How to write a return policy: The complete guide

Written by Erika Ellacott on April 8, 2024 Sell Online.

Let’s be honest: no business owner enjoys returns. They can be expensive, time-consuming, unpleasant, and tedious. But: returns don’t always have to be so terrible. A great return policy can boost your business and drive customer loyalty.

Customers might return an item for several reasons: maybe they bought the wrong thing, realized they don’t need it anymore, found that the product didn’t live up to its online description, received it damaged or in the wrong size, or even purchased multiple sizes to find the perfect fit.

Returns are as normal as morning coffee is to the start of the day — expected and routine. Plus, since Mastercard predicts retail ecommerce return volume to increase 5.9% year over year (YoY), understanding and crafting a fair, clear, and customer-friendly return policy is more crucial than ever.

This article will guide you through creating a return and refund or exchange policy that minimizes the hassle of returns and turns potential negatives into positives for your business.

What is a return policy?

A return policy is created by online stores and other businesses to guide customers through the return or exchange process. It typically outlines requirements for returning an item, how long a shopper has to make the return, the condition products need to be in, and how to get started.

For example, Nutribullet’s return policy highlights a 30-day money-back guarantee and breaks down how customers can return items.

Nutribullet return policy, highlighting a 30-day money back guarantee

Why your business needs a return policy

A clear and fair return and refund policy has evolved from just basic customer service to a differentiating factor in competitive industries. In 2022, a staggering 31% of shoppers in the U.S. were deterred from online purchases due to hard-to-find return policies, underscoring the importance of accessibility and clarity in your return guidelines. 

A well-crafted and executed return policy can:

  • Reduce negative feedback and chargebacks. Clear return policies lower the incidence of negative reviews and chargebacks, which are costly and damaging to your business’s credibility. A straightforward path for upset customers to express concerns and receive refunds helps you maintain control over the customer service narrative.
  • Drive repeat business. Customers with positive return experiences are more likely to shop confidently in the future. This creates a cycle of repeat business, as customers know they can trust your brand to support them after the purchase, fostering customer relationships and driving long-term revenue growth.
  • Optimize operational efficiency. Implementing a straightforward return process streamlines operations and reduces the time and resources spent managing customer returns. This efficiency cuts costs and speeds up the resolution of return-related issues to improve overall customer service.
  • Generate valuable data insights. Analyzing return patterns offers critical insights into customer preferences and product performance. This data can inform inventory management, product development, and marketing strategies.
  • Improve customer experience metrics. A customer-friendly return policy directly impacts key performance indicators like net promoter score (NPS) and customer satisfaction (CSAT) scores. By addressing one of the primary concerns of online shopping, you enhance the overall customer experience, increasing customer loyalty.
woman calling customer support

How to write a return policy

A return policy is a roadmap to make customers happy and protect your business. It’s one of those essential legal documents that bridges customer trust and compliance. 

But here’s the deal: No one wants to wade through legal jargon just to find out if they can return a pair of shoes. Keep the language of your policy clear and simple. It should define the conditions under which you’ll accept returns — a change of heart, size mismatches, or defects, and the steps necessary for returns or exchanges to process. 

Let’s dive into the common questions your return policy should answer.

  • What can be returned? Specify which items are returnable and what’s final sale (like personalized or clearance items).
  • What is the return period? Clearly state how many days customers have to initiate a return after the purchase date.
  • How can customers initiate a return? Provide a step-by-step guide for what your customers need to do to start the return process (e.g., return to a brick-and-mortar location, ship it back through courier).
  • What condition must the item be in? Detail the expected condition of items to be eligible for return (e.g., unworn, original packaging, with tags still on).
  • Who pays for return shipping? Clarify if you or the customer will be responsible for return shipping fees or if there’s free return shipping.
  • How will refunds be issued? Explain the refund policy, including how long it takes and the form of refund (e.g. store credit, original payment method, full refund).
  • Can items be exchanged? If you offer exchanges, describe how these are handled differently from returns, if at all.
  • Are return shipping methods specified? Inform customers if they must use a specific shipping service or purchase tracking options.
  • What documentation is required? List any necessary documentation, such as a purchase receipt or order numbers, that customers need to include with their return.
  • How are return exceptions handled? Address any special circumstances affecting the exchange process, such as defective items or incorrect orders.
  • How long does it take to process a return? Explain the timeframe customers can expect for their return to be processed once your business receives it.
  • Are there any restocking fees? Specify whether your business charges a restocking fee for returns and under which circumstances such restocking fees apply.
  • How are gift returns handled? Clarify the process for returning items received as gifts, including whether you’ll issue full refunds to the original purchaser or if the recipient can receive a store credit of equal value with a gift receipt.
  • What is the policy for international returns? Detail any differences in the return process for international customers, including handling fees, customs duties, or specific return instructions.
  • Who can customers contact for more information about returns? Provide contact information or links where customers can get assistance with returns, ask questions, or report issues with their returns.

