Driving Business Growth With Retail Returns as a DropShipper


  • Author Donald Ngonyo
  • Published March 16, 2024
  • Word count 1,266

Retail returns occur when a customer returns purchased items to a seller in exchange for a refund, store credit, or similar product. As a business owner, you can use retail returns to drive business growth. The strategic management of retail returns guarantees business growth as retailers enhance customer experience, minimize losses, and preserve revenue.

As businesses increase online sales, having a seamless return experience improves customer confidence and loyalty. This is an essential ingredient in boosting business growth. Reports indicate that retail returns are higher when businesses rely on online sales because customers cannot see products physically.

It is crucial to have proper incentives to manage returns to guarantee customer satisfaction and confidence. The aim is to retain clients who return products by making them purchase alternative products because they trust you more.

Trends in Retail Returns

The coronavirus pandemic led many businesses to rely on online sales. While this boosted revenue and streamlined the sale process, there was also a significant return increase.

According to a survey conducted by the National Retail Federation (NRF) and Appriss Retail, retail returns increased to more than 16%, against 10.6% in 2020. Another NRF report showed that online sales comprised 23% of all retail sales in 2021.

The trend confirms that many consumers rely on the internet to purchase products. In most cases, unwanted packages are returned to stores and warehouses. So, how returns are managed can positively or negatively impact a business.

According to research, more than 75% of retailers agree that retail returns are part of the business and should not be neglected. The business owner must plan to deal with emerging issues to build client trust and prevent negative reviews on social media, websites, and other platforms where clients interact. This will drive more sales and retain existing customers instead of losing them to competitors.

Benefits of Effective Management of Customer Returns

There are several benefits your business gains from the effective management of retail returns. The decision to purchase a product again or recommend another client is influenced by the experience when customers return products. According to a poll by Doddle, more than 80% of retail clients agree that returns experience influences their opinion about a company.

When retail returns are managed effectively, the customer lifetime value improves, retaining revenue for the company and driving growth. Handling returns poorly lowers customer loyalty, causing revenue loss and limiting company growth.

As a business owner, your goal is to retain existing clients and capitalize on the recommendations and referrals. When the interactions between customer and retailer are seamless, retail returns become a silver lining in the company's growth strategy.

With every interaction, the goal is to give customers value for their money and safeguard the brand image. Your business interactions must provide customers with peace of mind and the confidence to purchase something else from you. By changing how you interact with clients during returns, sales can grow by gaining more referrals and return customers.

How to Manage Retail Returns Effectively

Approaches for managing returns differ depending on the nature of the business, target clients, and products sold. However, there are best practices that can be replicated or followed across business niches to guarantee success in managing returns.

These best practices are intended to exhibit values like consumer-friendliness, value for money, and efficiency in the return process without incurring additional costs. When businesses adopt these best practices, they guarantee long-term profitability and operational success.

Some of the best practices that retailers can use are explained below.

Ensuring Fast, Free, and Easy Returns

To build consumer confidence, businesses must guarantee fast, free, and easy returns. Companies can achieve this by offering 'returnless refunds' where customers remain with the product after getting the refund and avoid incurring freight charges. This will build brand trust and retain more clients.

Proper Management of Challenges During Return Process

The return process can also be streamlined by effectively managing the operational challenges arising from returns. These challenges include customer expectations, data limitations, and reverse logistics. With proper management of these challenges, the company can save time and money.

Research indicates that businesses can save up to 125 billion dollars each year by effectively managing retail returns. Besides financial costs, retail returns affect customer loyalty, brand image, and the environment.

Business owners can improve customer loyalty through engagement, even without immediate profits. When customers see a money-back guarantee without incurring shipping charges, they will shop confidently and spend more, driving business growth.

Aim to Get a Competitive Advantage Over Other Retailers

As a business owner, always aim to get a competitive edge. When creating a return policy, consider its direct impacts on customers. When customers want to return a product, you have an opportunity to offer excellent customer experience and customer service, building dynamic customer relationships. With a favorable return policy, your retail returns management will guarantee sustained business. You will have a solid basis to increase long-term customer loyalty.

About 72% of customers share negative reviews about bad return experiences. This dramatically impacts brand perception and can lead to a loss of future revenue. So, return policies should be flexible and tackle challenges head-on, making meaningful

changes to customers' brand perceptions. Returns handled in a consumer-friendly way birth positive reviews, increasing sales and consequently driving growth.

Designing a Return Policy Relatable to Targeted Customers

When creating a return policy, avoid being generic. It is usually easy to state a 14-day return policy with store credits only. However, this approach does not boost customer loyalty or confidence. Consider a strategic approach to promote business growth by ensuring that the return policy relates to the targeted customers.

In your return policy, ensure that you have a reasonable return period. Consumers have multiple retailers to choose from when making purchase decisions. Before they make any purchase, one factor they consider is the returnability of an item.

So, the return policy should be comfortable and reasonable depending on the customer location and costs. Instead of allowing 14 days, consider a period of 30, 60, or 90 days after the original purchase date. You can include reasonable exclusions and limitations to curb abuses from customers.

Making The Return Policy Lenient to Favor Customers

According to a study by the University of Texas-Dallas, lenient return policies impact customer return rates. This is foundational in driving growth within a company. Retailers must look at the different dimensions of the return policy and its impact on clients. There must be a balance between customer expectations and store inventory management. When designing the policy, avoid being harsh and inconsiderate of customers' expectations.

Automating the Return Process and Exchanges

Automation of the return flow can also enhance customer experience and guarantee growth. Automating exchanges of faulty products with another is also necessary to offer clients opportunities to choose what they want or desire. This can be done by allowing customers to select an alternative product from the online shop with the same value instead of receiving monetary refunds. The business can offer multiple return options, like in-person returns to third-party networks. This option provides an immediate refund or exchange, giving customers the confidence to spend more on your business.


As the business owner, make sure that the return process is convenient and hassle-free, and demonstrate empathy to clients. Favorable retail return management can benefit your long-term business growth. According to GrooveHQ, retaining at least 5% of your clients increases profits by more than 95%. So, every sale is the first step to boosting profit margins by offering an excellent customer experience. Also, you can drive growth by exchanging items or cross-selling and making recommendations. This is an avenue for making customers fall in love with your brand.

Donald is an author, copywriter & content writer, and like to share tips to help freelancers grow.

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