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Retail Insights

Amelia Willson

For small and mid-sized business owners, ensuring a frictionless returns process for customers is crucial to cement brand loyalty and encourage repeat purchases. Don’t believe us? Take it from Zappos.

The online footwear marketplace is famous for their unlimited, 365-day, free returns policy. Customers love it, but so does Zappos — because it helped them discover that the customers who have the highest returns rate (50%, to be exact) also happen to be the ones who spend the most money with the brand. As Zappos VP Craig Adkins told Fast Company, “[They’re] our most profitable customers.”

To follow in Zappos’ footsteps (pun intended!), your brand must offer a returns process that wows customers and makes them want to buy again, even if their first purchase didn’t work out. 

How a Seamless Returns Process Benefits Ecommerce and Brick-and-Mortar Retailers

Customers expect the brands they shop with to provide a positive experience every step of the way. A seamless returns process is an essential part of that. 

Positive customer experiences breed customer loyalty, and in turn more repeat purchases. Indeed, 92% of shoppers say they will buy again if a merchant offers an easy return process. And according to Harvard Business Review, a 5% increase in customer retention rates can boost your profits by 25% to 95%. Having a customer-friendly return policy can go a long way toward that goal.

Forgiving returns policies can also drive conversions. Nearly 70% of online shoppers check a store’s returns policy before making a purchase. Knowing they can return an item reduces hesitation on the part of a customer, especially if they’re trying a brand or product for the first time.  

When you factor in the cost of customer acquisition, it’s simply good business sense to have a returns policy in place. It’s 5 to 25 times cheaper to keep an existing customer than to acquire a new one. Offer an attractive returns policy, and it will pay for itself.

What to Consider When Creating Your Returns Policy

What’s the right customer returns policy for your store? The one your customers expect, naturally.

For most shoppers, that means a returns policy that’s easy to find, easy to execute, and most importantly, includes free return shipping (nearly 80% of shoppers want free return shipping!). 

Crunch the numbers and think about what makes the most sense for your business. While some merchants can bake the cost of return shipping and processing into their product pricing, others may not be able to do so. 

If a completely free returns policy doesn’t feel like the right choice for your business, consider whether you can defray the costs by:

  • Charging a standard restocking fee
  • Charging a fee for return shipping
  • Offering return-less refunds for low-priced items (to eliminate the cost of processing the return)
  • Not accepting returns for some items, such as sale or seasonal items

Documenting Your Returns Process

When you have a clear, documented returns policy, it’s easier to provide a consistent customer experience. Here’s what to include when putting your policy into writing:

  • Will all items be eligible for a return? Or will some items be final sale, or eligible for exchange only? 
  • What’s the return period? (30 to 90 days is typical.) 
  • What conditions can items be returned in? Is a quick try-on allowed, as long as the tags are still on? Is original packaging required?
  • Will returned items be eligible for store credit, or will you issue a full refund?
  • If you have a brick-and-mortar presence, will you accept online returns in-store as well as by mail? Keep in mind that six in ten online shoppers prefer to return in-store when possible.

How can customers initiate a return? Provide clear, detailed instructions like this example from Nordstrom

How to Set Up an RMA System for Returns

A return merchandise authorization system (RMA) is software that handles the logistics of returns for you. Using your RMA system, shoppers can initiate a return, receive and print their pre-paid return shipping label, and ship the item back to your warehouse — without any of your staff having to get involved. 

RMA systems also include features like auto-generated status updates that notify customers when their return has been received and processed, as well as analytics that help you track which items are being most frequently returned and for what reason. 

Some RMA systems, like Returnly, offer “Instant Refunds” that encourage shoppers to use their refund to make another purchase immediately. Brilliant! 

Additional RMA apps include AfterShip, Return Magic, Easyship, Shippo, and ShipStation. When considering RMA apps, always confirm that it’s compatible with your website CMS and other third-party software.

Communicating Your Returns Policy to Staff and Customers: 6 Tips for Success

People typically aren’t in a great state of mind when they have to make a return. By making the process efficient and simple, you can turn a frustrating experience into a pleasant surprise, and foster customer loyalty in the process. Here are six tips for success. 

  1. Create a dedicated page on your website for your returns policy. It may include a summary at the top, followed by exceptions, with step-by-step instructions for initiating a return. Here’s a streamlined example from Outdoor Voices:
  1. Train your staff on your return policy. Empower your phone, email, and live chat support teams to answer questions clearly and directly. Encourage staff to maintain a friendly, helpful tone with the goal of completing the return as efficiently as possible.
  1. For brick-and-mortar stores, train your salespeople to mention the return policy at checkout along with any exceptions. Post your returns policy at the register and print it on receipts for full transparency. 
  1. For ecommerce merchants, the returns policy should be recapped briefly on the product pages, with a link to read the policy in full. Here’s an example from Target:


  1. Advertise your returns policy with the right buzzwords like Bed Bath & Beyond does. “Free,” “Easy,” “No-Hassle,” and “Satisfaction Guaranteed” are all good options.


  1. Include links to the returns policy in order confirmation emails, product pages, and in your footer, as in this example from REI


How Do Returns Work With Buy Now, Pay Later? 

We thought you might ask! At Zip, we keep it simple. We recommend customers initiate their return according to the merchant’s instructions. Once the merchant notifies us of the return, we immediately begin the refund process. Until then, your installments will be due on the original payment schedule. 

If you’d like, shoppers do have the option to notify us as soon as they’ve started a return with the merchant. In these instances, we pause payments for two weeks to give the merchant time to process the return and notify us. In either scenario, shoppers receive a full refund via Zip once the return is completely processed. 

Learn more about how to increase AOV, conversion, and revenue with Zip today.


Amelia Willson
Amelia Willson

Amelia Willson is an online marketer-turned-freelance writer, based in sunny southern California. She covers ecommerce, sleep health, tech, and online marketing. When she’s not busy writing, you can find her at the beach or walking her dog Rockefeller. Connect with her on LinkedIn.