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Product Returns Value Proposition Method

Estimated read time: Bagel & Cup of Coffee


Product returns in eCommerce. I hate them. You hate them.

Returns and refunds are the bane of an eCommerce retailer’s existence and a royal pain for online shoppers. In many ways, returns are a lose-lose proposition for both retailer and customer.  With a successful eCommerce growth strategy, return policies can be a definitive, positive selling advantage for retailers and a point of assurance for shoppers.



As an online store owner, here’s why product returns will ruin your day.

  • You’ll have to pay for return shipping or ask the customer to pay for this.
  • You’ll have to physically re-receive the product into your warehouse and restock.
  • Your accounting process, cash flow and ROI becomes more complicated.
  • You may need to pay a merchant account payment processor chargeback fee.
  • Wondering whether THIS is the shopper who leaves a bad review you’ll have to manage.

And that’s just for physically stocked inventory. Drop shipped items open another can of worms to contend with. Chargebacks suck.



Do you know YOUR return rate?

Let’s look at the average eCommerce return rate statistics.

At least 30% of all products ordered online are returned compared to only 8.89% bought in brick-and-mortar shops. Invesp

As you may imagine, online fashion retailers have a larger eCommerce return rate.

Now let’s find yours.

Magento 2 for example provides a high level overview of the number and dollar amount of returns with the ‘Refunds Report.’



How to calculate your eCommerce return rate

Knowing your return rate % as a baseline to improve is ideal. To get this number, run a Magento ‘Sales Order Report’ monthly. Then divide ‘Refunded’ by ‘Sales Total’.

Remembering the average return rate is 30%, if your shop is selling $20,000/mo in products, that’s $6,000/mo in returns. $72,000 each year gone. Poof.

After you’ve picked a few of the strategies below to lower your eCommerce return rate, consider A/B split testing to put more cash back into your pocket.

If you want to get fancy…

Use QuickBooks to run a sales by item detailed report, and then customize it just to show the credit memos for returns. You could then import SKU specific product return data into Google Analytics with enhanced eCommerce tracking enabled.


Why shoppers return products

A small percentage of returns are due to fraud, so let’s focus on shopper dissatisfaction. If shoppers can’t get the answers to their questions easily, the sale may not even happen!

24% of shoppers will abandon their shopping cart if return policies are not clearly stated. Salescycle



Personally, several questions cross my mind before buying:

  • What if this item isn’t the right size?
  • What if this product just isn’t what I am expecting?
  • Can I change my mind and return this item if I don’t like it?
  • Do I really have to pay for return shipping?
  • How many days do I have to return this item?
  • How long will it take to receive my refund or exchange.


Once your product finally get’s purchased, your shoppers may return an item due to:

  • Disappointment. The product just isn’t what your shopper expected.
  • Item dimension or measurements aren’t accurate.
  • The wrong item was received or it was damaged.
  • Product fit doesn’t work for them.
  • The actual product looks different than your item photos.
  • Product isn’t compatible with the accessories it was purchased for.





eCommerce return & refund policies


shopping bag illustration


How do people come up with these anyway?

Many retailers assume their competition knows they’re doing. Commonly, they don’t.

Copying your competitor’s return policy is selling yourself short. Chances are, your competitor stole it from somewhere else. These return policies are often buried in the footer, containing an unmemorable sea of legalese. Bad eCommerce user experience, as many shoppers will never even see it. Check your analytics and see!



Google AdWords research for return policies

Researching Google AdWords on this topic, I noticed two keywords and their associated average bid amount.

return policy template for ecommerce $6.83
ecommerce return policy generator $4.01

Many of these paid keywords are being used for ‘lead generation’ and that’s cool. A policy needs to start somewhere. My issue is, most return policies are buried in the footer, uninspiring and don’t help set a retailer apart.

In fact, try doing a Google search for  “return or exchange an item”. Click on a few of the results and look at the product pages.  Is the return policy prominent? How about in the header? How about in the shopping cart? Not usually. Lame.


67% of shoppers check the returns page before making a decision. Invesp


WOW! Do you see the problem here?

You’ve spent time and energy attracting this shopper to your store, they finally start a checkout and are forced to leave checkout to find critical purchase information.  The solution to this problem, is so simple.


Weave your return policy throughout every touchpoint from your Homepage to Checkout. 


Let me share with you a counterintuitive, yet effective return & refund strategy Zappos uses to increase eCommerce profits.

Our best customers have the highest returns rates, but they are also the ones that spend the most money with us and are our most profitable customers. Zappos’ modus operandi is not to give its purchasers the cheapest footwear on the block, but to give them the best service: hence, a 365-day returns policy, and free two-way shipping. Craig Adkins, CEO

This exact strategy isn’t right for everyone, but it shows the power of using a return policy as buyer motivation.

Tell you what, I’ll share one good eCommerce return policy example used as a value proposition, then show you specific tactics you can implement.

Do we have a deal? OK, then let’s go….


Glasses Direct

Glasses Direct is a UK based online prescription glasses retailer, started in 2004. They’ve got a great story, visually appealing website and use two really smart return & refund strategies to illustrate their value proposition, making it easy for their shoppers to say yes.

1. They offer a Free Home Trial for 7 days.  Engaging with their ‘call to action’ launches a brief explainer video.

Glasses Direct Free Home Trial


2. They offer a 30-day money back guarantee and mention it frequently.

Glasses Direct Category


Glasses Direct Product Page


Glasses Direct Checkout




Here’s a few strategies to improve your brand’s presentation and build Informed Trust.

  • Have a consistent brand message that speaks to your shopper’s emotional needs.
  • Provide persuasive product descriptions which go beyond stock manufacturer content.
  • Ensure all product dimension specifications are accurate and easy to find.
  • Encourage product reviews from shoppers via post purchase trigger emails.
  • Use high quality product photography with multiple angles and zoom capabilities.
  • If possible, use a product demonstration video.
  • Include merchandising for product accessory compatibility.
  • Make your return policy easy to find and hard to ignore.
  • Survey your shoppers to understand their challenges and update your messaging.







2 out of 3 shoppers would purchase more online if returns were free. eMarketer


Consider this Ace in the back pocket move. It’s a bit controversial and will make your competitors lose sleep.


Offer FREE returns, but for a time frame longer than commonly used.




Which Retailer would you rather be?

Retailer A: “We accept returns for 30 days after purchase.”

Retailer B: “6-month free returns. Guaranteed.”


If you were Retailer B, and broadcasted this unique selling proposition across your entire online shop, do you think it would generate a higher quantity of completed purchases?

Now you may be thinking 6 months is way too long.

Chances are, most shoppers will NOT take full advantage of this type of policy. People are most excited (or dissatisfied) about a product when it’s  just arrived. Over time newness fades and our attention shifts towards other things in our busy lives.

As we’ve seen, eCommerce product returns are a big stumbling point in the digital retail space. Shoppers want to know they have options when purchasing a product and retailers like yourself don’t want to get burnt.  By creating a prominent return policy based on the methods I’ve shared, and having a target return rate % to shoot for, you’ll achieve higher profits from completed purchases.


About me

I’m Jeff Bronson, a guy in his 40’s. Consider me a business analyst for eCommerce retailers. Experienced since the early 2000’s as shop owner, consultant and agency roles. From startups to 100M+ companies, I’ve helped diagnose eCommerce revenue challenges, strategized growth roadmaps and collaborated with teams ongoing to implement positive changes. Learn more.

Like you, I’m into outdoor recreation and adventure travel, with a few stories to share.

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