Return & Refund Policy for Dropshipping Stores
Running a dropshipping business generally means that the eCommerce business running the online store is not the one handling the returns. However, the dropshipping and fulfillment partner is responsible for that.
This makes it an attractive business model as it eliminates the need for a warehouse and staff to process these returns and manage inventory.
It allows for a hands-off approach where the fulfillment partner handles what is possibly the most frustrating part of owning an online store, returns.
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Table of contents
- Why is the Return Process Different When Dropshipping?
- Who Writes the Return Policy? The Supplier or the Dropshipper?
- What to Consider Before Writing a Return Policy for Dropshipping
- What to Include in Your Dropshipping Return Policy
- Why Dropshippers Should Accept Returns
- Key Takeaways for New Dropshippers
Why is the Return Process Different When Dropshipping?
The return process when using dropshipping as a fulfillment method is typically a bit more complex than it would be if you were processing the returns yourself.
You, as the online store owner, will be the one receiving return requests from your customers, as they will usually be unaware that a third party shipped out the products that they ordered.
This means that a whole process needs to happen in the background in order to process returns, which involves communication between you and your supplier.
You would usually contact your supplier to request a return authorization number, which you will supply to your customer with a return address (your supplier’s warehouse or your business address).
You will then be the one refunding the customer, as you are the one processing payments - in the meantime, your supplier will either refund or credit your account for that amount.
So, not as easy as it seems at first glance. But your customers do not need to know about it.
Who Writes the Return Policy? The Supplier or the Dropshipper?
You, as the online store owner, are the one responsible for writing a return and refund policy as customers are purchasing from your website and not directly from your supplier and that is where, ultimately, the policy will be displayed.
You should however take into account your suppliers’ respective return policies before drafting your own. You wouldn’t want to offer a 30-day return window and then realize that your supplier has a stricter 7-day term.
If you are only working with one supplier, you may be tempted to simply copy and paste their return policy, but make sure that it holds the important elements, takes into account the return shipping time, and includes your contact details, as you are the one providing customer service.
What to Consider Before Writing a Return Policy for Dropshipping
Buying online can be seen as risky for customers, which is something that you should take into account when developing your return and refund policy and pricing your products.
Terms & Timeframe
To make your business stand out from others that operate under a similar dropshipping model, you may want to try and negotiate generous return and refund terms with your suppliers, which you can then pass on to your customers.
If a customer has the choice between a retailer that offers a 10-day return window or a 30-day window, they will most likely choose the one with the better return policy, even if the price of the product is a bit higher.
You will also want to ask your potential suppliers if they have a no-return or no-refund policy except in very specific circumstances as this could impact your decision of choosing to do business with them or not.
Conversely, you could decide to have a strict or limited returns policy even if your supplier is flexible and generous. It is your business after all.
You may wish to offer limited refunds or returns in the case of products that have a lower value or that you would not be able to resell, such as swimwear or underwear, for example.
As long as you are transparent with potential customers and respect applicable consumer laws, it is fair game.
A lot of suppliers will want to charge restocking fees, which you can decide to pass on to your customers or, if you wish to remain attractive to prospective buyers, you may wish to assume.
While doing so may affect your bottom line, it likely will have a positive effect down the line, as charging restocking fees could act as a deterrent and prevent customers from placing orders on your website in the first place.
Similarly, your suppliers are not responsible for customer service and will generally not take direct responsibility for damaged or defective products.
In many countries, consumer law will force you to offer a refund, repair, or replacement of a faulty product that was sold to a customer.
In any case, you should cover the shipping cost for the customer to send back the defective products and make the process as seamless as possible for them by immediately asking your supplier to send them a replacement, which will help you maintain a good business reputation.
You could also simply send a new item to the customer and let them keep the defective product, which makes for an amazing customer experience and will probably be cheaper in the long run than having to process a return or refund, especially if you are selling items of a lower value.
A situation that happens more frequently in the case of dropshipping is customers requesting a refund because the product doesn’t match the description on the product page.
This goes back to the importance of really taking the time to select your suppliers before going into business with them, as you will not be able to do quality control before shipments go out to your customers.
You have to be able to trust your suppliers and know exactly what product your customers are getting. If not, your business’ reputation could otherwise be severely affected.
What to Include in Your Dropshipping Return Policy
The most important thing to include in your returns policy is the timeframe in which the items have to be sent back as well as any items that are final sale or cannot be returned due to the nature of the product.
It should also mention who will be covering the return shipping costs, you or the customer, and where the items should be sent i.e. your business address.
If the returned items are to be sent back to your supplier and you don't want your customers to know that you are dropshipping products, simply make it easy for them to contact you by providing an email address and communicate the return address only once the process is initiated.
You could also get a P.O. box or business address to process returns yourself - which would make sense if most of your customers are in your country and your supplier is located in China.
You should always include your contact information so that customers that receive faulty products can get in touch with you quickly (and encourage them to do so) - this will make you seem more trustworthy.
And if you need help creating a return and refund policy for your online store, click here to try our policy generator - your potential customers will appreciate your transparency.
Why Dropshippers Should Accept Returns
Like any other online business, it is all about the customer experience. If you are dropshipping what is a popular product, you are likely not the only one doing so.
And you can have the best marketing strategy in the world, if your customers have the option to choose between a store that offers no-questions-asked returns and one on which everything is a final sale, it is easy to imagine which option they will go for.
Try to think of your refund and return policy as a marketing tool. Having a good one can turn a potential customer into a repeat customer over time and, if you stand by the quality of the products that you sell, is worth the hassle.
Key Takeaways for New Dropshippers
In short, ask your supplier as many questions as you can about their return policies so that you can draft and adjust yours accordingly.
Even better, try to order and return products from various suppliers before considering entering into a business relationship with them.
After you have drafted your return policy, make sure that it is easy to find and not hidden in an obscure section of your website. Create a page specifically for your policy and link to it in your website footer.
You should also reference your policy throughout your website by including hyperlinks to it, such as on product pages, on the checkout screen, in shopping carts, and in your FAQ section, if you have one.
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- Updated on February 10, 2021