When you have an ecommerce shop, it’s a strong competitive advantage to have a generous return policy in place.

Customers say that free shipping (96%) and free returns are important factors when deciding which online retailer to buy an item from.

A lengthy return period is important too. Retailers found that while offering a more generous returns window was associated with more returns — but importantly, it was even more strongly associated with an increase in future purchases. By ensuring that customers can feel confident in your refund policy, you’ll be able to win their confidence and brand loyalty.

That said, a small amount of customers do abuse return policies. Let’s take a look at how to manage your customer experience so that customers can enjoy hassle-free returns, but you don’t get taken advantage of by unscrupulous customers.

Set a clear ecommerce return policy

The key to ensuring that customers respect your shop’s refund policy is setting clear guidelines for what can and can’t be returned, and under what conditions.

For example, with the prevalence of influencer marketing, you may find that a portion of customers purchase outfits just to wear them in photo shoots, and then return them: Almost 10% of shoppers admit to this type of behavior.

You may not be able to prevent it entirely, but you can ensure that your return policy only allows for clothing items that still have their original tags and are in new condition — enabling you to resell the returned merchandise. And make sure that you have clear limitations on items that can’t be returned, such as final sale items.

If you sell large and expensive-to-ship items like furniture, your return conditions may include restocking fees, ensuring that customers can return the item if they don’t like it, but that they need to choose carefully before making a purchase.

And, if certain customers are serial returners, you may consider banning them from returning future purchases, though you might enable them to make an exchange instead.

Don’t process refunds until the items are actually returned

While it might be in the customer’s interest to see the refund come in as soon as they’ve made the request, they may forget to ever send the item back, or simply decide to keep it or resell it independently. Or, if the item does come back, it may not be in the condition that the customer represented it as.

To make sure your returned items meet your conditions for a full refund, consider waiting to process the refund request until the items are returned to your warehouse and inspected. If the items don’t meet the required conditions, you can opt to offer the customer store credit rather than processing a refund.

Use automated returns management to determine a solution

Rather than wasting your customer support agents’ time on trying to determine whether a customer is entitled to a refund or not, you can easily automate the process using a returns management solution like Loop, which integrates directly with your Shopify store.

With Loop, customers can access a self-service returns portal that pulls up the items they’ve purchased and allows them to choose which return-eligible item they’d like a refund on. If an item is not eligible for a refund, whether it’s past the refund eligibility window or it’s in a category in which refunds aren’t allowed, the item will be blocked from the system.

If the item they want to return is within the eligibility window, you can set up a workflow that asks customers a series of questions about the item. For example, if the customer is returning a swimsuit, “Is the item in new, unworn condition with the hygiene strip intact?” If the customer has already worn the item in public, it will be disqualified for a return.

By using conditional logic rules to set conditions for returns and refunds, you can ensure that customers are aware of limitations before you issue them a return label. By the time they send the item back, you should have received verification that the item is in return-eligible condition — and if it’s not, you aren’t obligated to honor the request.

Design policies for the 95%, not the 5%

While return abuse does happen, it’s less common than you probably think. Only about 5% of all returns are fraudulent.

So don’t try to come up with a strict ecommerce return policy to thwart return abuse — it will only serve to alienate your loyal customers and lead them towards your competitors.

Instead, focus on building a generous and flexible return process with set conditions to monitor whether an item is eligible for a return or refund. By automating this process with Loop, you’ll be able to easily guide your customers through a seamless workflow that makes it easy to confirm whether their items are eligible for a refund, so that they don’t unintentionally abuse your policies.

Automating your return process with clear workflows enables your brand to reduce the number of returns that don’t meet your conditions and filter out potential return abuse.

It can also help you transform many of your returns into exchanges, through incentivizing exchanges with real-time inventory suggestions and store credit offers. Loop customers retain 40% of revenue from returns on average, helping them build long-term customer loyalty.

Want to build an ecommerce return policy that cuts abuse and boosts retention? Get in touch for a demo.