Complete Guide: Handle Dropshipping Refunds and Returns

The complete guide to handle Refunds and Returns when Dropshipping
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The moment I had my first refund request on my dropshipping store, I panicked. I didn’t know what to do, because the product came directly from my supplier. After some research, I found out that handling refunds and returns is not that hard when you’re dropshipping in 2019. I will give you a short answer below to then dive deep into this subject!

The best way to handle refunds and returns when dropshipping is to look if it’s cheaper to let your customer keep the product and to just send a new product. Otherwise, let your customer send it back to your supplier. You only have to decide if you pay for the return costs or not.

Recognize the Products That Might Not Require Returns at all

Before learning about the different kind of refund requests and how to handle all these refunds and returns in your own dropshipping store. It’s important to know that some products might not be worth returning to your dropshipping supplier at all.

Some products can cost more with return shipping than sending a replacement to your customer. Furthermore, some dropshipping suppliers charge a restocking fee for products that are getting returned.

For example, a customer bought a bracelet worth $3, but it doesn’t fit well. Now, this customer wants to return.

Even though you’re not at fault here. In such a case, you can simply offer your customer to send the replacement and let them keep the original product as well. 

This would be much easier than taking care of the full return process.

And it’s not only easier…

If you follow the example of the bracelet it would be cheaper as well. Just let your customer keep the wrong one and just send a new bracelet.

Furthermore, this small act may have converted your customer into a repeat customer for your dropshipping store.

Common Causes of Refund Requests When Dropshipping

Learning about the most common causes of refund requests is a great way to get fewer refunds.

You will know what to focus on and where to double-check.

1. The product doesn’t match your store’s description

Common causes of refund requests when dropshipping: The product doesn't match your store's description

One of the most common reasons for refund requests is that the product your customer got delivered doesn’t match your store’s description.

Say that your store’s description states that the product is 5 cm by 5 cm, but the product is like 10 times bigger. Or that you say that the product color is coffee brown, but the real color is more black.

This would be either your fault by copying the data from your supplier wrong onto your store’s description. Or your supplier’s fault by giving you the wrong data or sending out the wrong product.

You should double-check the data your supplier supplied you with.

Like the example above, say that you checked again and it definitely says the color is coffee brown, then this would be your supplier’s fault.

If you think it’s your supplier’s fault, then what you should do is directly send an email (or AliExpress message if you use AliExpress) to your supplier asking about this problem.

Ask him (or her) to send your customer a replacement or give you a refund (if they are at fault).

2. The product doesn’t fit right or they ordered the wrong size

Common causes of refund requests when dropshipping: The product doesn't fit or right or they ordered the wrong size

This could always happen when you have something like clothes or jewelry in your dropshipping store.

You can’t try things on when shopping online.

Maybe you had this happen before as well when you were shopping online. Like you ordered some pants or t-shirts and it didn’t quite fit as expected.

When this happens, your supplier likely won’t cover the return costs. Unless, of course, they’re great.

Knowing your supplier’s policy about refunds and returns is going to make all the difference.

If you don’t know your supplier’s refund and return policy then you should ask about it.

In this situation, I recommend you allow returns regardless of your supplier’s policy.

Why?

This kind of customer service will give you lifetime customers.

But first, check if the product is worth returning at all. Check if it might be cheaper to send a new one to your customer and to let the customer keep the product they have now.

Otherwise, I would just ask that the customer pays for return shipping since the mistake wasn’t on your end.

Clothing got one of the biggest return rates online

Clothes have a 40% return rate. So it’s not uncommon to get a refund request when you’re dropshipping clothes.

One thing you should make sure of is that you have a sizing guide on your dropshipping store’s description. This could dramatically decrease refund requests because your customers can double-check if the sizing is correct for them.

Also, make sure that the sizing guide is in the sizing of the country you want to dropship to, and does not contain the Chinese sizing. Which tend to be smaller.

