Minimizing the Impact of Returns and Chargebacks

You did your homework and designed a strategy that led to record sales for your company. But what about looming returns and chargebacks? What impact will they have on your bottom line? What percentage will be due to “friendly fraud”?

Retail Online Integration reported that in 2013, "friendly fraud" cases accounted for 5.8% of all returns - about 6.8 million US dollars. Managing this type of loss can be frustrating and costly, so it may be worth it for some retailers to engage a dispute mediation service to deal with difficult cases. But even if your returns are legitimate, the loss can have a significant impact on your bottom line. Last year, USPS handled 3.2 million returns, and this year UPS expect to process more than 4 million return packages in the US alone. Here are a few quick tips to reduce the negative impact if you're handling returns on your own:

1. Check your return policy and the policies of 3rd-party marketplaces such as Amazon and eBay.
2. Respond quickly to return requests. Maintaining communication throughout the return process is key to keeping your customer satisfied.
3. Make returns easier and inexpensive for the customer by offering return labels - this reduces the likelihood they try to keep the item and process a chargeback.
4. If a refund is not possible, give customers the options of a partial refund or store credit.
5. Be honest, fair, and generous.
6. Be sure to track returns, just like you would have the original order.

It is in your best interest as an online merchant to make the customer dispute process as painless as possible for all parties involved. Resolving disputes fairly and quickly helps to neutralize customer dissatisfaction, and increases the likelihood that they shop with you again. Giving you the opportunity to create a loyal customer.

Barbara Anderson
Marketing Coordinator