cancel-vs-refund

Is Canceling A Shopify Order The Same As A Refund?

As much as Shopify merchants try to minimize their occurrence, refunds and order cancellations are a natural part of the online customer journey. While canceling an order differs from refunding an order, the two processes are interconnected.

In this article, we’re exploring the differences between refunds and cancellations, the most frequent reasons behind a canceled order, and how to cancel a Shopfiy order through Shopify store admin.

Shopify Refund vs. Order Cancellation

Shopify refunds and order cancellations are two distinct yet interconnected processes.

Refunding an order means sending payment to the customer for returned and canceled orders when payment was captured.

Canceling an order implies stopping the order processing at your customers’ or team’s initiative. When payment is collected, you must issue a partial or full refund of the transaction.

Shopify’s native order-editing features allow you to refund and cancel orders through Shopify admin manually. Several factors influence the duration of both processes. 

Shopify refunds take approximately 5 to 10 business days, but the processing time can be influenced by other factors like the customer’s bank. If you want to learn more about Shopify refunds, we recommend reading “A Guide to Effectively Refund an Existing Shopify Order.”

Shopify cancellations take at least 10 minutes from when one of your agents takes over, but it might take longer when trying to process orders with the “Payment pending” status.

Before we dive into the steps of managing canceled Shopify orders, let’s first explore the common reasons behind a canceled order.

Reasons for Cancelling an Order

The initiative to cancel an order can come both from you and your customers. While order cancellations occur naturally in online shopping experiences, you should try to keep cancellation rates at a minimum. 

Processing canceled orders involves effort from your staff and operational costs for your store. Also, the way you manage customer interactions during this process can be decisive for the future of your relationships.

The cost paid for mismanaging canceled orders can go beyond operational costs, leading to customer churn, bad reviews, and negative word of mouth.

Here are three common reasons why orders usually get canceled:

1. Unavailable Items

There may be times when the current status of the products you have in stock is not reflected on your website. Because of this, customers can place orders even though one or more products they’ve purchased are not actually available. There are also cases when the inventory isn’t updated in real-time due to high demand, for example, during a big discount campaign.

You would probably want to cancel the order when you notice quality issues in the items available in stock. For example, you process an order from a customer who purchased the last winter jacket available in store, but you notice that the item has a manufacturing defect. So, you decide to cancel the order because the product doesn’t meet the quality standards you’re promising.

2. Customer Request

The most common reason customers contact support to cancel their orders is “I changed my mind.” They might still want to purchase from your online store, but aren’t happy with their choice, want a different item, or keep only a part of an order. 

A customer might change their mind when they see a better offer at one of your competitors or feel buyer’s remorse after an impulse purchase.

Buyers might also make mistakes, for example, selecting the wrong model or size, entering an incorrect delivery address at checkout, or using the wrong payment method.

High shipping costs and long delivery times can also determine a buyer to cancel their order. For example, a long waiting time for a product that they ordered as a birthday gift makes people want to cancel the order and maybe switch to a gift card instead.

Lack of constant status updates via emails, SMS, or other notifications weakens trust in your business and can determine customers to cancel orders.

3. Fraudulent Order

People can request your Shopify store for an order cancellation due to fraudulent use of their bank accounts or even their user accounts. But order cancellations can also be initiated when someone in your team has suspicions regarding an order, for example, when the shipping address is far from the IP address or a first-time buyer places a high-value order.

Shopify’s fraud analysis functionality helps you identify suspicious orders based on various indicators. To investigate suspicious activities, go to “Orders” in the admin section of your Shopify store, where you can identify suspicious orders based on the exclamation mark next to the order number.

You want to start the fraud analysis immediately to limit damages and avoid shipping charges or other taxes and fees.

Reasons for cancelling an order

When Can You Cancel a Shopify Order

Shopify allows you to start the order cancellation process only if: 

  • The payment was collected, but no items are fulfilled;
  • The payment isn’t collected.

You can cancel a fulfilled order only after manually canceling the fulfillment from the Shopify admin.

Shopify might block you from editing and canceling orders with the Pending payment status, which indicates that the processing has started but needs time for completion.

You’ll notice that the payment status changes when you cancel a Shopify order:

  • Voided = the payment wasn’t captured;
  • Refunded = the payment was fully refunded;
  • Partially refunded = you partially refunded the canceled order.

Another aspect you should be aware of is that you might need to take some follow-up actions after canceling an order depending on its status.

Paid for but no items are fulfilled

The refund is automatically issued if you choose to refund the full amount.

When you select “Refund later,” the refund won’t be automatically issued. Merchants pick this option when they want to issue a partial refund after canceling the order or need more information before entering the amount. 

You want to track non-refunded orders to avoid chargebacks and follow-up if you use a 3rd-party fulfillment service.

Fulfilled but payment isn’t collected

You won’t be able to collect payment once you cancel an order, so you’ll have to initiate the returns process.

Not paid and not fulfilled

You need to archive the order if the process doesn’t happen automatically.

How to Cancel a Shopify Order

When using Shopify’s native order-editing functionality, you must manually cancel orders from your Shopify account, carefully taking the following steps:

  1. Go to your Shopify admin and click “Orders.”
  2. Use the search menu to identify the order easily, then select the order you want to cancel.
  3. On the order details page, click on “More Actions” and select “Cancel Order.”
  4. Select the reason for canceling the order.
  5. You have two options for managing payment refunds:
    -Leaving the default Refund $ value checked allows you to issue a full refund right away;
    -Selecting “Refund later” will enable you to process a full or partial refund later.
  6. Leave the “Restock items” option checked to restock items in your inventory.
  7. Leave the “Send a notification to the customer” option checked if you want to inform the customer of the cancellation.
  8. Ensure all the details are correct and click “Cancel Order” to finish.

After you cancel the order, you can go to the order’s Timeline to see the order history, such as which items are restocked and refunded.

If you’ve selected “Refund later” during the cancelation process, you should refund the canceled orders as soon as possible to avoid transaction fees. 

To process refunds for canceled orders that are partially refunded, you have to search the order and issue additional partial refunds. Every time you calculate the amount of money owed to your customer, check if the price paid by your customer was influenced by a discount code or other promotional offer. Be sure you enter the correct refund amount because refunds are irreversible.

When you cancel Shopify orders, transaction costs are automatically disputed. If the canceled order was placed within the current billing cycle, the fees are removed from your upcoming invoice. If you want to cancel an order from a previous billing cycle, you will receive the transaction fee credit on your next invoice.

Shopify doesn’t have a functionality that allows customers to cancel orders on your store, so they have to contact your customer service. Then, your team has to take the steps presented above. 

Better Customer Experience With Rich Returns

Rich Returns is a Shopify app that helps you automate returns, exchanges, and refunds. The seamless integration with your store’s tech stack allows you to minimize manual work and implement a more advanced refund and return policy. Using this automated app helps you improve customer and revenue retention.

Start a free trial with Rich Returns to build better post-purchase experiences and keep your store’s profits high.