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Customer Experience

Shipping and delivery fundamentals: How to create and communicate a returns policy

Smarter Writer
Smarter Team

A team of business and technology journalists and editors who write to help Australia’s community of small and medium businesses access the technology and know-how that helps solve problems and create opportunities.

Smarter Writer
Smarter Team

A team of business and technology journalists and editors who write to help Australia’s community of small and medium businesses access the technology and know-how that helps solve problems and create opportunities.

2022 research by ShipStation and Inside Retail found that 57% of shoppers pay close attention to an online retailer’s returns policy before purchasing from them for the first time. If you’re running an online business, it’s important to put thought into your refunds and returns policy. In this four-part series, we’re looking at the ways you can meet customer needs when it comes to shipping and delivery. In part three, we explore how to create an effective returns policy that manages customer expectations without leaving you out of pocket.

Woman writing down on a Carton Box while looking at a Clipboard

Online shopping has grown 19.6% every year since 2017, according to IBISWorld’s Online Shopping in Australia report. Over the course of the pandemic, customers embraced eCommerce platforms, with 9.2 million Aussie households now shopping online. A strong returns policy is more important than ever – from legally protecting your business to delivering a great customer experience and boosting your profits.

The Telstra Business Intelligence report on Customer Experience found that 84% of consumers consider the returns policy of a small business “important” when interacting with them online. In fact, returns ranked above all other aspects of online delivery including free shipping, delivery times and status updates. Establishing your returns guidelines and effectively communicating them can help customers choose and trust your business.

In the third article of our Shipping and Delivery Fundamentals series, we’ll show you how to write a simple returns policy that satisfies your customers.

Features of a standard returns policy

A returns policy is a legal document that explains your business’s process and requirements for returns, exchanges, refunds and replacements. Some features of a returns policy include:

  • A clearly stated acceptable timeframe for returns, like a 30-day period.
  • Whether you offer free returns (or if this is only in special circumstances or for exchanges).
  • If you provide refunds or in-store credit.
  • What you consider acceptable conditions for return (e.g. clothing must be returned unwashed and unworn, with all tags attached).
  • If there are any products not available for return or refund. This could apply to sale items or limited-edition pieces.
  • The acceptable parameters for return (like change of mind, incorrect fit or if an item is faulty or in need of repair).

The Australian Competition and Consumer Commission (ACCC) is a useful resource for what’s considered fair grounds for returns or refunds. Outlining these terms means you and your customers are clear on what you’re happy to accept for a refund, repair or replacement and what’s out-of-bounds. Make sure your returns policy is easy to find online by displaying it in the relevant section on your website – like in the FAQs or “shipping” section – and referencing it again at the checkout.

The benefits of a clear returns policy

Effectively communicated, legally robust returns policies come with a host of benefits for online businesses.

Save on time

A direct returns strategy will save you time fielding customer questions. Should there be a mishap down the line, it can help you navigate any customer confusion and protect you legally (if it comes to that).

Support your bottom line

Outlining whether you offer free returns or exchanges (if at all) can save you paying extra delivery fees. A well-written returns policy can be a drawcard for new customers, which can in turn boost your profit. It will also deter scammers looking to take advantage of grey areas.

Prevent negative social media reviews

Providing your customers with post-purchase support and a competitive returns policy helps to bolster their trust and satisfaction with your brand. Meeting your customers’ needs and expectations once they’ve purchased your product is a great way to prevent negative social media reviews.

What to consider when creating a returns policy

In the Customer Experience report Ben Franzi, Australia Post’s general manager of parcel and express services, says simplicity is key to a good returns policy. “The process needs to be simple. Return labels should be easy for the customer to access and download, and retailers should be considering how their packaging may be repurposed in the event the item is returned.”

Returns policy checklist
  • Check out the ACCC and educate yourself about business and customers’ rights.
  • Look up resources from your local government, like this guide from Consumer Affairs Victoria or this one from the Small Business Development Corporation in Western Australia.
  • