Effective returns and refund management is critical for keeping your customers happy, as well as for maintaining a steady revenue for your online store. Refunds occur naturally as part of the customer journey, and there are multiple reasons behind a refund request.
Whenever you manage refund requests through your eCommerce platform, you can either issue partial refunds if the customer only wants to return some of the items, or full refunds for a customer that returns the entire order. But there are also other costs associated with the order, including shipping costs, shipping labels, and additional fees.
In this article, you’ll learn the most common reasons behind a refund request, understand how important refund management is, and discover how to refund shipping costs and shipping labels on Shopify.
Reasons Why Purchased Items Are Returned
The return rates associated with online retail are four times higher than in physical stores. The numbers for eCommerce shouldn’t surprise us because online shoppers have their first physical interaction with the ordered items when they open the package.
Returns occur when there’s a gap between the expectations built pre-purchase and the post-purchase experience with the items ordered. The customer might request a refund for the entire order or just a part of an order.
Here are some of the most common reasons for returns:
- The customer ordered the wrong item;
- The customer is dissatisfied with the item;
- The seller shipped the wrong merchandise;
- The item received is damaged or defective.
Both buyers and merchants can make mistakes. An online shopper may place the wrong order in a hurry, going quickly from the order page to the payment page without checking the order details first. The seller can pack the wrong products or use unsuitable packaging that can result in damage during shipping.
While you can drastically reduce the number of return requests and refunds by fine-tuning the eCommerce platform your store is built on, some refunds are inevitable. The way you manage refunds is crucial for how potential and existing customers perceive your brand.
Importance of Refunds
How you manage Shopify returns and refunds for your online store significantly impacts customers’ trust and loyalty. Any trustworthy online retail business has a clear return and refund policy that is in line with local regulations, which can be easily accessed by online shoppers on the website.
Transparent procedures set expectations before ordering and help you avoid unpleasant situations. It also helps both sides save time, reducing the number of questions around returns, refunds, and exchanges that customer service teams receive from potential and existing customers.
Being such an important predictor of how likely a customer is to order from an eCommerce business, you need to manage refund requests quickly and professionally.
You can manually handle Shopify refunds from your Shopify admin. You can find all the steps to refund a Shopify order based on the instructions from the Shopify Help Center below.
Also, you should note that using Shopify Payments to issue refunds means up to 10 business days until your customers get their money back.
As your Shopify store grows and you no longer can rely on the native functionality of the eCommerce platform, you can pick a third-party Shopify app that helps you automate returns management and improve the entire experience around this process.
Can you Refund a Shipping Cost?
When managing a refund through Shopify admin, you can issue full refunds and partial refunds, as well as refunds for other amounts associated with the order in question, including refunds of shipping charges, import taxes, or fees.
So, yes, you can refund shipping costs on Shopify.
You can refund the shipping cost to the customer during the same process you initiate for refunding an order in Shopify. To ensure the customers get their money back, you must enter the correct shipping amount you want to send back.
In the next section, you will find a step-by-step guide to refunding shipping costs on Shopify.
How to Refund Shipping Cost to the Customer
In Shopify admin, you can issue partial and full refunds according to your customer request and the clauses in the return policy. Manually adding the shipping amount allows you to issue a partial or full shipping refund depending on the request you have to process.
Let’s take a look at how to refund shipping on Shopify using the native order-editing functionality of this eCommerce platform:
Step 1:
Go to the Shopify Admin page and click Orders.
Select the order you want to refund and click Refund.
Step 2:
Set the quantity you need to refund for each item. Be careful when you refund orders because refunds are irreversible. If you manage a full refund, make sure the customer’s request is in line with the refund policy of your online store. If you have a partial refund, make sure you select the correct items and quantities.
Step 3:
The refund amount is calculated automatically, but you can manually edit the amount to refund shipping too.
Step 4:
Check Restore items if the customer has returned the items you’re about to refund.
We recommend adding the refund reason to make it easier to refer to the order later.
You can leave the Send a notification to the customer option checked to keep your customer informed.
Step 5:
Click Refund, and you’re done. You now know how to refund shipping on Shopify.