As a side note, the return process may differ if a third-party warranty covers your product or the customer purchased it through a different sales channel like an online marketplace. Check the warranty documentation or marketplace return policy for specific instructions and add this to the policy.

Seven essentials of a successful return policy

Navigating the fine print of return and refund policies can often feel like a maze for both businesses and customers. A well-crafted policy clarifies expectations and builds trust. Here are seven essentials of a successful return policy:

1. Make your return policy easy to find and understand 

Place your return policy in areas where customers can easily find them. When your policy is visible, it builds customer trust and reduces the chances of a potential argument about making returns. Here are some common areas for online stores to add their return policy:

  • The website footer
  • An FAQ page
  • The Checkout page
  • A website chat bot
  • Product pages
  • Order emails
  • The customer account area

Customers expect complete transparency and European fashion brand CBEAUX understands this. It displays the return policy directly on the product page so potential customers know everything before purchasing.

CBEAUX product page

Including your return policy in obvious locations boosts customer confidence throughout the customer journey. 

If your policy is lengthy, include the highlights in various places and then link to a dedicated page with all the information compiled in one place. You can include a table of contents at the top, if necessary, so readers can jump to the exact clauses that relate to their query. 

2. Convert returns into exchanges

Whenever a customer chooses to return an item, it is not just the loss of a sale that hurts; it’s the double hit of refunding the customer and covering the return shipping costs (if that’s your policy). This cycle puts a dent in your finances, especially if returns become frequent.

Keep the sale within your ecosystem by encouraging customers to exchange unwanted items. Depending on your margins, this could be a net gain — even if you cover shipping for both directions of the exchange or let the customer keep both items.

To sweeten the deal for customers, offer incentives for choosing an exchange over a refund. This could be a discount on their next purchase or even a small freebie added to their exchange order.

Also, make sure the conditions for exchanges are customer-friendly. Ensure your policy is flexible enough to accommodate genuine needs, but structured to discourage frivolous returns.

3. Sell product warranties

When a customer returns a product, especially an expensive one, the journey back to your inventory is risky. There’s the wait (it could be weeks for it to re-enter stock), and that’s before you consider the potential for damage during transit or unpacking.

This scenario is a gamble on your product’s lifecycle and profit margins. Every return of an expensive item carries the weight of a question: “Will I be able to resell this without a loss?” 

Offering third-party warranties, especially on expensive products, gives your customers peace of mind and protects your business from the financial strain of replacing damaged goods. 

They act as a buffer and absorb the shock of returns, damages, and disputes. Warranties protect your business against the unpredictability of returns and enhance customer trust by protecting your products. It’s a strategic move that acknowledges the realities of product lifecycles while prioritizing customers’ interests and business stability.

4. Upsell or cross-sell on exchange requests

Exchanges signal dissatisfaction or a preference change, leading to a potentially lost sale or customer. If not handled strategically, the exchange process results in additional costs for your business without any added benefit.

Transform the exchange process into a strategic touchpoint. 

For example, if a customer is exchanging a product because it didn’t meet their needs, offer them an alternative that’s slightly higher in value but more closely aligns with what they’re looking for, explaining the benefits and value-add of the higher-priced item. Alternatively, cross-sell by suggesting complementary products that enhance the use or enjoyment of the item they’re exchanging.

Implementing this approach turns a potentially negative experience into a positive one and reinforces the customer’s decision to shop with you. It makes the exchange process a continuation of their shopping journey rather than a detour. Plus, it introduces them to products they might not have considered, increasing their satisfaction and your sales.

woman packing up an item

5. Build in some flexibility

Sometimes, even the most attentive customers might miss the standard free returns window, typically 30 to 90 days after purchase. This is where flexibility becomes key. 

Offer store credit as an alternative when the return window has passed to keep the money within your business while still honoring the spirit of your return policy. 

It’s a win-win: customers feel heard and appreciated, and you maintain sales revenue. Plus, considering returns on a case-by-case basis, especially for loyal customers, shows a level of understanding and customer care that goes beyond a one-size-fits-all policy.

Processing returns with a bit of leniency, such as extending grace periods or being more flexible with the condition of returned merchandise, also fosters goodwill. 

