Okay. Let's talk about refunds and returns. A lot of people will ask what happens if a customer wants to return something, do they return it to your supplier in China? Do they return it to you? The answer is neither of those things. You just give them a refund. Well, what happens if a customer never receives their order?
Do they still pay for that? Or do you contact the supplier or neither of those things? You just give the customer a refund. Okay. But what happens if a customer has the audacity to just ask for a refund because they don't like their product, you give the customer a refund. Are you seeing what I'm trying to say here? You want to default to giving your customers a refund in almost any scenario where the customer will offer a complaint.
You may be thinking that you're going to hemorrhage cash if all you do is give refunds whenever a customer has a problem. So I want to set the record straight on how your business will realistically work. In a really successful eCommerce business. A refund rate of around 8% is normal. It's completely normal. So as you get into this business, just know that at some point a customer will have a complaint.
They'll want to return an item or they'll want a refund. Now you definitely don't want that number to be higher. And that's why, if you'll remember a few lessons ago, we put so much energy into supplier research. When you have suppliers that you can trust that ship on time and ship high quality products, then you're going to keep that refund rate low. And at that good average of 8%, however, at that 8% rate, eight out of 100 customers are going to want their money back for some reason or another. Now you won't necessarily lose money with all of these refund requests.
I'll walk you through this in a future lesson, but there are ways that you can get your money back from the supplier. In general, the point I'm trying to make is that it's almost always the smarter reflex to give your customer a refund. Let me tell you why the refund first policy might lose you money, but it will gain you three important things. First, it will gain you time. You are a new store owner. You have lots to do, and going back and forth with a customer who didn't read your size chart or who didn't read the product description is just going to burn hours that you could spend getting better at Facebook ads, tweaking your store design, or finding great new products to sell. It's not a smart use of your time.
You can resolve the issue quickly by giving a refund. You can think of it this way. If a customer wants a refund on a product that you priced at 14.99, you can either go back and forth arguing with the customer for a total of an hour, and maybe they'll give up the fight. But if you do that, you're valuing hour of your time at 14.99. And I know you're worth more than that. Give them the refund.
And you'll not only gain that time, but you'll also probably weirdly gain a loyal customer. I've seen this in my own stores, just when I think that a customer might be a little annoyed because there was a shipping mistake. If I turn around and I say, I'm so sorry, here's a refund. I hope you'll come back and shop later. They do. What they realize is they're shopping from a store with a real caring person behind it.
That's kind of store they trust to go back to and resolve the mistake. That is a huge win because a loyal customer will tell their friends about the store that they love. You could make one angry customer into two happy customers just by giving that refund. No questions asked. And the third reason that I love and advise a refund first policy is because most of the customers that are going to read your FAQ are reading it before they click buy. They just want to know if something goes wrong, will they be the ones that have to pay for the mistake when you let that customer know how to have time? Nope. If there's a mistake, you, the store owner will take care of it. That customer is going to relax.
They're going to think, okay. There's like no risk in pressing buy, and you're going to get that sale. And you know what? Everything's going to go smoothly. And the customer probably won't ask for a refund at all. An 8% refund rate might seem high, but that means that 92% of your sales are going to stick. And that's revenue in your pocket. In closing, this is one of those cool occasions where being a good person also means being a savvy entrepreneur.
When a customer complains to you, treat them with empathy and respect and give them an automatic refund, you will be shocked at how that grows your revenues rather than decreases them. Okay, now that we've set the record straight on refunds and returns, let's get back to putting the finishing touches on your store because I'm so excited to see what that end result looks like.
