What happens if a product arrives at the customer's house or business and they decide that they don't want it and they want to return it? Or what if the item they ordered is damaged and want a refund? What do you do in this situation?
In today's episode, I'm going to talk about returns and refunds and how you should best approach these things when dropshipping.
Ways to Deal with Returns & Refunds:
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What's up everybody? Anton Kraly here from ecommercelifestyle.com and welcome back to the podcast. In today's episode, we're going to talk about returns and refunds and how you should approach these things when dropshipping. Now, if you're watching this and you're part of Drop Ship Lifestyle, which is my eCommerce coaching program, you probably know a lot more than I'm about to share with you in this episode because I dive deep into this in my coaching program. By the way, if you're not part of that yet, be sure to go to dropshipwebinar.com where you can learn a whole bunch more about this stuff, how we build stores, how we get suppliers, how we get sales, and then of course what we do in this situation. But I want to cover this for everybody that's just tuning in that is maybe still on the fence about joining my coaching program and thinking like, "Well, okay, I get how dropshipping works, right? Somebody will order from my store. Then my suppliers will ship the products directly to my customer."
But what happens if a product arrives at the customer's home or business and they decide that they don't want it and they want to return it? Or what happens if it arrives to their home or their business and maybe it's damaged and they want a refund? What do you do in this situation? How do you handle it? Well, I want to cover a few different scenarios and a few different points that I think should be really helpful. Again, if you're maybe confused about how to proceed, if that should happen, if you decide to build an eCommerce store using my Drop Ship Lifestyle system. So the first thing that is super important to pay attention to is when you are reaching out to suppliers and you're getting approved to sell for them, you're going to have some type of agreement.
Now, this agreement isn't something that you're going to be creating. This is something that the supplier is going to send you when you reach out to them and tell them you want to sell their products. Now, part of this agreement is going to be their return policy and most of them are going to say, "We accept returns within 30 days or within 14 days or within 60 days," whatever it is, they're going to have that return policy and they might even have some more information in there like we accept returns if you cover shipping back to our warehouse. So sometimes they say they cover shipping. Again, it varies by supplier. As you probably know, we work with tens of thousands of suppliers and so do our students amongst thousands of different niches and industries. So it comes down to a supplier by supplier basis because they're all their own businesses. They all have their own policies.
But you want to make sure that you are working with suppliers that do accept returns. Now what happens if you reach out to a supplier that you really want to work with, they send you the documentation to get approved and in their policy it says, "We do not accept returns." Well, I still think you should work with them if they have good reviews online, if you think you could really sell their products, but what you want to do in that situation is make sure on the product pages for that specific brand you have it noted that this product or these products are not eligible for return and you're going to let customers know it's going to be right there, right with the product description. So if you have 20 different suppliers you work with and one of them, the products are not eligible for returns, again, the customers will know if they're buying products off your website from that one specific brand.
That way you won't run into a situation where the customer gets the item, they say, "Hey, I want to return this," and then you have to have it shipped to your home, right? You don't definitely don't want to deal with that. So again, just be sure you know your suppliers' policies going into this and make sure you make it clear on your website, on your online store. Now, let's say your suppliers do accept returns, which again, most of them will and let's say the item arrives at your customer's home and the customer says, "Hey, I ordered this, let's call it the standup desk from you and I thought that the color was going to be glossy white and it's actually matte white and I really wanted a glossy white, so I want to return this." Okay? Well, you could just say, "Okay, no problem. Let me give you a return tracking number, which you would get from your supplier and have it shipped back." You could definitely do that.
But what I would advise you to do and what we do first is tell the customer, "Hey, I totally understand if you want to return this, you can, but because you already have it, because it's already out of the box," which like we would be if they saw the color and that situation, you could say, "How about we give you a partial refund and you keep it?" and how much you should offer for partial refunds of course varies based on your product price, but I'll let you know how we would do it if that was the exact situation. Let's say we sold this desk for $750, customer said, "Hey, the color is not exactly what I was expecting," then our response would be, "Totally understand if you want to return it, you can, but can we offer you a $50 partial refund to your credit card that you use when buying and you can keep it," right? Basically they're dealing with the fact that it's not exactly what they thought it would be.
A lot of customers will say yes because they know also they don't want to have to pack this thing up and ship it back. Let's just say if that was a $750 sale, we probably would have made around $250, right? Assuming they didn't want any money back. So if we're giving them $50 back, they keep it, we still made 200 bucks on that sale and we don't have to deal with the whole return label giving them their full money back, trying to find them another product. So the first step, the first course of action should always be a partial refund to keep what they have. Now, like I mentioned, if your profit margins are higher and you have basically more money to work with, they might come back.
