What is your return policy? Is it fair? Is it cost effective? Is it too strict and losing you sales? Is it too lenient and stripping your bottom line? Should you change it? What is everyone else doing?

Well the last question may be the most important. The climate of the marketplace will change, and customer expectations change as it evolves.

In the past, “the customer is always right.” As companies like Target tighten up their return policy (no returns after 90 days, no returns without a receipt), customers are expecting less from your return policy. As fraud increases, in particular online, etailers tighten their return policies in an effort to protect themselves.  These things combine to set a climate that an etailer can use to their advantage. 

Return policies sometimes seem to be stricter for “bargain” companies.  For example, in the B&M world, Burlington Coat Factory, known for designer clothing at Target prices, will not give a refund after 2 weeks, even with a receipt. That’s strict. 

So who pays for shipping? Most online retailers pay for return shipping if it is their mistake. Some pay for return shipping even if the customer changes their mind. One logic is that if you bought the vaccum cleaner at Target, you drove to Target to buy it, used your gas and car and time, and if you got home the vacuum did not work, you would have to drive to Target to get another one.  Target is not going to reimburse you for your gas expense or time.  Even though it was not your fault.  So why should you pay for your customer to “drive it back” to your store?  Answer: because it is mostly still expected in the online world. The customer does not equate a shipping cost with their time/gas spent shopping in the B&M world. Free shipping still reigns.  And a few etailers even pay for return shipping even if the customer changes their mind (like Gotham City Online, top online shoe-seller). 

But as larger retailers tighten up their policies, this attitude should shift. There will always be a debate about the value of customer service, the increased sales from a lenient return policy paying for the cost of the returns, and for some business models this will work.  But overall,  “what everyone else is doing” will guide customer expectations, and staying in tune with this can help you maintain a return policy keeps customers satisfied and profits up.