Taming a Retail Monster: How to Prevent Costly Returns

“Returns have long been the nemesis of many retail brands,” says Forbes. “When a product is returned or exchanged, not only does the retailer experience incremental supply chain costs, but often the item cannot be resold at the original price owing to damage, wear and tear, or obsolescence/devaluation given the passage of time — particularly an issue with fashion or seasonal merchandise.”

“The mounting cost of returns is a growing and scary problem for many retailers that simply cannot go unchecked much longer. As e-commerce continues to grab share, it’s going to get worse — perhaps considerably — before it gets better.”

Source: Forbes

Product returns create complications for both sides of the merchandise transaction, suggests Entrepreneur. Obviously, consumers want liberal returns policies to ensure against a bad purchase. Likewise, retailers want to use generous shipping policies to attract more customers and nurture long-term relationships with them while still making a profit.

So what can retailers do to prevent product returns? Read on for some helpful best practices, tips, and industry advice.

How to Reduce Costly Returns

While dealing with returns is a pain point for retailers, if handled the right way, store owners can effectively decrease returns and—believe it or not—even capitalize on them.

Here are 6 ways you can make it happen in your store:

1. Take Preventative Measures

You can avoid the inevitable headache of product returns, by preventing them from happening in the first place.

Helping shoppers avoid the wrong items can save both you and your customers the time and costs involved with product returns. One way to achieve this is by making sure your marketing and promotional messages are absolutely clear. From describing what your product does—and does not—do to clarifying who will benefit from it and how much it costs, using straightforward, transparent marketing messages will help you attract the right type of shopper, which can also result in decreasing dissatisfied buyers and returns. 

Additionally, it’s important to teach your sales associates the art of genuine selling. While you certainly want them to entice people to buy, it’s bad form to sell products that they know aren’t right for the customer. This is also true of your product descriptions and packaging. Clear and accurate descriptions of the features and benefits of your products will help your customers make the right purchasing decisions.

2. Create Good Return policies

The first step to handling returns in a professional and efficient manner that will result in customer satisfaction is creating a good returns policy.

Your policy should be clear, transparent, and straightforward. Customers shouldn’t have to guess whether they can expect to receive cash or store credit or how long they have to return an item. It’s also important to be upfront about restrictions so customers don’t feel like you’re trying to hide the truth. If you do require customers to pay for certain costs for returned items, be sure the customer knows this at the time of purchase. Accuracy and honesty will help minimize returns and keep your customers happy and loyal.

Keep in mind that no matter how good your return policy is, it won’t do your business much good if customers are unaware of the terms. Be sure to post your policy prominently in your brick-and-mortar store and on your website. You might also consider printing it on your store receipts and including it in shipping materials.

Don’t stop at educating your customers on your returns policy. Your employees need to know it, too! In order to make the returns process as easy and painless as possible, it’s crucial that your staff knows the terms and conditions or your policies and how they should behave.

3. Train Your Staff

Invest in some quality “returns” training for your front-line associates. Make sure they know your returns policy and can process a return quickly and efficiently at the service level you expect them to meet. You might also consider keeping a copy of your returns policy at the front desk where it can easily be accessed if necessary.

The better your associates are trained in the handling of returns, the more likely it is that your customers will have a positive experience. Make sure your employees understand the importance that a positive returns process plays in encouraging customers to come back.

4. Recognize that Returns are an Opportunity to Make More Sales

As it turns out, there might actually be something good about retail returns. True story. Not only is it cheaper to handle returns in a physical store, but consumers often make additional purchases when they come into your store.

“In retail, we take it as a given that returns are bad for the bottom line. But here’s the silver–maybe even platinum–lining: A return, at least one that is made in-store, means the customer is in the store!

Source: Micah Solomon

Handle returns with a smile and make the process as quick and painless as possible. Your associates should be on their best behavior. If employees feel like returns are nothing but an annoying chore, your customers will pick up on that. Negative customer interactions can drive shoppers away, so motivate your team to look and be enthusiastic and happy while dealing with returns.

Product returns provide you with opportunities to engage customers and make more sales. While it may not be their intention to make a purchase, if you impress them with an awesome experience, they might decide to buy something else or come back at a later time.

5. Get Creative With Returns

A little creativity can go a long way in minimizing returns. If you sell products online, for example, you might give customers the opportunity to lower their total amount if they choose to waive returns.

In your brick and mortar store, you can promote exchanges, store, credit, or gift cards over cash back, helping you retain your revenue and reduce the volume of returns you might otherwise get. Just make sure your staff communicates these options to the customer at the time of purchase, as well as prior to processing outright cash returns.

Enthusiastically inform customers of the great products or gift cards that they can get in exchange for the item they want to return. This way, you can at least get them to stay in your store longer as they explore what they can get out of their store credit.

6. Get Feedback on Product Returns

If you’re not asking shoppers why they decided to return a product, you’re missing out on a great opportunity to gather valuable data that could help you avoid returns in the future.

Ask your customers if there was a problem using the product, if the instructions were unclear, and even why they purchased the item to begin with. If you discover that customers are realizing that a product isn’t right for them, for example, you can then work on improving the way you market and sell the item so you can attract the right buyers.


For retailers, returns will probably always be associated with a certain amount of “unpleasantness.”  But that doesn’t mean they can’t be minimized…and even capitalized upon. Leveraging best practices and taking steps to prevent product returns is a win-win for you, and for your customers.


“The return experience is just as important as the initial sales experience.”

Source: Order Dynamics

Not only does establishing a good return policy reduce the time and money spent dealing with returned items, but it also helps ensure that customers have a good experience in your store (and while they’re making a return, there’s a decent chance they’ll buy something else).

In the end, those good experiences will likely bring customers back to purchase from you again.

Also published on Medium.

Sherene Funk is the author of the contemporary romance Autumn in Your Arms and two small business e-books. She is a voracious reader who owns more books than she can ever read in this lifetime. A graduate of Brigham Young University, she worked in advertising for many years before moving to her current writing position at Rain Retail Software. She researches non-stop to see what successful retailers do and loves to share what she learns with small business owners.