How To Handle Returns And Refunds In DropShipping

August 5, 2021
| by Zoe Sofer

Before we start to talk about returns and refunds in the dropshipping world, let’s understand what dropshipping actually is.

Dropshipping is a form of retail business where the seller accepts customer orders but does not keep any products in stock. Instead, the seller purchases the products as needed, from a third-party supplier that has them shipped directly to the client. This means that the seller is responsible for marketing, returns and exchanges, and selling the products, but has little to no control over the storage, product quality, inventory, or shipping process. 

Dropshipping has many benefits that make this business model very attractive, for example- you can run your store from anywhere in the world, even on the beach in Thailand, all you need is a good internet connection. Another benefit is that you can sell a large variety of products since you don’t need to worry about storage space.

On the other hand, many disadvantages come with the comfort of the dropshipping world. For example, the fact that the actual product doesn’t go through you means you have no way of maintaining a certain standard of quality, products may be defective or sent incorrectly and you will probably know about it only when, and if, the client complains. 

Returns and refunds in dropshipping seem complicated and even intimidating at times. Here are some things to keep in mind that might help:

Returns And Refunds In Dropshipping

While writing down your return policy there are a few things to pay attention to. To start, you want to make sure that you give it a personal touch and make it your own. You also want to go over all your supplier’s return policies, see that you understand them. Make sure that when you write yours, it is in line with most, if not all of them, so there is no confusion along the way. While writing your return policy you may decide that you don’t like a certain part of a supplier’s policy and you would like to do things differently. That’s ok, just know It might mean that you will have to take upon yourself some more expenses and responsibilities.

Here are possible complications that can occur in the return process:

  • Some suppliers charge a restocking fee, which is basically a charge for having to return the product. It is highly recommended that you take on yourself these fees, and do not involve your client, mainly because a fee of this sort seems unfriendly.
  • Returning defective products. Running a dropshipping business means you have no control over the quality of your products, so when a customer receives a defective product you should take responsibility for the mistake and make sure you compensate them properly, especially if you want to keep them as a customer. 
  • Returning a non-defective product for a refund, Most companies will charge the client for the shipment of the product which is a reasonable request, And yet you will stand out if you offer free returns to everyone if you can afford the cost. 

In some situations, when a client requests a refund and the price you paid the merchant for the product isn’t high, you should offer your client to send them a brand new product instead of a refund. And to top that off, you can tell them they get to keep the old one. This works mostly if the client has received a defective product, but it can also be applied in different situations. By doing so not only did you avoid a refund, but you might end up still being net positive in revenue if your margins are big enough. And if that doesn’t sound good enough, you made your client feel as if he got the best service possible.

When a customer wants to return an item to get a refund, a simple and complication free process should look something like this:

  1. The customer will contact you via email or by sending a return request using a self service portal.
  2. The first thing you should do is ask them why they want a refund.
  3. According to their answer you will know if it is possible to get the refund from the merchant or not.
    -First option is if they answer that they simply don’t like the product, unfortunately that isn’t a valid reason for a refund from the merchant and you will need to take on yourself the loss.
    – Second option is if they answer that the product is broken, defective or doesn’t match your description, in this case ask for a photo as evidence, but it will also help you get refunded from the merchant.
    – Third option is if they say that the product didn’t arrive at all, in this case you will go over the shipment details to figure out what happened. 
  4. According to the client’s answer you will submit a refund request with the client’s photos and explanations, and if the situation calls for it, receive an RMA (return merchandise authorization) number. 
  5. If needed the customer will send back the products to the supplier with the RMA number.
  6. The supplier refunds your account.
  7. You refund the client’s account.

During this entire process, you should be very apologetic, nice and understanding to the unfortunate situation. Your main goal is that the customer will want to come and shop at your store again at the end of the process. 

Everyone wants to sell and enjoy their profits without having any need to refund, But as a business owner, you have to be prepared for any situation. It is important that you learn how to handle return and refund requests so you can provide the best customer service either by managing it on your own or by using a self-service returning portal. 

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