Dropshipping Returns & Refunds: Everything You Need to Know

Got a refund request in your dropshipping store?

We know the feeling 一 that initial moment of panic, wondering how to proceed with a product shipped straight from the supplier.

But you know what? Handling refunds and returns in 2024 is simpler than it seems.

Let's start with a brief overview before diving deeper into this topic!

The best way to handle refunds and returns in dropshipping is to first see if it's cheaper to let your customer keep the item and send them a new one. If not, have your customer return it to your supplier. The main decision you'll face is whether to cover the return shipping costs or not.

Common reasons for refund requests when dropshipping

First, let's learn about the most common causes of refund requests in dropshipping.

This knowledge can help you know what to focus on and where to double-check.

1. Mismatch between product and store description

One of the most common reasons for refund requests is that the product delivered doesn't match your store's description.

Say that your product description states that the product is 5 cm by 5 cm, but the actual product is like ten times bigger. Or if you advertise the color as coffee brown, but it's more black.

This issue might be because you entered the wrong details from your supplier into your store's description, or your supplier might have given you incorrect information or sent the wrong product.

That's why you should double-check the data from your supplier.

For example, if you verify that the description says coffee brown, the mistake is on your supplier's end.

If you think it's your supplier's fault, contact them directly through email (or AliExpress message if you use AliExpress).

Ask them to either send a replacement to your customer or give you a refund if they are responsible for the error.

While we're on the topic of product descriptions, here are two articles that will help you create some compelling product descriptions:

• 8 Product Description Examples for Ecommerce (+ 5 Tips)
• How to Write Product Descriptions for Dropshipping Stores?

2. Sizing issues or wrong size ordered

Issues with fit or size are common in dropshipping stores, especially when you're selling clothes or jewelry.

Since customers can't try on items when shopping online, they might end up with something that doesn't fit.

You might have experienced this yourself when shopping online. Like you ordered some pants or T-shirts, and they didn't fit as you expected.

In these cases, your supplier will unlikely pay for return shipping unless they're really helpful.

That's why knowing your supplier’s policy on refunds and returns makes all the difference.

If you don't know your supplier's refund and return policy, then you should ask about it.

In situations like this, we recommend allowing returns, no matter what your supplier's policy is.

Why?

This kind of customer service will give you lifetime customers!

But first, check if the product is worth returning at all. Check whether it's cheaper to send a new item and let the customer keep the original, or have them return it.

If the sizing issue isn’t your fault, you can ask the customer to pay for return shipping.

High returns in the clothing niche

Clothing often has high return rates, with a 40% chance of being returned.

So, it's not uncommon to get a refund request when you're dropshipping clothes.

To help prevent sizing issues, include a clear sizing guide in your store's description. Also, make sure the guide matches the sizes of the country you're shipping to, not just Chinese sizes, which are usually smaller.

For more information, check out our guide on how to convert Asian sizes to the US, UK, and EU sizes.

This could dramatically decrease refund requests because your customers can double-check if the sizing is correct.

Tip: If you're new to dropshipping, we suggest staying away from selling items that need specific sizes.

But if you're ready to try, here's a list of the best clothing dropshipping suppliers.

3. Damaged or defective product

Even with a reliable supplier, there's a chance products might arrive damaged or defective.

This is less likely if you're careful in choosing your suppliers – if you use AliExpress, check out our guide to select the best ones.

Sometimes, the product might not work or could get damaged during transit.

In such cases, ask your customer to send pictures or a video of the damaged item. Then, forward these to your supplier.

You might not even need pictures or videos if you have a good business relationship with your supplier. But it's a great way to know if your customer is speaking the truth (or not).

Usually, you just need to contact your supplier and request them to send a replacement or refund you.

With your customers, your job is to apologize and ask them to wait for the replacement.

More on how to handle refunds and returns below!

But what if you don't use AliExpress suppliers?

The situation can be different with non-AliExpress suppliers.

Most dropshipping suppliers don't cover return costs for defective items, as they don't see themselves responsible for manufacturing defects.

They simply view it as a risk of selling products to a retail market.

For a deeper understanding of dropshipping suppliers and their return policies, we recommend reading this forum post.

4. Late or lost deliveries

This is mostly for the people who are dropshipping from China.

Your customers might worry their package is lost if it hasn't arrived within a week, even though typical shipping times from China are two to three weeks.

Another scenario is when you check your customer's order tracking and notice there hasn't been an update for about a month.

The good news is that you can open a dispute using AliExpress and can't resolve the issue with your supplier.

Just look at the guarantee from your supplier. Most (if not all) of the AliExpress sellers will have a 60-day or less delivery guarantee.

Interested in more tips on handling long shipping times from China? Check out my detailed article on the topic!

We suggest reading this article if you want to learn how to get a faster delivery time when dropshipping. This can decrease the chance of customers requesting refunds while their package is still on its way.

5. Buyer's remorse

Buyer's remorse is, to put it simply, a change in heart and even regret in needing the product or service purchased.

While buyer's remorse can happen along the sales funnel, in turn affecting your overall conversion rate, it can also occur after the purchase has taken place.

This may not necessarily have anything to do with your product or customer service; perhaps the customer just decided they don't need it.

This is most certainly an unavoidable part of doing business.

Most online countries' retail laws will oblige you to honor the return, even if you state the contrary in your returns policy.

Here's an example for the United Kingdom:

You must offer a refund to customers if they’ve told you within 14 days of receiving their goods that they want to cancel. They have another 14 days to return the goods once they’ve told you.

You must refund the customer within 14 days of receiving the goods back. They do not have to provide a reason.

Source: GOV.UK

How to handle refunds and returns in your dropshipping store

Understanding different refund requests is one thing, but knowing how to handle them in your store takes your business to a new level!

Recognize the products that might not require returns at all

Sometimes, the cost of returning a product, especially with shipping fees, can be higher than just sending out a replacement.

Also, remember that many suppliers charge a restocking fee for returned items.

Take, for instance, a customer who buys a $3 bracelet that doesn't fit. It's not your fault, but returning this bracelet isn't cost-effective.

Instead, why not just send them a new one and let them keep the original?

This approach is not only simpler than a full return process but also cheaper. Plus, this kind gesture could turn a one-time buyer into a repeat customer!

How do you respond to a refund request?

When you get a refund request, your first reply is crucial!

Don't jump straight to offering a refund. This could mean losing all your profit from that sale.

It's not that you should never offer a refund, but if the customer agrees to wait for a replacement, this is usually better for your profits.

So, what should you do next?

First, decide if it's cheaper for you to let your customer return the product to your supplier or to let them keep it and just send another one.

If you've figured out that it's cheaper for you to send a new product to your customer, here's a suggestion for what to say to your customer:

Hello 'First name of the customer,'

I'm so sorry to hear that your bracelet was not the same as it was described in our description.

What I can do for you is send you the correct bracelet, free of charge. You won't have to return the bracelet you got from us now!

Let me know if that would be alright for you.

Kind regards,

'Your information'

What if your customer still wants a refund?

If your customer isn't happy with the replacement offer and replies asking for a refund, then offer a refund in your second email.

Of course, you should not forget about the lifetime value of your customer.

Even if a customer asks for a refund, you can still encourage them to return to your store in the future.

But how do you do this?!

Focus on providing outstanding customer service and do your best to resolve the issue.

Even if you end up giving a refund, a positive interaction can leave a good impression.

This increases the chances of the customer returning to your store because of their good memories with you.

Keep reading for more tips on what to include in your refund or apology email to make it more likely for your customer to come back!

What should you do if the customer is being difficult?

Sometimes, the best move is to issue a refund and move on.

You'll encounter customers who are difficult to please, making it tough for you to maintain excellent customer service.

While it's always good to try turning the situation around, there are times when a refund is the simplest solution.

How can you turn a refund request into a lifetime customer?

Handling a refund or replacement well doesn't always guarantee the customer will return to your store.

Here are some extra steps you can take to make sure your customers are happy after their refund request.

• Exclusive coupon code. Give your customer a discount code for their next purchase. This is a great way to get them to come back.
• Store credit. Instead of a direct refund, give store credit for the same amount, or even a bit extra. This nudges them to revisit your store.
• Free product upgrade. If a better version of the product is available, offer it for free. This shows your commitment to customer satisfaction.
• Free additional product. If your customer agrees to wait for a replacement, surprise them with an extra, low-cost item. This small gesture can make a big difference in how they perceive your brand.

Although these things are relatively small for you and might be low cost, they can help your customer rebuild trust in your dropshipping store.

You have one goal: To get them to purchase again!

How do you deal with product returns?

So what if you let your customer return the product? How do you deal with returns when you are dropshipping?

When a customer is returning a product, the process will look like this:

1. The customer contacts you to request a return.
2. You request an RMA number (return merchandise authorization) from your supplier.
3. The customer sends back the product(s) to your supplier. And your customer writes the RMA # on the address.
4. The supplier refunds you for the wholesale price of the product(s).
5. You refund the customer for the full price of the product(s).

The only thing left to decide is whether you pay for the return shipping costs or let your customer pay for it.

What if you get a chargeback?

A chargeback is when a customer disputes a charge with their bank or credit card company, rather than asking for a refund from your store directly.