Personally, I don’t suggest dropshipping any products that need sizing if you don’t have much experience yet.

3. The product is damaged or defective

Common causes of refund requests when dropshipping: The product is damaged or defective

Although this won’t happen that much if you have a reliable supplier. It could still happen sometimes.

If you’re using AliExpress (which I suggest you use if you’re just beginning with dropshipping), then use my guide to select the best AliExpress suppliers!

What could happen is that the product doesn’t work at all or it might be damaged while being in transit to your customer.

Ask your customer to send you pictures or a video of the damaged product. Then send these to your supplier.

If you have a good business relationship with your supplier you might not even need pictures or videos, but it’s a great way for you to know if your customer is speaking the truth or not.

Then most of the times you just have to send a message to your supplier and ask them to send a replacement to your customer or refund you the money.

All you have to do now with your customer is to apology and convince them to wait for the replacement. More on how to handle refunds and returns below!

But what if you don’t use AliExpress suppliers?

Above is true for most AliExpress suppliers, but most dropshipping suppliers won’t cover return costs for defective items. Because in their minds, they didn’t manufacture the products so they aren’t liable for defects. They simply view it as a risk of selling products to a retail market.

I suggest reading this forum post to get a better understanding of dropshipping suppliers and there return policies.

4. The product did not arrive on time or is lost in transit

Common causes of refund requests when dropshipping: The product did not arrive on time or is lost in transit

This is mostly for the people who are dropshipping from China.

Your customer might think that their package is lost because it’s been already like one week, while the usual shipping time will be between 2-3 weeks.

Or you’re looking at the tracking information of your customer’s order and you see that the last update was like a month ago.

Good thing now is that if you’re using AliExpress and you can’t agree with your supplier that the package is lost that you can open a dispute.

Just look at the guarantee from your supplier. Most (if not all) of the AliExpress sellers will have a 60-day or less delivery guarantee.

Do you want to learn more ways to deal with long shipping times when dropshipping from China? Then I suggest reading my article here!

In case you want to learn how to get a faster delivery time when dropshipping to decrease the chance of people asking for a refund while their package is still on its way, then I suggest reading this article.

How to Handle Refunds and Returns in Your Dropshipping Store

Learn how to handle refunds and returns in your dropshipping store

Of course, knowing about all kind of different refund requests is one thing, but learning how to handle refunds and returns in your own dropshipping store will bring it to the next level!

How to respond to a refund request?

The best tip I can give you for writing the first response is to not mention a refund yet, because this will mean that you lose all your profits from that customer.

This doesn’t mean you should never refund, but if they accept to wait for a replacement, then this would almost always be better for you profit-wise.

So what to say then?

First, check if it’s cheaper for you to let your customer return the product to your supplier or to let your customer keep the product and just send a new one. You learned this at the beginning of this article!

If you figured out that it’s cheaper for you to send a new product to your customer, then what I like to do is write something like this to your customer:

Hello “First name of customer”,

I’m so sorry to hear that your bracelet was not the same as we described it in our description.

What I can do for you is send you the correct bracelet, free of charge. You won’t have to send back the bracelet you got from us now!

Let me know if that would be alright for you.

Greetings,

“Your information”

What if your customer still wants a refund?

If your customer replies negatively on your email offering them a replacement, then in your second email offer them a refund.

Sometimes it’s best to just give the refund and never hear from that customer again. Some customers will be such a pain for you that it might be hard to keep giving them great customer service. I always try to turn it around, but otherwise, I will just refund.

Of course, you should not forget about the lifetime value of your customer.

This means, that even though your customer had a refund request, you can still make that customer come back to your dropshipping store again.

How?

Just make sure your customer service is on point and you did anything to solve the problem for your customer. Even though maybe, in the end, you still gave a refund.

You now have a chance that that customer will come back again to you because they have good past memories with you.

Keep reading to learn more things you can do. Things you can add to your refund or apology email so that your customer is more likely to come back!

