Managing Returns and Refunds on Shopify

How to handle returns and refunds on Shopify is one of the questions I get asked most in my line of work. It is usually something that confuses beginners and rightfully so. Here I’ll cover the full details on how you can enable returns and refunds in your Shopify store and how you should handle them, through a step-by-step guide.

Table of Contents

• Setting up Return and Refund Policies, and Return …

• Handling Customer Requests for Returns and Refunds

  • Setting up Self-serve returns

• Recommended Apps for Additional Functionality

Setting up Return and Refund Policies, and Return Rules

Most people do not have their return and refund policies set, and return rules set. They provide a consistent framework for handling returns and refunds, and ensure compliance with consumer protection laws, avoiding legal issues.

So, here’s how to set it up:

1. Access Your Shopify Store Settings:
   Navigate to your store’s ‘Settings’ on the bottom left, scroll down, and select ‘Policies’ from the left-hand menu. Under the ‘Written policies’ menu, choose the ‘Return and refund policy’

2. Set Up Return and Refund Policies
   Ensure you have your return and refund policies clearly stated. If you don’t have one, either use the template provided by Shopify by clicking on the ‘Insert template’ button or generate one using a policy generation tool or ChatGPT.
   

3. Configure Return Rules
   Return to the ‘Policies’ tab and navigate to the ‘Return rules’ by clicking on ‘Manage’ in the return rules section.
   
   Here, set:

   1. Return window: This defines the period within which customers can return items.

   2. Return shipping cost: Define who is responsible for the shipping costs when returning an item.

   3. Restocking fee: Decide whether a fee will be charged for restocking returned items and specify the amount.

   4. Final sale items: Set products/collections that customers can’t return as final sale items.

   
   Finally, click ‘Save’ to ensure your default rules and policies are updated and reflected on your store.

Handling Customer Requests for Returns and Refunds

A customer may request a return or refund by directly contacting you through phone/email. You can also set up ‘Self-serve returns’ which allows customers to submit return requests from their accounts without having to email or call you. We will discuss setting up ‘Self-serve returns’ at the end. First, let’s go through how you can refund/return products manually.

1. Processing a Refund
   Navigate to the ‘Orders’ menu on your store dashboard and choose the product you wish to refund.

   1. Click on the ‘Refund’ option on the top right.

   2. Specify the quantity of the item you want to refund.

   3. Decide whether you wish to restock the item.

   4. If there is a reason for the refund, include it in the ‘Reason for refund’ section.

   5. Click ‘Refund’

   
   Note that you can also refund by a specific amount instead of the item quantity. To do this, just input the amount within the ‘Refund amount’ > ‘Manual’ section.

2. Processing a Return
   Navigate to the ‘Orders’ menu on your store dashboard and choose the product you wish to return.

   1. Click on the ‘Return’ option on the top right.

   2. Specify the quantity of the item you want to return, along with the reason for return (e.g., damaged or defective).

   3. If you’re offering an exchange item to the customer add that in the ‘Exchange items’ section. The cost of the exchange item will be deducted from the ‘Expected refund’

   4. Upload the return label, add the tracking number and carrier information.

   5. Click ‘Return’

   
   Once the item is received from the customer ‘Restock’ it, and then proceed with the refund.
   
   If you’ve offered an exchange item to the customer, the exchange items will be shown as ‘On Hold’. Ideally, you want to first restock the returned item and then proceed with the refund. Then ‘Release fulfillment’ of the exchange item, and then proceed to fulfill it by clicking on ‘Fulfill item’.

Setting up Self-serve returns

Navigate to your store’s ‘Settings’ on the bottom left, scroll down, and select ‘Customer Accounts’ from the left-hand menu. Under the ‘New customer accounts’ section, turn on ‘Self-serve returns’.

Also, turn on ‘Show login links’ under the ‘Login links’ section, and switch the version of customer accounts to ‘New’.

Recommended Apps for Additional Functionality

Here are some apps that seamlessly integrate into the Shopify ecosystem that helps you manage returns and exchanges with ease, and enables you to give customers a self-service return center.

Managing returns and refunds on Shopify can be straightforward and efficient when you have clear policies and a well-defined process in place.

I believe that by following the steps outlined in this guide, you will be able to handle returns and refunds, protecting your business while providing a positive shopping experience for your customers.

If you have any questions or need further assistance, you may reply to this newsletter.

Thank you, and good luck with your business.