Why You Should Have an Order Cancellation Policy
Rebecca Fox

April 23, 2023

Giving your customers the option to cancel their orders early on can reduce your return rates and improve customer satisfaction. Learn why having a clear order cancellation policy is a good idea for your online store.

It is common for customers to accidentally order the same item twice, to choose the wrong size or color, or to decide they were being impulsive and want to cancel the order. As a Shopify merchant, handling cancellations can be costly and take up precious time and energy, especially if you don’t have a well-defined order cancellation policy in place.

Make it easy for customers to cancel orders, to avoid future returns and disappointed customers.

If your customers are unsure of how they can cancel their order or if they can cancel it at all, they may become confused and discouraged from placing their order.

What is an Order Cancellation Policy?

Order cancellation policies are documents, often part of a store’s return policy, that specify under what conditions customers can cancel their orders.

Eligibility for canceling orders can be based on the amount of time since the order was placed, specific products, or the fulfillment status of the order.

Make sure your order cancellation policy is clearly displayed on your website and is easy to understand. Give customers all the information they need about canceling an order, including eligibility conditions as well as the cancellation process.

What is an eCommerce Cancellation Rate? 

Your eCommerce cancellation rate is based on the percentage of orders that are canceled by customers.

How to calculate your eCommerce cancellation rate: 

Divide the number of canceled orders by the number of total orders, then multiply by 100 to get the percentage.

Cancellation rate = Number of canceled orders / Number of total orders x 100

5 Benefits of Having an Order Cancellation Policy

Here’s why your eCommerce store should have an order cancellation policy:

1. Save Yourself Time and Money

When there is no clear cancellation option, customers are likely to contact your support team to request to cancel their order. Without a clear order cancellation policy in place, customers have no way of knowing whether their order is eligible to be canceled, and what kind of refund they are eligible to receive. Handling each order individually takes up your team’s time and energy that can be spent more efficiently.

Make sure your eCommerce cancellation policy is prominently displayed on your store’s website, and clearly states the conditions for canceling an order. 

With a well-defined order cancellation policy, your customers can know exactly what their options are and what they need to do if they want to cancel an order, making the whole process more efficient and convenient both for you and your customers. Customers won’t try to request to cancel ineligible orders, and you won’t need to individually explain your policy to each customer.

2. Keep Your Customers Happy

Customers are more confident about placing their order when they know they can cancel their order if they make a mistake in their order or no longer require it, and are reassured by having all the information about the cancellation time frame, fees, and process in advance.

Having a transparent order cancellation policy helps retain customers and build customer loyalty.

3. Reduce Return Rates

Giving customers the option to cancel their order before it is fulfilled can cut down on future returns caused by mistakes or orders your customers changed their minds about.

By offering the option to cancel orders you save yourself and your customers a lot of time, money, and energy, and as a bonus, you reduce your carbon footprint by avoiding redundant returns. 

4. Create Accountability

Informing your customers what to expect from the cancellation process helps them know what they need to do and what they can expect from you.

Clear eCommerce cancellation policies can help prevent ambiguity and serve as proof of what was agreed upon when your customer made the purchase from your store.

For example, when customers are provided with a clear timeframe in which they can cancel an order, they won’t be surprised if they cannot cancel an order after the deadline. Make sure to be clear about how they can request a cancellation and if there is a cancellation fee. Your customers having all the relevant information in advance leaves a lot less room for misunderstandings.

5. Protect Your Business

An order cancellation policy provides security to your business in the event that your customer cancels an order. You may reasonably charge a cancellation fee after a certain deadline, covering costs you suffered due to the cancellation. 

How to Create an Order Cancellation Policy

Having an order cancellation policy is essential for setting clear expectations for customers and minimizing disputes and returns.

Here’s how to create an effective order cancellation policy:

1. Determine the Timeline for Cancellations

Decide on a timeframe within which customers can cancel their orders. 

The timeframe for cancellation could be time-based, such as 24 hours or 3 days, or it can be status-based, such as before the product is fulfilled or before it is shipped.

2. Specify the Cancellation Process

Clearly outline the steps that customers must follow to cancel their orders. Set expectations regarding how long the process takes and what customers need to do to cancel an order.

Make sure to include the specific details that customers will need to provide to cancel their orders, such as their order number or email address.

3. State the Refund Policy

Let your customers know whether they will receive a full refund, a partial refund, or no refund at all upon cancelling their order. 

Be transparent about any fees or charges that may be deducted from the refund.

It’s important to clearly communicate your policy to avoid misunderstandings and disputes with customers.

4. Communicate Any Restrictions

If you have certain restrictions on cancelling orders, such as for customized products or items that have already been shipped, make sure to clearly communicate them to your customers. 

You might also consider including information on what happens if a customer cancels an order after it has already been shipped, such as whether they will be responsible for return shipping costs.

5. Include Contact Information

Provide customers with contact information for any questions or concerns they may have about cancelling their order. 

This could be a specific email address, phone number, or contact form on your website. 

Providing a clear point of contact can help to reassure customers that they can easily get in touch if they have any issues with cancelling their order.

What Should Your Order Cancellation Policy Include?

When creating an order cancellation policy, it’s important to include everything that is relevant and necessary to provide clear guidance to your customers. 

Your order cancellation policy should cover the following:

  • The timeline for cancellations
  • The cancellation process
  • The refund policy
  • Any restrictions on cancellations
  • Contact information

By including all of these components, you can create a comprehensive eCommerce cancellation policy that covers all possible scenarios, avoids misunderstandings and disputes, and ensures a positive experience for your customers. 

Be sure to clearly communicate your cancellation policy on your website, order confirmation emails, and anywhere else to make it easy for customers to understand and follow.

By having a clear and concise order cancellation policy in place, you can minimize the risk of customer disputes and ensure a smooth and hassle-free cancellation process for both you and your customers.

Save Time and Money With an Order Cancellation Policy

Customers are inevitably going to place orders they sometimes don’t end up wanting. Offering the option to cancel orders before they are fulfilled gives your store an advantage over your competitors, and customers will feel confident purchasing from you again and again. 

Every eCommerce store should have a clear order cancellation policy, saving time and energy for both merchants and customers.

Use a returns management system to easily offer your customers the option to cancel orders that have not been fulfilled based on your store’s eCommerce cancellation policy.

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