Fashion Business

5 Questions you Must-ask Yourself before Creating Returns Policy of your Fashion Label


A return policy is not just a return policy in today’s eCommerce scenario, it is so much more. It reduces purchase risk and acts as an incentive in the minds of a customer. A customer forms a level of trust, when he learns that if a piece of clothing, they ordered from your online store doesn’t fit, is damaged or is different from what they had expected it to be, they can return it. No question asked!

There has been researching that suggests that if your return rates exceed 20%, it can start affecting your online store’s operating profit. Thus designing your returns policy shouldn’t just be an afterthought, for an eCommerce brand.  If your return policy is extremely lenient, customers would flock to your online store to purchase from you, however, the returns will be just as high. On the contrary, if your returns policy is not lenient enough, customers might not want to purchase from you, from the fear that they won’t be able to return products.

Let us understand the different aspects of the return policy that should be considered. So that when you draw out the return policy of your fashion brand, it strikes the right balance between too lenient or too strict. The 5 questions you should ask yourself while designing a returns policy are:

  1. How much of the purchase price will be refunded? (Monetary leniency)
  2. Within how time duration will the returned products be accepted? (Time leniency)
  3. How easy is the process of returns? (Effort leniency)
  4. Will the customers receive cash or store credit in exchange for returned products? (Exchange leniency)
  5. Will discounted products be acceptable for returns? (Scope leniency)

Now that you have an understanding of the five parameters of the returns policy, let us get some clarity on the science behind the factors that a customer considers while returning a product. 

A study published in the journal of retailing puts forth the following points:

  • If your eCommerce brand opts for a lenient return policy, there will be an increase in the number of products bought, more than an increase in the number of items returned.
  • Monetary leniency which means offering a full price return or Effort leniency which means removing any hassles from the returns process are the best ways to lure a customer into buying more of a product.
  • If your brand is striving to reduce returns, you might want to focus on Time leniency and Scope Leniency. What that means is offer a longer time duration for returns and do not accept returns on discounted products.
  • In regards to the Exchange leniency, you must understand that offering a customer store credit of the full purchase price encourages more customers to return goods than cash payments which are paid in part.
  • Most retailers embed monetary and effort restrictions in their returns policy, like offering only a part of the purchase price or asking customers to retain receipts. Some even make the returns process more hectic for the customer by asking them to fill out long forms. These restrictions can surely reduce returns but they may also affect sales.

Which brings us to the last part of the process of designing a returns policy. So how do yo as a fashion brand go about creating a returns policy? One that keeps the sales up and the returns down.

What is the reason for the return
Offer a 30 -45 days returns policy, but if the product is defective in any way, in that case, consider having an unrestricted time return policy.

Set a time frame to return price ratio
You might consider offering a 100% money back for returns less than 30 days after purchase, 75% back for 30 to 60 days after purchase.

Is the customer a loyal member
You can offer returns without a receipt to your loyal customers.

Reduce buyers remorse
One of the major reasons for returns is the regret a customer feels after making a purchase, commonly known as buyer’s remorse. If you accept returns after a window of time say 15 days after the purchase is made, the chances that the product will be returned are reduced. As the customer feels an endowment effect or a sense of ownership.

Remember that only you can decide, which returns policy works best for your brand to increase sales and limit returns. Design wisely!


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