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Dropshipping Returns: How To Set Up Your Returns & Refunds? [Full Guide]

Unsure how to handle dropshipping returns? This complete guide will provide you with tips & tricks to effectively manage your returns.

22 minutes
WRITTEN BY:
Aleksandra
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Chief of Content Marketing
Aleksandra teaches marketing and management at various levels in High School. She writes about marketing, the economics and logistics of the dropshipping business and ecommerce in general.
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Chief of Content Marketing

Running a dropshipping business can be a lucrative venture, but what happens when customers want to return or refund their purchases? Setting up and managing dropshipping returns and refund policies is crucial for any Shopify store owner engaged in dropshipping.

So, to ensure customer satisfaction and maintain a positive reputation, it is essential for dropshippers to have clear and effective return and refund policies in place.

In this comprehensive guide, I will walk you through the steps of setting up and managing these policies on your Shopify store, helping you navigate the complexities of dropshipping returns with confidence.

What Are The Main Causes Of Dropshipping Returns And Refunds?

Understanding what motivates your customers to return a purchase can help you build great relationships with them and minimize returns.

According to recent data, the majority of ecommerce returns (60%) are because of fit or quality issues, while 30% of returns are due to customers changing their minds. Moreover, did you know that the returns cost in the US is reaching up to $400 billion annually?

Thus, this is no game, and you must acknowledge why your customers return your dropshipping products. So, let’s see the main causes.

Quality Issues

One of the main causes of dropshipping returns and refunds is product quality issues. When customers receive a product that is damaged, defective, or not as described, they are likely to request a return or refund. This can happen due to various reasons, such as poor packaging or mishandling during shipping.

For example, let’s say a customer orders a smartphone case from your online dropshipping store. However, when they receive the product, they find that it is cracked or does not fit their phone properly. In this case, the customer would likely request a return or refund due to the product’s quality issue.

Shipping Delays or Errors

Another cause of dropshipping returns and refunds is shipping delays or errors. When customers do not receive their orders within the expected timeframe or if their orders are lost or delivered to the wrong address, they may choose to return the product or request a refund.

For instance, once I had an issue with a package getting lost during transit, and my customer did not receive their order within the promised delivery window. Frustrated with the delay, she decided to return the shoes and requested a refund. So, I lost my profit and a customer because of the unreliable dropshipping supplier I was working with. 

💡 Tip: Learn about Dropshipping Scams & How To Avoid Them As a Beginner.

Inaccurate Product Descriptions or Misleading Ads

Furthermore, inaccurate product descriptions or misleading advertising can also lead to dropshipping returns and refunds. When customers receive a product that does not match the description or fails to meet their expectations based on the advertising materials, they may want to return the item or seek a refund.

For instance, this often happens with AliExpress suppliers. Hence, customers leave feedback about inaccurate product descriptions or bad product quality referring that they didn’t receive what was promised. And, this affects the supplier’s rating. 👇

dropshipping returns

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How Do Returns Work With Dropshipping?

As you are not dealing with inventory and shipping (you are a dropshipper), the concept of accepting dropshipping returns for your products may sound confusing.

Namely, your customers do not know that you are collaborating with dropshipping suppliers whenever you receive a return request. And, that is worse, because you are the main culprit even though it is not your fault. However, you have to deal with it. So, this is how it goes. 👇

  1. Your customer informs you that they want to return a product.
  2. Then, you request a return merchandise authorization number, i.e., RMA from the supplier.
  3. Next, your customer sends back the product to your supplier.
  4. And your supplier refunds your account for the wholesale price of the product. Finally, you refund your customer for the full price of the product.

Unfortunately, some things may complicate this process. And these things include:

  • Restocking fees. If your supplier charges restocking fees (extra fees for returning a product), it is not advisable to include them in your return policy. Even though you may have to cover these fees from time to time, you will probably recoup them from selling to other customers.
  • Defective products. In most cases, suppliers do not cover return postage for defective products. The main reason for this is that they are not liable for defects because they are not manufacturers. But you need to compensate your buyers for the return shipping fees for defective products. After all, you want to build a successful dropshipping business, don’t you?

Understand The Dropshipping Return Policies Of Your Suppliers

Again, as you will not process the dropshipping returns yourself, you must have a good understanding of your suppliers’ return policies.