Extra things you can do to turn a refund request into a lifetime customer

Sometimes just giving a refund or sending a replacement is enough, but this doesn’t automatically mean that this customer will come back to your store again.

Here are some extra things you can do to make sure your customers are happy after there refund request.

  • Exclusive Coupon Code: Give your customer a discount code for there next purchase. This is a great way to let them come back.
  • Store Credit: Give them store credit for the refund amount maybe even with something extra.
  • Offer a Product Upgrade for Free: Just make sure you have an upgrade available for that product.
  • Free Product: If your customer accepts to wait for the replacement you could send them an extra product. Which could be low-cost for you, but could mean a lot for your customer, because they are getting something for free from you!

Although these things are relatively small for you and might be low cost, they can help your customer rebuild trust in your dropshipping store.

With one goal: To let them purchase again!

How to deal with returns in your dropshipping store?

Learn how to deal with returns in your dropshipping store!

So what if you let your customer return the product?

How to deal with returns when you are dropshipping?

When a customer is returning a product, the process will look like this:

  1. The customer contacts you to request a return.
  2. You request an RMA number (return merchandise authorization) from your supplier.
  3. The customer sends back the product(s) to your supplier. And your customer writes the RMA # on the address.
  4. The supplier refunds you for the wholesale price of the product(s).
  5. You refund the customer for the full price of the product(s).

The only thing now to decide on your dropshipping store is if you pay for the return shipping costs or if you let your customer pay for it.

How to get Fewer Refunds and Returns Requests When Dropshipping?

Now you know about the most common causes of refunds and returns and how to handle them in your own dropshipping store.

But do you know the best way to handle refunds and returns?

Of course… Get less of them!

1. Check for fraud

How to get Fewer Refunds and Returns Requests When Dropshipping: Check for fraud

Before shipping any products you should make sure the order is legit and that chances are low that it might be a fraud order.

Shopify has a great tool in their platform available, which is a fraud analysis.

If you have a big order, then you can always send an email to that customer asking them if it’s correct that they ordered for that amount.

But nonetheless, don’t forget to use your gut feelings as well.

Like when the billing address is in America and the shipping address is some were in India. This could be an example of a fraud order.

One great last tip is to be careful with PayPal eChecks. Wait until the payment arrived on your PayPal account and then fulfill the order. People might cancel the check once you send the products they ordered.

2. Great customer service

How to get Fewer Refunds and Returns Requests When Dropshipping: Great customer service

This one is important for all the refund requests listed above. Always try to be as polite and understanding as possible.

But that’s not all if you have great customer service you can even prevent refund requests.

I know… You’re probably thinking, how?

This is definitely for the people who are dropshipping from China but it could also apply for shorter delivery times.

The number one question you will get is where their order is.

If you don’t answer polite and with a good answer, then this could turn into a refund request. Your customer might not want to wait any longer.

You might think the same as me when you’re getting your first refund requests. I thought why do all these people ask where their package is while we send out an email automatically when their order was shipped with the tracking information inside.

Don’t think too much like this, because some customers clearly don’t know or they might think that you have more information that you’re not sharing with them.

How to respond to customers asking where their package is?

Always make sure you include the tracking information. Don’t forget to explain that they can follow their order on that site.

I always include the tracking information as a link to 17track or any other tracking site you’re using (like this: https://t.17track.net/en#nums=”tracking number here”). Otherwise, you might get questions about how to use the tracking number.

I like to write something like this to my customers when they are asking about where their package is:

Hello “First name of customer”,

I tracked your package for you at: 
(link to tracking information of the order)

(write something about the latest tracking information update)
As you can see your order arrived in the UK already and is currently being processed in a distribution center close to you.

(now you can write something about your estimate when the package comes)
We expect that your package will arrive before the end of this week.

Please let us know if your package didn’t arrive at that time. We will do our best to solve this for you then.

Greetings,

“Your information”

This way your customer has all the information he or she needs.