6. Watch out for fraud

Fraudulent returns are a significant and growing problem. Common schemes include returning stolen merchandise, using false or stolen receipts, and buying something to use with the plan to return it. 

According to a 2023 survey by Appriss Retail and the National Retail Federation, businesses estimated 13.7% of returns, or $101 billion worth, were fraudulent. 

The tricky thing about fighting fraud is that most of the measures you would take to address this problem involve making your return policy more stringent. Anti-fraud measures might include requiring receipts or ID, fully intact product packaging, or shorter timeframes, and allowing only exchanges or store credit. 

Every business owner should take a long look at their situation and balance the need for fraud security against the benefits of a lenient policy. Ask yourself: How large a risk (or ongoing problem) is return fraud for my business? With an eye for balance, adjust your return policy accordingly.

7. Change your approach during the holiday period

The holiday season is a unique time for retail, and it calls for a special approach to your return policy. Here are five steps you can take:

  • Increase return windows. Extend your return period during the holidays. Shoppers buy gifts early, so a longer window ensures recipients have time to make returns or exchanges if needed. 
  • Inform customers. Communicate these temporary policy changes. Update your website, send emails, and post on social media to keep everyone in the loop. 
  • Increase resources. Boost your customer service team to handle the holiday rush. Be ready to assist with returns, whether it’s more staff or extended hours.
  • Offer multiple ways to return. Give customers options — mail-in returns, in-store, or even curbside drop-offs. Convenience during the hectic holiday season is a thoughtful touch they’ll appreciate.
  • Provide gift receipts and exchange-only options. Encourage gift receipts and offer exchange-only options for gift purchases. You can reduce the need for refunds and keep the sale within your business while catering to the gift recipient’s preferences.

Setting up a return management system

Without an organized return management system, your business can quickly turn into a logistical nightmare. Think returns piling up, confused customers flooding your inbox, and your team scrambling to keep track. 

This chaos isn’t just frustrating, it’s costly — leading to lost sales, damaged customer relationships, and a tarnished brand reputation.

Setting up a return management system for online and in-store purchases helps you bypass that chaos. This system isn’t just a backend lifesaver — it’s a front-facing reassurance to your customers that their satisfaction is your priority. With the right setup, you can turn the dreaded returns process into a seamless, positive experience for your team and customers.

What is a return management system?

A return management system is the backbone of handling product returns. It’s a strategic framework that allows businesses to manage and process returns smoothly, from the moment a customer decides to return an item to when it’s either restocked, exchanged, or refunded. 

This system covers all the steps — initiating returns, inspecting returned goods, managing inventory, and communicating with customers throughout the process. A return management system automates and organizes these steps to increase accuracy and efficiency while reducing customer complaints. 

How to set up a return management system

Setting up a return management system can seem daunting, but if you built your online store using WooCommerce, there are a number of ready-made tools that can help.

First of all, built-in WooCommerce features let you issue both automatic and manual refunds. Automatic refunds change the order status and reverse the charge. Manual refunds change the order status but require you to manually return money to the customer.

The WooCommerce Smart Refunder extension makes things even faster for customers, allowing them to request a refund directly from their account dashboard. You can choose to automatically approve and issue instant refunds or provide store credit or partial refunds. 

Five return policy examples

Without a clear starting point, it’s possible to overlook essential elements that ensure customer satisfaction and protect your operations. Use these return and refund policies for inspiration to create your own policy. 

1. Gentlewench

Gentlewench return policy

Gentlewench is a fashion boutique that offers curated collections of high-end clothing, accessories, and unique homeware. Their product offerings are luxurious and the return policy is on the more stringent side as a result. If this describes your business, it could be a solid model to follow. The return policy of Gentlewench includes elements like:

  • A 14-day return window. Gentlewench offers a 14-day period for returns to provide customers with a reasonable timeframe to decide if their purchase meets their expectations. This relatively short, but not unreasonable, policy balances the need for customer flexibility with the boutique’s operational efficiency.
  • Condition and presentation. Items must be returned unworn and in perfect condition, with all original tags attached. This requirement ensures products maintain their high quality and are fit for resale to preserve the boutique’s standards.
  • Hygiene and safety. The policy explicitly excludes returns on cosmetics, jewelry, lingerie, hosiery, and swimwear for hygiene and safety reasons. This clarity upholds the store’s commitment to health and safety standards.
  • Shipping costs and refusals. Return shipping costs are the customer’s responsibility, and any refusal of shipments incurs costs that will be deducted from the refund. This transparency about potential charges discourages unnecessary returns and ensures customers are informed about their obligations.