Customers might cancel an order or request a return after you’ve printed the shipping label, but your eCommerce business can avoid unnecessary shipping label costs. As orders frequently get canceled or returned in online retail, you should also know how to refund shipping labels on Shopify.
To get the cost of a shipping label credited back to your account, you need to void the shipping label by following these steps:
- Go to Shopify admin and click Orders;
- Select the order with the shipping label you want to void;
- Go to the Fulfilled section, click the “…” icon, then click Void label;
- Select the reason for canceling the shipping label;
- Confirm by clicking Void label and insurance.
You can refund shipping labels on Shopify only for labels purchased in less than 30 days and if there are no tracking events associated.
Ways to Refund Shipping Costs
Each time you receive a request for a partial or full refund, check if it is eligible in terms of the return policy, as well as the refund policy. When processing the request, ensure you add the correct shipping amount into the Shipping field because the process is irreversible once you click Refund.
While you can manually refund shipping, you should know that the customer is more likely to receive a partial or full refund for shipping costs if the carrier is at fault.
Carrier at fault
Your customer can receive a partial or full refund for shipping if the order was delayed or the package was damaged due to an error on the carrier’s side. If the carrier refuses to offer a partial or full refund, you can contact Shopify support.
Customer’s fault
Carriers might not refund shipping for orders that are delayed due to an error on the customer’s part. For example, if your customer entered the wrong shipping address at checkout and caused delivery delays, they might not get a refund.
Pay attention to the reason behind a refund request. You might need to pay the shipping amount from your account if the carrier refuses to refund shipping costs.
The refunds issued using Shopify Payments can take up to ten business days to be credited back to the original payment method. If your account displays a negative balance, the payout is tried again in three business days. If you want to clear a negative balance so you can process refunds, you can make a manual repayment into your account.
Remember that you can get your money back for the return label if the delivery got delayed and there are no tracking events associated with the order you need to refund. To get a refund for a shipping label, you first have to void the shipping label following the steps we’ve presented in the previous section.
Other Ways to Refund a Customer
You can issue a refund only after you process the return or cancel the order. Such being the case, should you refund the customer right away or wait for the customer to send back the items?
Some stores wait until the customer returns the items, evaluate if the returned items qualify as restock items, and only then issue a refund, sending the money back to the original payment method.
But customers might not be happy with waiting so long for a refund. You can adjust your return and refund policy and enable multiple refund alternatives to keep your customers happy and your business profitable.
Gift cards and store credit are great alternatives to cash, debit, and credit card refunds, allowing online stores to refund customers immediately.
With Shopify refunds, you can only issue a refund to the original payment method, and it can take around 5-10 business days until the customers get their money back.
But a gift card or store credit can be accessed immediately, improving your customers’ post-purchase experience and helping you transform returns into exchanges.
You can’t offer store credit through Shopify’s native order-editing functionality, and issuing a gift card is only available for Shopify Plus stores. So, if you want to offer gift cards and store credits as refund options, you can choose a return management solution from Shopify App Store.
Return management apps help you enable multiple refund options that allow customers to choose their preferred refund method, and eliminate the waiting time when a customer picks a gift card or store credit, leading to better revenue and customer retention.
Improving Shopify Refund Management
In this article, we’ve walked you through the reasons why customers request refunds, how important it is to manage refunds professionally, how to refund shipping on Shopify, how to refund shipping labels on Shopify, and what refund alternatives you can use for your online store.
While Shopify only allows you to refund customers to their original payment method, there are multiple return management apps that integrate with your eCommerce platform and enable you to add gift cards and store credit as alternatives to refunds.
Automated return management solutions are highly popular among online retail businesses. Rich Returns is a return management app designed for Shopify stores that can help eCommerce stores like yours enable a more flexible refund policy and create a customer-friendly experience around returns.
An app like Rich Returns helps you automate returns and offer convenient refund alternatives that are accessible immediately. Furthermore, the customer has access to an intuitive self-service portal, where they can choose a refund method, choose exchanges instead of a refund, or go for a gift card or store credit.