The whole return process will happen in the background. And this involves effective communication between you and your dropshipping suppliers

But before I get any further, let me clarify one thing. You, as a dropshipper, have to write YOUR OWN return and refund policy as people will buy from your store and not directly from your suppliers.

And you have to display your return policy on your site.

Still, you must take into account your suppliers’ respective return policies before writing your own.  Here is what to pay attention to in their return policies. 👇

  • How they deal with returns (the entire process);
  • Whether they accept returns on wrong orders (e.g., wrong shoe size);
  • Who pays the cost of return shipping;
  • How long your customers can send an item back after receiving it;
  • Do they charge restocking fees (and if so, what are they?)

I also want to mention that in case you work with more than one dropshipping supplier, you must know the return policy of each supplier.

👉 Check out the 21 Best Dropshipping Suppliers In The USA [General + Niche].

How To Make The Best Dropshipping Returns Policy? – My Guide

🔸 Make An Easy-To-Understand Returns Process 

When it comes to dropshipping, making the returns process easy and hassle-free is essential for maintaining customer satisfaction. 

First things first, I suggest you automate as much of the process as possible. For instance, by using Shopify apps, you can set up a self-service return portal that allows customers to easily initiate return requests and track the progress of their returns. This not only saves time for the customer but also reduces the workload for the business owner or customer service team.

Automation also allows you to create a standardized return policy template, eliminating the need for individual negotiations with each customer. This ensures consistency and fairness in the returns process.

Additionally, providing a clear and concise return policy on the website, including information on return windows, return addresses, and any applicable return shipping fees, is crucial for setting customer expectations from the start.

For example, I find the Everlast return page an easy breeze. Their return page is straightforward, clearly stating that they accept returns within a 30-day window from the date of purchase, provided that the products remain unused and in their original packaging. 👇

dropshipping returns

The page also provides concise instructions, presented in bullets, for smooth returns and speedy exchanges, ensuring a seamless and trouble-free return and exchange experience.

🔸 Protect Yourself From Fraudulent Dropshipping Returns

When running a dropshipping business, it is crucial to have a fraud policy in place to protect your dropshipping business from fraudulent orders. Unfortunately, online businesses are prone to fraudulent activities, and having a robust fraud policy can significantly reduce the risks.

Therefore, you must familiarize yourself with the common signs. Thus, look out for suspiciously large orders, rush orders with expedited shipping, mismatched billing, and shipping addresses, and high-value items being purchased with stolen credit cards.

To mitigate these risks, consider using an address verification system (AVS) to ensure that the billing and shipping addresses provided by the customer match.

If you encounter a fraudulent order, it is essential to take the necessary steps promptly. Document the original order, including all the information provided by the customer. This will be vital when reporting the fraud to the appropriate authorities or your payment processor.

Additionally, provide tracking information for the shipped order to prove that you fulfilled your part of the transaction. Be sure to respond promptly to any requests for additional information from law enforcement or your payment processor.

Here’s a great example for you. Built Athletics includes a unique fraud clause that is not commonly seen. This serves as a deterrent to discourage customers from engaging in return fraud by making them reconsider their decision.” 👇

fraud policy

🔸 Make a FAQ Section For Your Return Policy

One important aspect of creating a seamless customer experience for your dropshipping business is having a clear and easily accessible return policy in place. To ensure that customers can quickly and easily find the information they need, it is crucial to have a Frequently Asked Questions (FAQ) section on your website.

Thus, you can include common questions and concerns related to returns, refunds, and exchanges and provide customers with valuable information upfront. 

For example, you can consider answering questions such as:

  • What is your return policy?
  • How do customers request a return or exchange?
  • What is the return window?
  • How long does the refund process take?
  • What are the common reasons for returns?
  • What are the return shipping costs and procedures?
  • How can customers reach your customer service team?

Take a look at this example. Here is a return policy template for eCommerce provided by MyProtein, which includes frequently asked questions about their return policy. 👇

return faq

This template aids in boosting conversions by addressing customer inquiries, potentially converting users into paying customers.

🔸 Provide Country-Specific Return Information

Different countries have varying laws and regulations regarding returns, so it’s important to understand and comply with these to ensure a smooth return process.