This can happen for various reasons, such as dissatisfaction with a product, failed delivery, or even fraudulent activity.

Chargebacks can be a headache for dropshippers as they are typically time-consuming to deal with and could even lead to your account being banned by payment processors if they occur frequently.

This is where Chargeflow comes in:

It's an automated solution that uses artificial intelligence to manage and fight chargebacks on your behalf.

It is designed to increase your win rate in chargeback disputes, saving you time and potentially a lot of money.

And the best part about Chargeflow is that you only pay when they successfully recover a chargeback for you!

How do you reduce refunds and return requests when dropshipping?

Now you know about the most common causes of refunds and returns and how to handle them in your own dropshipping store.

But wouldn't it be better to have fewer of them in the first place?

Here's how you can cut down on those refund and return requests:

1. Remove high-return items

If you keep seeing the same items or types of products getting returned often, it's a good idea to take another look at your inventory.

Certain products can confuse customers or get damaged in shipping, so consider whether you should keep selling them.

Doing this helps you focus on items that sell well and cause fewer issues, making your business run more smoothly.

Check out these resources, which will help you know which niches and products to avoid dropshipping:

• 13 Products You Should Avoid Dropshipping | Be Careful!
• Top 10 Dropshipping Niches to Avoid as a Beginner in 2024
• 10 Most Common Dropshipping Mistakes & How to Avoid Them

2. Check for fraud

Before you ship any products, make sure each order is genuine to avoid fraud.

Shopify users have an advantage here, as the platform offers a fraud analysis tool.

If you have a big order, you can always email that customer asking them if it's correct that they ordered for that amount.

But nonetheless, don't forget to trust your gut as well!

For example, if the billing address is in the US, but the shipping address is in India, this might signal a fraudulent order.

One last tip is to be careful with PayPal eChecks. Wait until the payment arrives in your PayPal account, and then fulfill the order. People might cancel the check once you send the products they ordered.

If you're interested in learning more, take a look at these credit card fraud signals.

3. Provide great customer service

This is the most important tip among all the refund requests listed above!

Always try to be as polite and understanding as possible.

But that's not all; great customer service can even prevent refund requests. Plus, it lowers the risk of getting banned by PayPal.

You might be wondering how.

Customers commonly ask where their order is.

If your response isn't polite and informative, they might get impatient and ask for a refund.

You might think, 'Why are they asking when we've already emailed the tracking information?'

Remember, not every customer remembers or understands this. Some may think you have more information than you've shared.

So, always respond helpfully, and never assume they have all the information you do.

How do you respond to customers asking where their package is?

When customers ask where their package is, always include the tracking information.

Don't forget to explain that they can follow their order on that site.

Tip: We always include the tracking information as a link to 17track, or any other tracking site you're using. For example, like this: (https://t.17track.net/en#nums='tracking number here'). Otherwise, you might get questions about how to use the tracking number.

Here's a sample response we often use when customers inquire about their package location:

Hello 'First name of the customer,'

I've checked the status of your package for you:
(Link to tracking information)

(Include the latest update from the tracking info)
As you can see, your order has arrived in the UK and is currently being processed at a distribution center near you.

We expect your package to arrive by the end of this week.

Please get in touch if it hasn't arrived by then, and we'll do our best to help.

Kind regards,

Your Name/Store Name

This way, your customer has all the information they need.

It often reduces the likelihood of a refund request, and in most cases, you won't hear back from them after sending this response.

How do you reduce the number of people asking where their package is?

The solution? Simple. Keep your customers engaged throughout the whole delivery process.

The app that we recommend for this is called AfterShip.

AfterShip actively engages your customers while their orders are in transit. Here's the difference it can make:

This is what it will look like without using AfterShip:

Customers receive minimal updates, leading to more inquiries.

Here you can see how much that changes once you integrate AfterShip on your dropshipping store:

Do you see how many more updates your customers get after using AfterShip? When customers get frequent updates, they don't contact you as much.

Another great thing you can do with AfterShip is create a branded tracking page.

Check out an example below to see what it looks like:

As for the cost, AfterShip's pricing varies based on the number of trackings per month. The good news is they offer a 14-day free trial and have a free account option:

You can click here to see their current pricing.

Create a clear return and refund policy for dropshipping

To be able to handle refunds and returns like an expert, you need to have a clear return and refund policy on your dropshipping store.

This agreement outlines your procedures for handling returns and issuing refunds.

It usually includes information like how many days they have to return a product and how they will receive the refund (store credit, bank account, replacement).