Gentlewench’s return policy reflects its dedication to maintaining a high-quality product offering while providing clear, fair guidelines to support a positive shopping experience for its clientele. If a customer receives an order and immediately and legitimately realizes a mistake, they can take proper care and return the item with minimal damage to either party. 

2. The Kind Pen

The Kind Pen exchange policy

The Kind Pen, based in Ocean, New Jersey, is an award-winning vape pen company that offers a contemporary alternative to traditional smoking methods. Their product line caters to different preferences, including CBD, e-liquids, oils, and concentrates.

The store’s return policy reflects its commitment to quality and satisfaction:

  • A 30-day return window. Customers get a generous 30 days from the order receipt to return UNUSED products in their original packaging. This timeframe allows customers ample opportunity to assess their purchase without rush.
  • No restocking fee. Unlike many companies that charge a restocking fee for returns, The Kind Pen does not, which makes returns easier for the customer. 
  • Refund process clarity. The policy outlines the steps for return, including the requirement of an RMA (return merchandise authorization) form to ensure smooth returns. It reassures customers with detailed instructions and reduces potential confusion.
  • Prompt refund processing: They commit to processing refunds within 2-3 business days of receiving a return, with an email confirmation sent to the customer. This transparency and efficiency in handling refunds shows respect to patrons.
  • Troubleshooting and replacement for used items: Recognizing that issues can arise even with the best products, The Kind Pen offers troubleshooting support and replacement for devices that may have been used.

This return policy underscores The Kind Pen’s dedication to providing a positive customer experience. It balances flexibility with clear guidelines to maintain trust and satisfaction.

3. The Antique Jewellery Company

AJC return policy

The Antique Jewellery Company is a family-run business in London with a rich history spanning over 40 years in the antique jewelry trade. The jewelry company specializes in exquisite and rare pieces and brings expertise and passion to every item they curate.

Their entire policy is crafted with the same attention to detail and customer care that they apply to their jewelry selection, featuring several standout aspects:

  • 100% satisfaction guarantee. This policy underscores their confidence in the quality and authenticity of their pieces. To reinforce trust and credibility, it promises a full money-back guarantee if customers are not completely satisfied.
  • A 30-day return window. Offering a generous 30-day period for returns provides customers ample time to assess their purchase. This generous period ensures products meet customer expectations and fit into their collection.
  • Clear conditions for returns. The policy specifies that items must be returned in their original condition, which is crucial for maintaining the integrity of antique pieces. Clear communication helps manage customer expectations and maintain high inventory standards.
  • Prompt refund process. Detailed refund timelines for credit cards and the commitment to refunding the full purchase price within 48 hours show their dedication to customer service.
  • Detailed international return policy. For international customers, they specify the handling of return shipping charges and import taxes. This info provides clarity and transparency for overseas transactions — crucial in the luxury goods market.

The Antique Jewellery Company’s return policy reflects their commitment to customer trust, mirroring the timeless elegance and integrity of the beautiful pieces they offer.

4. Nutribullet 

30-day money back guarantee from NutriBullet

Nutribullet is focused on providing tools that make healthy living possible no matter their customers’ lifestyles, locations, or goals. 

A leading small kitchen appliance company, they sell personal blenders, juicers, and baby food makers, among other high-quality countertop machines. Highlights of their return policy information include: 

  • A 30-day money-back guarantee. People can try it out and add it into their routine without any financial risk whatsoever. However, it’s important to note that this doesn’t apply to opened food products.
  • Clear steps for customers to follow. The return steps are clear, with a numbered list outlining the process from contacting support to receiving a refund.
  • A return authorization number. Customers requesting a refund will reach out and be provided with a return authorization number. This allows Nutribullet to evaluate each case and to send proper documentation and tracking items for the customers to use. This also reduces cases of customers randomly sending in unidentifiable products and adding friction to the process. 
  • An available warranty and extended warranty. Nutribullet also adds reassurance for customers by providing a one-year warranty on their products. This means that, outside of the 30-day return window, Nutribullet will help make customers whole if the product fails due to manufacturer error. An extended warranty is also available for purchase, which further reduces the risk for customers. 

Tools of the return

Returns are an inevitable part of running an online store. Instead of letting it become a frustration, consider it an opportunity to set yourself apart from the competition. You can turn less-than-thrilled customers into your best advocates with a surprisingly delightful and human-centric approach. 

WooCommerce has the tools to simplify your return process — it’s up to you to determine your policies and set your brand’s attitude towards this essential part of customer service.