Maybe they'll say, "No, 50 bucks not going to happen." Maybe you can offer them a little bit more because again, you'd still be making money and it would save you having to contact your supplier, get a shipping return label, send it to the customer, giving them all their money back, and then making $0 on that sale and having extra work. So always try that method first, a partial refund for what it is that they already have if they just don't think it's perfect for them, right? If it's just something small like that.
Now something else you definitely want to do is talk with your suppliers or your sales rep at the different companies you work with about whatever the reason is for the return. So let's just say it was a different scenario. Same thing. Sold this desk for 750 bucks. It arrives at the customer's home and the customer says, "Hey, on the bottom of it, there's actually like a little gash, right? There's like a one inch defect. It's scratched a little bit and I want one that's perfect so I want to send it back." I would still recommend, like I mentioned earlier, offer them a partial refund to keep it. But if that's the case, you definitely want to reach out to your supplier and sales rep as well at the company and say, "Hey, the customer, this customer received this item and here's an image of it. It was damaged."
Then you basically say the same thing to your customer, we're offering them X amount of dollars to keep it. Can you offer a credit to our company for X amount of dollars on future purchases? Of course, if it's something like a defect or a damage, they should have no problem doing that. So just make sure if, again, it's like a damage or a defect type thing, not only do you offer the customer a partial refund, but you're requesting that partial refund from the supplier to use on a credit for future orders. So you're really not losing any money there because in that scenario or a scenario like that, the reason for the money back is out of your control. It was something that either happened during shipping or it was something that happened from the supplier side with their quality control.
Now the next thing that you really want to do and pay attention to is if a customer emails you that bought from you and says, "Hey, I just received this item." Maybe it was this standup desk, and they say, "The bottom right leg is bent and it's unusable. I want a refund, I want to return this." Okay, again, you want to let them know, "If you want to return it, you definitely can, but before we send you with a return label, let me just ask you, is it okay if we just ship you that replacement part, so we ship you a new right leg for the thing, right?" If they say yes, you want to talk to your supplier and say, "Hey, supplier, this customer, again, they received their product, here's a picture of the right leg. It was bent, ship them a replacement part please."
If they do that, it's not going to cost you any money because again, it wasn't your fault, it was out of your control. Then the customer will receive that part. They'll have their complete item and again, it will cost no money to you because the supplier will be shipping that product to the customer. The benefit here obviously is that you keep the sale, you keep your profits, basically nothing changes. I want you to do that first always, instead of just telling the customer, "Oh, I'm so sorry about that. Here's a return label. Go ahead and ship it back." You always want to try to salvage the sale first because you'll be able to keep your profits when things like this do come up.
Now, something else that you definitely wanna do is as you get more and more sales, returns aren't super common. It's not like 10% of your orders are anything are going to be returns. If it is, that's a huge problem, but it's going to be a small amount. But when things do come up and when customers email you and say they want a refund or they want to return the item, you want keep track of every time this happens and why it's happening so that you can update your website to prevent it again from happening in the future. So let's just say that example I gave first where the customer said, "Hey, I thought this desk was going to be glossy white. It's at my house now. I see it's matte white." If that happened and that was our business, what I would do right away is go to that product page on our website and in the description somewhere in bold, I would say this desk has a matte white finish. It is not a glossy white. If you're interested in a glossy white desk, here's a link for the glossy white version.
So you're basically trying to be proactive here based on your feedback to make sure that these things don't happen again and again and again because like I mentioned, returns are rare and if it's something that it's kind of on you, like it would be on your suppliers for not giving you the best descriptions, but if it was something that you can control, you want to proactively step in and update your website to prevent it from happening again in the future. Now, that's pretty much the best advice I can give you. There are going to be times where customers just are being customers and you offer them a $50 partial credit or refund, whatever it is, and they say, "No, I just want to send this back." Okay, that's fine. Don't argue with them over and over because you're going to get negative reviews and it's going to hurt your business. When that happens, what you want to do is contact your supplier and say, "Hey, supplier, customer name, whatever, got the item, they want to return it. We need a return shipping label."
What will happen then is the supplier will send you either from UPS or FedEx or a freight company a return shipping label. You will send that to your customer, your customer will send that item back to the supplier's warehouse. When it gets there, you'll have a tracking number from that return label. When it gets back to your supplier, you can then go ahead and refund the customer and your supplier will go ahead and refund you and it'll be basically like you're working for nothing, but again, use it as a learning experience and try to make your website better so it doesn't happen again in the future.
So as always, guys, I hope you found this episode helpful. If you did, please go on over to Apple Podcast and leave a review. It really helps. If you're looking to get started by building your very own highly profitable, semi-automated online store, be sure to go to dropshipwebinar.com. I will post the link in the description of this podcast. So thank you everybody. I appreciate you and I'll talk to you next episode. Bye.
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