When outlining your return policy, be sure to include country-specific return information. This includes providing the correct return address for each country, as well as stating any specific instructions or requirements for international returns. It’s also essential to clearly communicate the return shipping cost, as this can vary depending on the country.

By including country-specific return information in your policy, you can avoid potential complications and ensure a positive customer experience.

For instance, Gymshark excels in its return policy by effectively highlighting its region-specific return guidelines. 👇

specific country policy

🔸 Mention Any Exceptions That May Arise

To leave no room for misunderstandings, it is crucial to outline any limitations or conditions for returns. For instance, certain products may be non-returnable due to hygiene reasons or other specific factors. Additionally, it is important to clearly state any fees associated with returns, such as return shipping costs or restocking fees.

To further clarify the return process, you should specify any additional requirements or processes. For example, this could include obtaining a Return Merchandise Authorization (RMA) number before returning a product or providing proof of purchase.

For instance, I personally got inspired by Under Armour’s return policy on this one. They mention the possibility of exceptions in their 60-day return policy. Plus, the manufacture date on the tag should be less than 2 years old. 👇

return policy

If the customer is unable to provide proof of purchase, the return will be processed based on the most recent selling price and the refund will be issued in the form of a UA eGift card.

By clearly outlining these requirements, customers will have a better understanding of what is expected of them.

🔸 Have a Reliable Policy For International Dropshipping Returns

One of the main challenges with international returns is the issue of shipping costs. Unlike domestic returns, international returns often involve higher shipping costs due to longer distances and potentially multiple carriers.

Therefore, I recommend you clearly communicate and outline who is responsible for these costs – the customer or the seller.

Another complexity to consider is customs fees. Depending on the country, customers may be required to pay customs fees when returning items. Therefore, you must ensure that their return policy clearly states who will cover these fees, to avoid any confusion or dissatisfaction.

And, don’t forget about the return timeframes. Due to longer shipping times, it is important to set reasonable return windows that align with customers’ expectations. This ensures that customers have enough time to initiate a return and ship the item back.

For example, Overstock has dedicated a specific webpage for international returns, facilitating a seamless return process for customers located outside the country. 👇

dropshipping returns

How To Ensure Your Return Policy Matches With Your Suppliers?

Of course, you should not turn the return policy of your supplier into your own. Instead, you need to use their policy as a framework and make sure your policy matches theirs.

When writing your policy, please consider the following:

Determine the timeframe during which you will accept dropshipping returns. Give your customers enough time to request a product return. For instance, if your supplier gives you a 15-day return window, you should give your customers 10-12.

Cover the return policy of each supplier within your policy if you work with a few suppliers. For example, one supplier may have a 30-day return period and the other a 20-day return period. If this is the case, you can give your customers a single return policy of, let’s say, 15 days for items from both suppliers.

Avoid specifying any return address on your refund and return policy page. Again, if you work with multiple suppliers and specify a few addresses in your policy, it may be quite confusing for your customers. So, in your return policy, you simply need to state that your customers should contact you for more information about returns via e-mail.

Do not accept dropshipping returns that do not have a tracking number. You do not want your customers to claim they sent the product back to you, and it gets “lost” in the mail, right?

How To Create A Return Policy Page For Your Dropshipping Store On Shopify?

If you are about to use Shopify for dropshipping, you need to know how to create your Shopify return policy page to be clear about your dropshipping returns.

Want to set up your first store on Shopify but do not how to create your Shopify return policy page? Then read on!

To create your Shopify return policy page, you need to follow these steps:

Step 1 – Log in and go to your Shopify admin page. 👇

dropshipping returns

Step 2 – Then, you need to open up the “Online Store” tab and select “Pages”. And, the next thing you need to do is click the “Add Page” button. 👇

pages

Step 3Create a title for your return policy page. For instance, you can use something like, “Refunds and Returns Policy”. Also, from here, you can boost it for SEO, customize the page layout, etc. 👇

shopify return page

Step 5 – Go to the “Content” box and include clear information regarding your dropshipping returns. Cover several points to ensure that your customers know the limits and restrictions your store places on returns. 👇

add page

For example, I find Shopify’s refund and return policy generator very useful. Plus, it is all for free. Hence, it helps me generate a refund and return policy. 👇

dropshipping returns

Step 6 – At the bottom of the page, click “Save”.

