How to Process Dropshipping Returns and Refunds

1) Introduction to Dropshipping

The internet has allowed us to divulge into an abstract world. Technological developments have allowed us to diminish limitations, so you don’t need to get a warehouse or store to sell a product.

Dropshipping is a business of the modern world that extends the boundaries of convenience to business owners. How do Dropshipping Returns and Refunds fit in the picture?

The Returns and Refund experience in the ecommerce sector is one of the key ingredients in the recipe for the perfect ecommerce experience. However, the logistics and backend processes needed to support these features can be pretty complex.

The Dropshipping operations are often handled by individuals or small teams that have an array of other tasks at hand. But, since the issue is critical to customer experience, most Dropshipping businesses have started to include these features on their platforms.

Dropshipping is a business model where an individual or a company finds a wholesaler or manufacturer of a product. The dropshippers then use the internet to create a website to market these products. As they buy the products at a wholesale rate, there is a considerable profit margin.

Once the website has been developed and you establish it as a platform for a niche product, you won’t have to put in the effort to manage your business. That is why Dropshipping is considered an excellent secondary source of income.

As most of the players in the Dropshipping businesses are not full-time, the ease of doing business is essential. Most dropshippers partner with various third-party services to provide a seamless shopping experience.

When considering Dropshipping returns and refunds, the most convenient option is to partner with an NPR Management platform. The software allows you to manage and automate your platform's returns and refunds feature.

2) Common Reasons for Returns on your Dropshipping platform

Now that we have an idea about the Dropshipping business model let’s look into the most common reasons for returns and refund requests on Dropshipping platforms.

2.1) Description Mismatch

One of the most common reasons for ecommerce returns is that the product does not match the product descriptions and visuals shown on the website. This includes the size, dimensions, or even technical specifications.

2.2) Wrong Size or Model

If your products have multiple models or sizes, there is a good chance that the customer may order the wrong size or model. This can lead to an increased number of returns on your platform.

2.3) Damaged or Defective Shipments

As a dropshipper, you cannot assure the quality of the products. If your supplier does not use appropriate packaging, there is a high chance the product may be damaged during transit. According to the product returns law for ecommerce, every company has to provide a refund or a replacement for damaged and defective shipments.

2.4) Lost Shipments

Shipping exceptions are an unfortunate yet unrealistic part of the logistics supply chain. If you or your supplier uses an unreliable carrier, there can be instances where your order is extremely delayed or lost in transit. The customer is entitled to a refund in such cases.

The reasons listed above are some of the most common reasons for ecommerce returns. When these instances occur on your Dropshipping platform, it becomes more challenging to resolve them effectively if you do not have a predesigned solution.

As a dropshipper, you have little control over the fulfillment and delivery process as you rely upon third-party services. But, you have complete control over the online experience of your customers.

One of the best things you can do for your customers includes a returns and refunds policy for your Dropshipping platforms to establish communication with your shoppers.

3) The Importance of Returns and Refunds in Dropshipping

For a typical dropshipper, it is convenient to use platforms like Shopify or WordPress WooCommerce plugins to create their website. You can use a variety of themes and pre-designed templates to create a website. Since the website is the primary point of contact with your customers, the website's user experience becomes more critical.

Providing accurate details about the products can become challenging when selling a particular product or service from a third party. You may have to use templates from the internet, providing the user with a generic online shopping experience.

This can act as a barrier when they decide to make a purchase. In such cases, it is found that having a returns and refunds policy can help you in increasing conversions and retention rates.

Allowing returns is not just good for the customer experience but also creates a new avenue for selling your products. The returns process is highly engaging, as the customer constantly engages with your platforms to check the status of their return or refund.

You can use this opportunity to push personalized recommendations and other products their way to increase your sales. You can also use the return process to collect valuable customer feedback about the products and experience. This feedback can cater to the shopping experience on your platform according to the customers' needs.

4) Why do you need a Returns and Refunds Feature for your Dropshipping website?

According to some experts, returns are one of the primary reasons behind the ecommerce boom. If you want to run a successful ecommerce Dropshipping platform, it is essential to include this feature. Some of the benefits of having the Returns and refunds feature on your Dropshipping website include:

4.1) Increased Customer Engagement

It can help you identify the problems with your products by collecting customer feedback during return requests. You can recommend products based on their search history and feedback to improve your conversion rate.

4.2) Improved Customer Experience

In ecommerce, it is not essential to just acquire a customer. It is vital to acquire a returning customer. Ecommerce Returns Statistics show that customers that have a seamless returns experience on your platform are more likely to return to your platform for future purchases.

4.3) Enhanced Fulfilment operations

If a product is returned in a non-damaged condition, it is unnecessary to bring it back to the primary warehouse. You can send that to the ecommerce fulfillment center and ship it out for the following product order. This allows you to optimize your delivery operations and improve the fulfillment time.

4.4) Improve Brand Image and Perception

As a dropshipper, it is vital to establish your brand as a standard platform for your niche of products. A seamless returns experience and quick refunds allow you to improve brand perception.

Customers are more likely to prefer your platform over other sources if you provide a better customer experience than other competitors on the market.

5) How to handle Dropshipping Returns and Refunds?

Handling returns and refunds for your Dropshipping platform can be complex. Since you are most likely to use different third-party services for other parts of your order creation and fulfillment process, it becomes difficult to handle the returns.

Your typical Dropshipping returns flow show looks something like this:

•  The customer puts a return request on your platform.
•  You then forward the return request and the order issues to your supplier.
•  The supplier will then revert with the RMA number.
•  After you push the RMA number to the customer, the customer will ship the return to the supplier.
•  Once the issues with the product issues have been verified by the supplier, the supplier will issue a refund to you for the wholesale price of the product.
•  You can then forward the refund according to your refund policies to the customer.

Establishing this workflow in an efficient and optimized manner can be a challenge. As a dropshipper, if you deal with low-value items, the process cost may be higher than the order cost.

In such cases, it is optimal to directly issue the refund to the customer without bearing the costs of returns logistics. You can also use electronic verification forms, including photos of the damage, etc., to verify the reasons for the return request.

6) Conclusion

The Dropshipping business model was designed around the convenience of the customers and the merchants.

The ecommerce sector is one of the most competitive sectors, and when you are looking to earn secondary income from such an industry, you have to find the right blend of convenience and conversions.

While you want your business model to be feasible as a secondary income source, you would like it to be a standard platform for your niche products. This will reduce your marketing and advertising burden even further.

In today’s ecommerce sector, customer experience is the key that will unlock the potential of Dropshipping as a passive income source. One of the must-have features for a better customer experience is the ecommerce returns feature.

Since the entire online shopping experience is essentially virtual, the returns and refunds feature helps you improve your chances of customers overcoming their anxieties about buying something.

At the same time, a smooth returns experience will help you establish your platform as a brand that prioritizes customer experience.

7) FAQs

7.1) Do I need a Returns and Refunds Policy for my Dropshipping website?

Legally, you are not required to add a returns and refunds policy to your website, with the exception of providing refunds for damaged goods. However, it is better to include an ecommerce returns policy for your website for ease of business and convenience of the customers.

7.2) What is the best way to handle refunds for a dropshipper?

As a dropshipper, if you either deal with low-value items or often face return requests for damaged goods, it is best to provide refunds without processing the returns. You can verify the damage electronically and save the cost of reverse logistics.