Tips for your refund and return policy

• If your supplier allows a 30-day return, offer your customers a 20 to 25-day return window. This gives you and your customers room to account for shipping delays and other unforeseen issues.
• If you work with multiple suppliers with varying return periods (e.g., 25 days and 15 days), create a single return policy. For example, a ten to 12-day return period for all products.
• If you don’t have a physical office, as many dropshippers don’t, avoid specifying a return address. Instead, provide an email for customers to contact you about returns.
• Only accept returns with a tracking number. The last thing you want is for them to claim they shipped your item, and it gets 'lost' in the mail.

If you want to learn more about how to write a good refund and return policy for your dropshipping store, we suggest reading this article here!

That article also contains a dropshipping return policy template that you can use!

Where should you display the return policy on your website?

Customers should be able to access your Return Policy easily, whether they're using a mobile app or the desktop version of your website.

You can place the link in these locations:

• Website footer. This is a standard location where customers often look for policies.

Here's how Meowgicians, a dropshipping store in the pet niche, has smartly placed their return policy in the website footer.

• Within other policy documents. Embed your return policy within related documents like Terms and Conditions.

Check out how MaxPush, a one-product dropshipping store, has included their return policy in their Terms and Conditions page.

• At checkout. Include a link or a brief summary of your return policy during the checkout process to keep customers informed.

Here's how The Peaky Hat includes a link to their return policy during checkout.

How do you handle returns when dropshipping from China?

If you're wondering how to deal with returns when working with Chinese dropshipping suppliers, we have some tips for you!

• Don't squabble. How you handle returns reflects directly on your business' image, especially in the age of social media reviews. Avoid disputes over low-cost items and focus on resolving issues.
• Provide a refund. Be prepared to issue refunds swiftly through your sales platform for all return reasons.
• Don't depend on AliExpress. Don't wait for the resolution as with AliExpress. For example, their dispute process can take up to 3 months to conclude.
• Be proactive with returns. Establish clear shipping and returns policies to set customer expectations before purchase.
• Write better product descriptions. If customers keep buying the incorrect sizes, compatibility, or functionality, then it's likely that your product descriptions could be the problem.

These are just a few tips. If you want to know more, read our article on how to handle returns when dropshipping from China!

How to handle refunds and returns on different ecommerce platforms

So, you've decided to refund a customer, but how do you do it on your ecommerce platform?

Let's break it down:

How do you give refunds on Shopify?

Firstly, go to the order you want to refund.

Then, you'll see a button that says 'Refund items.' Click on that.

Choose the items and the amount you want to refund.

You can also refund less than the price of the product. This can come in handy if you agree to give a partial refund.

You even have the option to let your customer know about the refund, saving you the trouble of sending an email.

How do you give refunds if you use a different ecommerce platform?

Now, what if you're using a different platform?

While we specialize in Shopify, we can still guide you.

For information on handling refunds on various platforms, check out the following links:

• How to give refunds if you're using WooCommerce
• How to give refunds if you're using BigCommerce
• How to give refunds if you're using Shift4Shop
• How to give refunds if you're using Volusion

Summary

Before we go, we've created a quick summary of this article for you, so you can easily remember it:

• Common refund reasons. Understand why customers request refunds, such as product mismatches, sizing issues, damage, late deliveries, or lost packages.
• Return and refund policy. Create a clear return and refund policy with reasonable timeframes and communicate it to customers.
• Handling refunds. Respond to refund requests by offering replacements before full refunds to preserve profits. Be customer-centric and focus on retaining customers.
• Customer service. Provide excellent customer service to prevent refund requests. Address inquiries about package status promptly and courteously.
• Handling returns from China. Handle returns professionally by establishing customer preferences, requesting proof of issues, offering replacements, and issuing refunds when necessary. Avoid squabbling and consider the value of the product.
• Reducing inquiries. Keep customers engaged with order tracking using apps like AfterShip. A transparent process reduces inquiries about order status.

Final thoughts on returns and refunds when dropshipping

So, there you have everything you need to know about how to handle refunds and returns on your dropshipping store!

You see that you could get a lot of different refund requests, but one thing is for sure, just be as polite as possible to your customer so that the chances of you giving out a refund get lower and lower.

If you were scared before about handling refunds and returns on your dropshipping store, we hope you're not anymore after reading this!

Don't forget that it all comes down to you and how you treat your customers. Treat them well, and they might come back to purchase more!

If you have any questions or suggestions, let us know by commenting below or contacting us directly by pressing the 'Contact Us' button at the top!

Want to learn more about dropshipping?

Ready to move your dropshipping store to the next level? Check out the articles below:

• How Do You Handle Print on Demand Returns in 2024?
• How Do You Do Dropshipping With Multiple Suppliers in 2024?
• Minimum Order Quantity (MOQ) For Dropshipping: What to Know