Step 7 – Finally, click on “add it to your store’s navigation” to ensure that people who visit your site can actually see your Shopify return policy page.

First, you can access this section by clicking on the “add it to your store’s navigation” from the “Pages” section. 👇

dropshipping returns

Or, you can simply go through Online Store> Navigation. Either way, click on “Add Menu”, and add your Returns & Refunds page there. 👇

add menu

How To Handle Dropshipping Returns In An Expert Manner?

I know that handling dropshipping returns may be one of the thorniest problems for you. But, you must learn how to become a problem solver.

Think of the restaurant service. What would a waiter do if there’s an order return? Of course, the waiter almost always accepts a dish sent back and fires a new order for their guest as soon as possible. There’s no difference in the dropshipping world as well. You also need to accept and deal with dropshipping returns the right way.

Also, as online shopping becomes the preferred method for a lot of people, the importance of providing simple, quick return solutions is crucial.

So, here is how I handle dropshipping returns professionally:

1. Determine The Reason Why Your Customer Wants A Return

When a buyer submits a return request, the first thing you need to do is ask them why they want to return the item. Just ensure your tone is apologetic and positive rather than negative and suspicious.

Another important thing you need to do as a dropshipping store owner is to ensure the product meets all the requirements so that you can process the return.

And remember that, it is one thing to accept a return if the product is damaged/wrong, or if it does not match the product description. But, it’s quite different to accept a return if the customer has already used the item or simply changed their mind.

2. Apologize To Them For The Issue

I know, most of the time is not even your fault. Your supplier is responsible for solving problems with dropshipping returns. But, your customer does not know that. So, you are the face that needs to apologize and respond to customer complaints.

That’s why you should never blame your supplier for the mistake, no matter if they sent the wrong or damaged item, etc.

So, you can write something like this to your customer in order to apologize for the inconvenience:

“Dear [the name of your customer],

Please accept our sincerest apologies for the delivery of [e.g., wrong order] to your address. We are really sorry that …”

3. Respond To The Dropshipping Returns Request

Once you have apologized to your customer, it is time to respond to the return request. That’s to say, you need to let your customer know that you are going to fix the problem.

It is important to check if it is cheaper for you to ask your customer to return the item to your supplier or to simply send a new item to them without asking them to return the first one. In some cases, return shipping can be more expensive than sending a replacement to your customer.

Also, before mentioning a refund, check if your customer is able to wait for a replacement or not.

Either way, you must contact your dropshipping supplier before verifying your customer’s replacement/return request. 

4. Contact Your Supplier

Whether your customer wants a replacement or their money back, you must inform your dropshipping supplier about the issue. As mentioned above, you need to request an RMA number from the supplier.

If your supplier approves the return, you need to give your customer the return address and the RMA number. Keep in contact with your supplier to stay informed about the entire return process.

Depending on your customer’s preferences, your supplier will either ship a new product to them or refund your account for the wholesale price of the product. If your customer wants a refund, then you need to refund them for the full price of the product.

How To Handle Dropshipping Returns When Working With AliExpress Or Chinese Suppliers

Dealing with dropshipping returns when sourcing from AliExpress or Chinese suppliers may not be that simple.

The main reason for this is that you might not want your customer to send the item back to China, particularly if your customer is not based in China.

Also, when there is a problem with an order a customer places on your site, it is often because the order never arrived (a missing item) or your customer is unhappy with the product.

This means that AliExpress dropshipping returns often happen due to the long shipping times or the goods do not match the description.

💡 Tip: Learn how to reduce AliExpress Shipping Times.

For the first case, you must discuss the problem with your AliExpress supplier and ask them to resolve the issue.  However, for the second case, it would be wise to use better-quality product photos and be as specific and realistic as possible in your product descriptions.

For example, what I do when dealing with Chinese suppliers, is I order products from them as a customer. This way, I can check on the product’s quality, the shipping times, etc. 

Also, on AliExpress, I use the Up Assistant extension, so I can check on the seller’s rating and credibility. 👇

dropshipping returns

Nevertheless, once you and your supplier have made the mistake, you must take responsibility and do your best to make things right. Contact your supplier and resolve the issue together.

Also, when it comes to creating your AliExpress return policy, you must write a crystal clear return policy so that your customers know what to expect from you.

That way, you will not only minimize the rate of dropshipping returns, but you will also make your customers happy.

