Return Types Every Shopify Merchant Should Know

March 23, 2022
| by David Miles

As a Shopify merchant, it’s important to be aware of the different types of returns available to you. Understanding the return types and processes can provide better customer service and increase sales.

We will discuss the different types of returns and how they can benefit your business.

Refund

When you hear returns, refunds are probably what comes to mind. Refunds are the simplest and most well-known type of return. A customer returns a product for whatever issue, then the store gives a full or partial refund. 

If you want your customer to have a positive experience, you should be able to refund their money quickly.
Here are what you should do:

  • You or your team should communicate properly with the consumer
  • Provide the instructions and things that they need to return the product
  • Let the customer know when the returned product is received

Those things may sound time-consuming and complicated. Having the right returns management systems can make this process a lot easier.

Exchange

Product Exchanges are another common type of return. The customer may want to swap the product that they received with another option from your Shopify store. It allows you to “save the sale,” and at times, we see customers taking advantage of this option.


Here are the two types of exchanges that a store may offer: 

Variant Exchange

This occurs when the consumer wants a different version of the item. The received product can be swapped for its slightly altered version, which may differ in color, size, or another variation.

Full Exchange

In this type, the buyer can choose a replacement from the whole store catalog. A full exchange is when a customer exchanges their order for a totally different product from the store. At times, if the replacement has a lower value, the customer will be refunded the difference. 

Alternatively, if the replacement item has a higher value, the consumer may be required to pay the difference in price. This is an opportunity to increase the order value and customer lifetime value.

Store Credit

Similar to exchange, this can be another opportunity for you. It works by giving credits that can be used in your store. 

Store credits allow the customers to choose a different product than they might like more.

However, the consumer might not use this credit. You might think that it will be good for you, but it’s not. This shows that the customer doesn’t trust you anymore and might affect your customer’s lifetime value.

If you collect data about store credit returns, you might be able to figure out a way of reducing agitated customers and increasing trust in your business.

Warranty Return

You might think that warranties are not a return type, but they are. Warranty, or product protection plan, is an obligation of the seller to provide items that have high quality. So, if the product was damaged, the seller should repair or replace it, as long as it is covered by the warranty. 

Processing a warranty can be complicated too. So, a returns management system will be really helpful for you. Keep in mind that there are different types of warranties, and here are the ones you should know: 

Extended Warranty or Service Agreement

This type is provided to customers in addition to the standard warranty of the item that they purchased. This can be more expensive, but it provides peace of mind to the consumer.

Third-Party Warranty

This protects products purchased from third-party retailers. If you can offer this type of warranty, it shows the customers that you have excellent service and will help you increase sales. 

By processing a third-party warranty, you’ll get customer information that can expand your mailing list. It will also increase the target audience that you can market your other products with.

Even though this sounds great, you might have difficulty verifying the orders not purchased in your Shopify store. So, you should have the right processes to help you with this.

Accidental Damages and Handling (ADH) Plan

It can be frustrating for buyers when the product they received has been damaged due to shipping. This type of warranty takes care of that. It helps reassure customers that it’s okay to purchase because the item will be protected. 

When processing an ADH plan, here are the things that you should do:

  • Effectively communicate with the buyer to determine which part has an issue
  • When you have already received the damaged part, quickly send the new part
  • Collect data to reduce instances of returns

Since this is also a complicated process, an ideal system should be in place to prevent confusion and distrust.

Implied Warranty

An implied warranty is an oral or written assurance that is an addition to the warranty return that was provided by the seller. It has two kinds, which are: merchantability and fitness.

Fitness declares that the product fits its specific purpose and merchantability indicates that the item meets the expectations of the buyer.

Takeaway

There are four main types of returns that Shopify merchants can offer their customers: refund, exchange, store credit, and warranty return. Each return type has its own benefits and drawbacks for your business. 

A refund gives the customer their money back and may encourage them to shop with you again if they had a positive experience. An exchange allows the customer to switch out the product they bought for something else. 

Store credit is beneficial because it encourages customers to come back and shop at your store again. Lastly, a warranty guarantees customers that it’s alright to purchase because their items will be protected. Knowing all types of returns can help you use them effectively to improve customer experience and profit.

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