This will reduce the chance that this customer will ask for a refund. Most of the times you won’t even hear back from them after you send this response.

How to Handle Refunds and Returns on your E-commerce Platform?

Learn how to handle refunds and returns on your e-commerce platform

Now that you know how to deal with refund and return requests. You might have decided to give your customer a refund (his / her money back) It’s important to know how to do that on the E-commerce platform you use.

How to give refunds if you use Shopify?

Firstly, go to the order you want to refund. Then you see on the top a button called Refund items. Click on that.

learn how to give refunds if you use Shopify part 1
My first order! (#1001 was my test order,
which was already refunded so I could not use it for this example)

Then you can select what you want to refund and how much you want to refund.

You can also refund less than the price of the product. This can come in handy if you agreed to give a partial refund.

learn how to give refunds if you use Shopify part 2

You also have the option to notify your customer of the refund. This is a great way to let your customer know that their refund is on the way.

This saves you time sending an email every time you processed a refund!

How to give refunds if you use a different E-commerce platform?

I mainly focus on Shopify, but of course, you could use a different platform.

I personally don’t have much experience on these e-commerce platforms, but I will link to great websites to give you the information you need to handle refunds!

If you didn’t pick an e-commerce platform yet, then I suggest you pick Shopify. This way you can use tools like Oberlo, which will make your dropshipping store a lot easier to handle. If you’re interested, then you can start a free 14-day trial here.

How to Write a Refund and Return Policy When Dropshipping?

Learn how to write a refund and return policy when dropshipping

Last but not least to be able to handle refunds and returns like an expert is that you need to have a refund and return (or return and refund) policy on your dropshipping store.

This is the agreement where you inform customers about your policies regarding refunds and returns.

It usually includes information like, how many days they have to return a product and how they will receive the refund (store credit, bank account, replacement).

Some great tips to follow for your refund and return policy:

  • If your supplier gives you a 30-day return window, you’ll want to give your customers 20-25 days. This gives you and your customers some room to account for shipping delays, forgetting to send out the package and so on.
  • If you have multiple suppliers, try to cover all of their return policies within your policy. Say one supplier has a 25-day return period and the other a 15-day return period. You can give them a single return policy of 10-12 days for products from both suppliers.
  • Remember you’re a dropshipping store and in case you have no physical office (many dropshippers don’t), then do not specify any return address on your refund and return policy page. You can just share an email address and let your customer contact you for more information about the return process.
  • Only accept returns with a tracking number. The last thing you want is for them to claim they shipped your item, and it gets “lost” in the mail.

If you want to learn more about how to write a good refund and return policy for your dropshipping store, then I suggest reading this great article here.

Getting Started with Dropshipping in 2019

Learn how to get started with your dropshipping store in 2019

So, are you ready to get started with dropshipping? Or maybe you have already started, but you’re looking to get some inspiration?

If so, then I will link to a few of my best articles below for you. This will help you to get started and to stay motivated while beginning your dropshipping journey!

Just don’t forget that success takes time. Keep improving each and every day!

And also, if you don’t have a Shopify store yet, then you can click here to get a free 14-day trial!

Conclusion

So, there you have everything you need to know about how to handle refunds and returns on your dropshipping store!

You see that you could get a lot of different refund requests, but one thing is for sure, just be as polite as possible to your customer so that the chances of you giving out a refund get lower and lower.

If you were scared before about handling refunds and returns on your dropshipping store, then I hope you’re not anymore after reading this!

Don’t forget that it all comes down to you and how you treat your customers. Treat them good and they might come back to purchase more!

If you have any questions or suggestions, then let me know by commenting below or contacting me directly by pressing the “Contact Me” button at the top!

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Complete Guide: Handle Dropshipping Refunds and Returns
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Complete Guide: Handle Dropshipping Refunds and Returns
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Learn how to correctly handle refunds and returns in your dropshipping store! You will also learn how to get fewer refunds in 2019!
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Do Dropshipping
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