Returns are an inevitable part of doing business online. But not all return policies are the same from one business to another. In this article, you'll find an explanation of why an exchange of returned goods is significantly more profitable than a refund and how you can provide a return option that benefits both parties. Check out the following explanation!
The reason why an exchange is more profitable for your business than a refund is actually very simple. By exchanging food items the customer wants to continue the buying and selling relationship with your business while a refund can mean the end of the customer relationship with your business
The exchange of goods in the process of returns has many implications for your business. When customers choose an exchange over a refund, your business can retain revenue because they don't ask for money back. You can also build brand loyalty by sending back replacement products that match the customer's wishes.
Providing an exchange policy can also reduce inconvenience and help satisfy customers with the option to choose a product that is better and suitable for them. This problem is often experienced by shops that sell clothes and the like where customers get sizes or products that do not match the description.
Suppose a customer buys a blue shirt with size L online, but it turns out that the shirt size does not match the product size description. If there is an exchange policy, he can easily exchange it for the same shirt only with a larger size, for example XL. If the customer gets a suitable product exchange, he will certainly consider shopping at your store again. As we know that having loyal customers or repeat customers coming to your shop, will provide more benefits than attracting new customers.
Exchanging products also saves more time than refunds. If you choose the refund option, then the customer must return the product and wait for the funds to be returned. Then the customer will place a new order to get an XL size shirt and wait until he receives the order. This lengthy process can be shortened by an exchange, where new products from sellers and old products from customers will be shipped at the same time, without involving a refund transaction. Saves more time, right?
If you want to avoid loss in business, you can reduce the refund rate and increase the exchange instead. Here are four tips that you can apply to your return policy.
There are two options that business owners commonly apply to their return policies. The first option is to charge the customer a return shipping fee to minimize the costs incurred by your business. while the second option is where the business owner sees the return process as a post-purchase service and they use free shipping to reduce the risk that the customer could experience unpleasant.
Arguably, the second approach or option is the most effective choice. With this strategy, business owners can encourage customers to make an exchange instead of asking for a refund. However, if they keep asking for a refund, you can charge less shipping so it doesn't burden your customers.
By implementing this strategy, namely by eliminating shipping costs or charging lower shipping costs, you can increase the exchange rate and lower the refund rate.
Many business or store owners adopt a 30-day return period - although there is currently no data to support that a 30-day return period is better than a 60-day or longer return period. Most customers will return an ordered item within 14 days.
However, you can offer them a longer time limit so they can know that you value their loyalty to your business. Give as much time as possible for the customer to return the product. You also need to remember that most buyers or more than 67% of them will check the return page before deciding to buy from your online store. By having a longer exchange time, customers are more likely to choose an exchange over a refund.
Another way that you can use to turn your refund into an exchange is by offering customers bonuses or points. You can offer this feature to customers and can be one way to increase additional purchasing power. This bonus will certainly be more considered by customers, especially if it is combined with a policy of shipping costs that must be borne by customers if they choose a refund.
For example, let's say you offer a point of IDR 25,000 that can be used for future purchases to customers if they make an exchange. That way, customers will certainly feel at a loss if they choose a refund, especially if the returned funds must be deducted from shipping costs. That way, you can still make a profit and customers can consider exchanging items instead of opting for a full refund.
Most of the items returned are usually because the customer got the wrong size or item. If so, that means that more than half of your returns are potentially subject to exchange - but only if your return process is easy to do. However, if the return policy or return process requires more effort and time consuming, then customers are more likely to opt for a refund in the form of a refund or the money they paid for when purchasing.
That's why you are required to use a return portal that makes the customer return process easy. Instead of getting customers to email back and forth with your customer service team to make an exchange, you can use software or tools that can automatically process returns easier. Based on data, 92% of consumers stated that they would return to buy at an online store if the return process was easy and simple.
If your business often loses money from customers asking for refunds, it may be time to change the way you think about returns. It is recommended that you prioritize converting your refund to an exchange of goods. By implementing this strategy, you will not only get satisfied customers, but you can also maintain revenue, build brand loyalty and get other benefits. If you need help optimizing your return process for an exchange, you can use a tool like ReturnKey. You only need to contact the ReturnKey team who will be happy to provide a solution for an easy return process.