How to Handle Dropshipping Returns And Refunds

August 5, 2021
| by Rebecca Fox

The complexity of dropshipping returns can make them difficult to manage, since you don’t have control over the fulfillment process. Knowing the reasons returns happen and how to handle them can help streamline your Shopify store’s dropshipping returns.

Running a dropshipping business has the advantage of having lower costs and risks than a traditional eCommerce business. Nearly 33% of eCommerce retailers use the dropshipping fulfillment model. Even though dropshipping can be a great way to run your business, you must consider how not handling inventory hugely affects the returns process.

Refunds and returns are sometimes requested due to an order being fulfilled incorrectly or failing to meet a customer’s expectations. Knowing why returns happen, how to deal with them, and what policies to put in place can help you streamline your Shopify store’s dropshipping returns process.

Handling Dropshipping Returns

Having a process in place for handling returns as quickly and efficiently as possible is important when running a dropshipping business. Having a well-defined return policy helps customers know what to expect, and streamlines your returns management process.

Depending on the types of products you’re dropshipping, you may choose to have returns shipped back to your warehouse as opposed to straight to the supplier, or you may prefer customers to keep returned items instead of shipping them back.

Given that dropshipping returns can be more complex than standard eCommerce returns, it’s important to plan ahead and develop a policy that suits your business model.

Set Expectations with an Effective Return Policy

Having a clear and easy-to-find return policy is important to provide customers with all the information they need to be confident in buying from your Shopify store. 68% of online shoppers read the return policy before making a purchase, so having a clear return policy is essential.

Find Out Your Supplier’s Return Policy

Before you create your store’s return policy, check with your dropshipping supplier what their policy is. If they charge restocking or shipping fees or have a limited time frame for returns, those are important for you to consider when writing your store’s return policy.

Find out which products can be returned and under what conditions, any extra fees they charge, and how they handle the return process.

Working with several dropshipping suppliers can complicate things since each supplier will have a different policy. You can formulate a general return policy that covers everything, or alternatively, you can set up an automated Return Portal with all the different conditions and settings automatically in place.

Create Your Return Policy

Your store’s return policy lets your customers know what items they can return, how long they have to request a return from the date of purchase, and what kind of compensation they’ll receive. It’s important to specify any additional fees such as shipping fees and restocking fees so that customers know what to expect.

Important things to include in your return policy:

  • Eligibility Conditions – The conditions items must be in to be eligible to be returned.
  • Returns Solutions – The return solutions you offer – refunds, exchanges, store credit, etc.
  • Return Time Frame – How long the return window is and how long to expect to wait before receiving a refund/replacement product.
  • Return Instructions – The steps customers need to take in order to request a return.

Simplify the Returns Process

Dropshipping returns may be initiated because customers are unhappy with the order they received, or simply ordered the wrong item. It’s important to be prepared for the different situations you may encounter so that you can plan accordingly and take action to streamline your returns process.

Here are a few of the main reasons customers request a return:

Common Return Reasons

The customer ordered the wrong product or size/style

Customers will often order the wrong size or accidentally order the wrong product altogether. It might be a replacement part for the wrong model, or clothes that don’t fit. Since the customer can’t see and touch the products before purchasing when shopping online, it is easy to order the wrong thing.

It is not uncommon for people to purchase a few different sizes or styles of a product with the intent of returning anything that doesn’t fit. The best way to handle this is by having a good return policy that facilitates easy returns while offering incentives to exchange instead of just returning items for a refund.

The product doesn’t match the description

If a product doesn’t match its description, you might have made a mistake when writing the product description and uploading images, or your supplier may have given you incorrect information.

Regardless of whether the mistake was yours or your supplier’s, it’s your responsibility to offer a satisfactory solution to keep your customers happy.

The customer received a damaged or defective product

When you run a dropshipping business, you don’t have much control over the quality of your products. When a customer receives a defective product, it’s your responsibility to compensate them and make sure they remain satisfied. 

By exchanging their order or offering store credit plus an additional bonus, you can keep their business without giving them a refund and potentially losing them as customers.

The product arrived too late/the customer no longer needs it

Depending on how long it takes for the order to arrive, customers may no longer need the product. They might have purchased the product somewhere else, or a change in their circumstances may have made it no longer necessary.

For customers to know when to expect their orders, it is best to provide delivery estimates, real-time updates, and tracking codes.

The wrong product was sent

It may happen that a customer receives the wrong product. This might happen due to mistakes when manually inputting orders to be sent to dropshipping suppliers, or during dropshipping fulfillment. It’s possible that the supplier packed the wrong product, or the wrong shipping label was applied to the package.

In these cases, the customer is not at fault and it’s important to make up for the inconvenience by sending the correct item or providing a refund.

Coordinate the Return Process

When a customer wants to return a product, the dropshipping return process will look something like this: 

  1. The customer contacts you and requests a return. 
  2. Find out why they want to return the product. Assess the return reason and calculate the costs involved.
  3. Determine a suitable solution, such as a full refund, product exchange, or store credit.
  4. The customer sends the product back to your supplier and notes the RMA (Return Merchandise Authorization) number.
  5. The supplier confirms the return and refunds your account for the cost of the product or sends out the new product if issuing an exchange.
  6. You refund the customer or update them about the delivery of the replacement product.

Throughout the return process, always be polite to your suppliers and customers, as maintaining your relationship with them is important.

Streamline Your Dropshipping Returns

How your dropshipping store manages returns has a huge impact on both customer loyalty and sales. 

In summary, it’s important to: 

  • Set expectations with a clear returns policy. 
  • Coordinate with your dropshipping supplier to ensure that the return process goes smoothly.
  • Communicate with your customer and do what you can to keep them happy.

Another great way to make your returns process more efficient is using a return management system. An automated returns system helps you keep track of returns, send automated updates to customers, and coordinate shipping labels and fees.

Automate Returns & Exchanges

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