The reality is that when you are selling products, you need to offer returns and exchanges to your customers. However, one of the things that you need to keep in mind is that these can turn out to be very expensive for you. After all, just remember the shipping fees associated with the return, the restocking, and even the customer support hours that you are spending with this simple part of your business.
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So, today, we would like to show you that there are ways to make profitable returns and exchanges.
3 Strategies For More Profitable Returns And Exchanges
#1: Transform Returns Into Exchanges:
As you know, there is a big difference between a return and an exchange. When a customer asks you for a refund, you will lose the money that you spend on customer acquisition as well as you’ll lose the money on the return shipping costs. On the other hand, when a customer asks for an exchange, the loss is almost inexistent. As long as you have high margins on that specific product, if you decide to offer a product replacement instead of a refund, you’ll see the positive effects on your business cash flow.
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One of the things that many businesses do is that they only offer the cost of return shipping when the customer wants to exchange the product. In addition, this can also be advantageous in terms of retaining customers. Even though the customer wasn’t happy with the product in his first purchase, with a credit store he will buy a second product that hopefully, he likes. So, he will come back to buy the third, the fourth, and so on.
#2: Sell Product Warranties:
When your customer decides to ask for a refund or an exchange, you know that you may not be able to resell the product again. The truth is that the process of making a product re-enter the stock is not immediate. In fact, and depending on business to business, it can take up to 2 weeks. Besides, with the unpacking and the time the product spent on transit, it may even arrive damaged.
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With this in mind, some companies tend to sell product warranties on the most expensive products. This way, you will be protected not only paying to replace damaged products but also to avoid disputes.
#3: Cross-Sell Or Upsell On Exchange Requests:
while we have already seen that it is more advantageous for a business to handle exchanges than to handle returns, the truth is that having profitable returns and exchanges is not easy. After all, it all depends on the product that your customer wants to exchange and the margins.
In case you notice that you aren’t being able to have profitable returns and exchanges, then you should consider cross-selling or upselling on exchanges.
Lear more about handling refunds and returns as a dropshipper.
Let’s say that your customer has a store credit. So, he decides to go to your website to look for a product to buy. At this point, you should consider showing him some products that could complement the product that he is trying to exchange.
When you know why a customer is requesting an exchange, it will also be easier for you to get profitable returns and exchanges. Let’s say that your customer is exchanging a TV because the volume was too low for him. When he is about to choose the product he wants, you can show him the TVs that have a better sound quality.