerMule also offers custom-printed poly mailers with order sizes as low as 10 bags.

Return shipping is a big piece of the shipping puzzle

When it comes to running an ecommerce business, shipping is a key part of your logistics. Having a return shipping strategy in place can help make customers more comfortable buying from you, and will streamline the process of accepting returns when they happen. No matter how you price and manage your return shipping, you’re officially ready to implement it—and you can always adjust it as you go.

About the Author

Desirae is a content creator at Shopify, and has zero chill when it comes to helping entrepreneurs grow their businesses.

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