How to Build a Holiday-Friendly Return Policy

Editors note: This blog was originally published in August of 2022 but has been updated to reflect current statistics and best practices.

As we enter the 2023 holiday season, many e-commerce merchants have one thing on their minds: Preparing their business for the holiday rush to come. One aspect that can get overlooked during the initial planning stage, however, is building a holiday-friendly return policy.

While the returns season typically begins after Christmas in the U.S., merchants should have their holiday return policy developed and communicated long before then. Many consumers will be doing their Christmas shopping throughout the fall, so it’s crucial your business readies itself for returns as soon as possible. Once those e-commerce returns do come, they come in droves.

Consider that last year the National Retail Federation reported that retailers expected 17.9% of merchandise sold during the holiday season to be returned. While it might seem tempting to make a more stringent returns policy to combat this high rate of returns, that may hurt your overall sales. In our 2023 Benchmarks Report, 80% of Americans said they would stop shopping at a retailer they regularly shop with if they made their returns policy more difficult.

Because of this alarming stat, its more important than ever that your return policy takes into consideration your customer without breaking the bank too. We’ll walk you through how to build a holiday-friendly return policy to account for holiday shopping behaviors, and help you build more customer trust upfront to increase sales.

Steps To Take When Building Your Return Policy for The Holidays

Make sure your return policy is visible

No matter how you decide to craft your return policy this holiday season, you’ll want to ensure your customers have a chance to view it before and after they make a purchase. Some potential placements for your return policy include:

• On the product description page
• In an FAQ section of your website
• On the top or bottom banner of your homepage
• Within post-purchase communications such as confirmation and tracking emails
• Included as a section within your website’s chat box

Making your return policy visible can heighten trust with your brand and help avoid any confusion that may come up later during the return initiation process. This means fewer support tickets sent to your CS team – and more time for them to handle other more serious matters. 

Clearly identify which products can and cannot be returned

In certain scenarios, the cost of handling a return will outweigh the cost of the product itself. For example, if the item you’re selling is priced lower than the cost of a return label and restocking fees, you may not want to allow returns for that particular product.

Another example could be stock that you are trying to get rid of. Oftentimes, e-commerce businesses will put items on sale to push out that inventory and make room for new SKUs. Those on-sale items will then not qualify for returns.

This could be a good strategy to adopt early on in the holiday season as you stock up for Black Friday, Cyber Monday, and Christmas shoppers. Keep in mind, however, that you might want to reverse course here and open up more of your items to be returned the closer you get to the holidays.

Inform customers what condition you’re willing to accept for returns

For some e-commerce businesses, a “no questions asked” returns policy might work, as it certainly invokes confidence in the product. For smaller businesses accepting returns, however, this may not be the most cost-effective policy.

You’ll want to clearly state to the customer if you are willing to accept lightly worn or used products, if you still need them in the original packaging, or if you need them sent back in the original box it was sent in. You’ll want to look at your past returns to see what percentage of them are being resold versus the amount that has to be scrapped before you make this decision.

Be lenient in your returns window

Remember that many shoppers will buy Christmas gifts during Black Friday, Cyber Monday, or even earlier. This means the final recipient of your product may not get to see their gift for a month or more after the initial purchase was made.

While the industry standard for returns is 30 days, you may want to consider extending this returns period to 45 or even 60 days during the holidays. This offers flexibility to both the gift buyer and gift recipient, resulting in a more pleasant experience with your business across the board.

Determine if free returns are right for your business

According to our 2023 State of Shipping Report, 45% of consumers said that free return shipping is most important to them when returning an item they bought online. However, this can be hard to achieve during the holiday season when the rate of returns increases.

One method you can take to offer free returns is to offer it to customers who make returns at your retail store. If that’s not possible, another method e-commerce businesses can take to meet in the middle is to offer free returns when it comes to exchanges or store credit. This way, the sale isn’t totally lost, and the opportunity to cover the cost of the return through a new purchase remains. It’s also a good incentive for customers to keep shopping with you. 

Outline how customers can initiate returns

There are several different instructions you can give customers to make a return, but consider the following: When surveyed, 30% of consumers’ preferred method of returns comes from having prepaid returns labels included in their package, a top choice among five different options.

Alternatively, the least preferred method of returns was by having to contact a customer support representative to initiate the return. This is where having a returns portal set up could help expedite the process for both parties.

Also, Shippo users can print return labels at the same time as shipping labels so that they can give them to customers upfront. Best of all, merchants are not charged anything until those return labels are actually scanned by the parcel carrier making the return.

Give customers multiple options for returning items

E-commerce merchants with retail storefronts will want to give customers the option to use that space to make returns.

Allowing customers to return in-store allows you to promote exchanges and also ease the logistics of getting your product back on the shelf or back at your warehouse. 

For merchants that don’t have a physical retail presence, simply giving your customers the option to ship returns back through multiple carriers gives them increased flexibility and a more enjoyable experience. This could incentivize customers to shop with you again in the future.

Set proper expectations for refunds

When shaping your holiday-friendly return policy, you’ll want to consider the time it takes to process a refund. 

Some merchants will initiate a refund after the item has been inspected by their warehouse/fulfillment team and is cleared to be resold. Other merchants will initiate a return after the return label has been scanned. And some can afford to process a refund as soon as a return has been requested on their site.

Depending on the method you choose, it will affect the amount of time required for customers to get their refund back and should be made clear in your policy.

Looking at your past returns and determining what percentage can be resold versus thrown out can help determine if you’re able to give refunds before physically receiving the product back. 

Make return tracking available

For merchants who decide to wait until they’ve received products back before initiating a refund, having return tracking could benefit you and your customers.

Just as shoppers want to receive orders quickly, the same is true when it comes to refunds. Having return tracking as part of your policy could help give customers confidence and assurance that they will receive their refund when you say they will.

How Shippo Can Help You Build a Holiday-Friendly Return Policy

At Shippo, we know that returns are an inevitable part of the holiday season. However, it doesn’t have to be a painful experience for you or your customer. With Shippo, online sellers can:

• Create return labels the same time as shipping labels
• Only pay when return labels are scanned
• Ship returns through a different service level
• Save package information for future returns.

To help you get going, Shippo now offers a Free Return Policy Generator that allows you to input some of your specific business rules and preferences for returns to deliver a copy-and-paste policy to include on your website, email communications, and other channels. The entire process takes only a few minutes and can help you establish a clear return policy throughout the holiday season and beyond.