How To Get Fewer Refunds And Dropshipping Returns Requests?

While it’s impossible to avoid returns altogether, there are steps you can take to minimize the number of refunds and return requests you receive. 

Choose Your Dropshipping Suppliers Wisely

As I already mentioned, in dropshipping, suppliers are the ones that send your orders to your customers. And, of course, you must be sure that the products to be sent are high-quality products. Plus, you need to be sure about the shipping times’ accuracy. 

So, what you can do to assure this?

  • Ask for product samples. By requesting product samples from your customers, you can check on the product’s quality. 
  • Consider the location of the suppliers. Opt for suppliers who are closer to your target market, as this can significantly reduce shipping costs and delivery times. Faster shipping and delivery enhance the overall customer experience and increase customer satisfaction.
  • Supplier reviews also play a vital role in the selection process. Regularly check and evaluate the feedback left by other dropshippers or businesses who have worked with the suppliers you’re considering. Look for positive reviews that highlight reliable shipping, product quality, and exceptional customer service. This will give you valuable insights into the supplier’s reliability and trustworthiness.

For example, I always search for reliable dropshipping suppliers from the Dropshipping.com supplier directory, They have a huge supplier base of 2000+ suppliers from various dropshipping niches. 👇

dropshipping.com suppliers

Write a Reliable Product Description

Well-written product descriptions provide accurate specifications, detailed features, and clear instructions, ensuring that your customers know exactly what they are buying. By accurately conveying the product’s size, material, color, and other essential details, the chances of customers receiving something different from their expectations diminish significantly.

Including key elements in the product description can further prevent returns. By mentioning specific measurements, customers can ascertain if the item will fit their needs perfectly. 

Moreover, the power of descriptive and emotional language should not be underestimated. Using enticing adjectives, storytelling, and evoking emotions can create a compelling narrative that captures the customers’ attention and makes them want to possess the product.  For example, this is a great technique if you are selling vintage products. 

Use High-Quality Product Photos

High-quality product photos play a crucial role in attracting customers and convincing them to make a purchase.

A good product photo should accurately depict the item’s condition, colors, and fit. It should provide customers with a clear and realistic idea of what they can expect to receive.

To achieve this, it is important to use high-resolution, real-life product images. Furthermore, using actual person models to showcase your products is highly recommended. This gives customers a better sense of the product’s size and appearance when worn or used in real life.

For instance, Gymshark is an excellent example of how a product page should look. They showcase their products in actual models and offer multiple high-resolution and quality photos. This way, customers can clearly see every angle of the product. 👇

dropshipping returns

Decrease Delivery Times

If you want to decrease your delivery times I recommend you to consider working with dropshipping suppliers that have warehouses located closer to your customers. This can significantly reduce shipping time as products can be shipped directly from nearby warehouses.

Alternatively, you may opt to work with a dropshipping agent who has a worldwide fulfillment center. This central hub allows for faster shipping to customers worldwide.

👉 Check out my guide about Dropshipping Agent: How To Find The Best Dropshipping Agents?

In any case, it’s important to manage customer expectations by informing them about potential delays in delivery. Transparency is key to reducing the likelihood of return requests.

Stay In Touch After The Purchase

This is equally important as being in touch before or during the purchase. So, you can consider sending a post-purchase confirmation email to your customers. This email should include order details, tracking information, contact information, and expectations.

By providing this information, you are not only reassuring the customer that their order is being processed but also providing them with all the necessary information they may need in case they have any questions or concerns.

Additionally, offering returnless refunds for expensive-to-return items can be a great way to improve the overall customer experience.

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Conclusion

Dropshipping returns are a common occurrence in the e-commerce industry, with the majority of returns being due to fit or quality issues.

After going through an in-depth review of dropshipping returns, I can say that product quality issues, shipping delays or errors, and inaccurate product descriptions or misleading ads are the main causes of dropshipping returns and refunds.

Therefore, as a dropshipper, it is important to handle returns professionally and address the main causes to minimize returns and maintain good relationships with customers. So, if you need good guidance, this article is for you!

About the Author

Profile picture of Aleksandra
Aleksandra Miteva
Aleksandra teaches marketing and management at various levels in High School. She writes about marketing, the economics and logistics of the dropshipping business and ecommerce in general.