Why You Should Have an Order Cancellation Policy
July 27, 2021
by Rebecca Fox

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. 

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.

Our returns management system helps you 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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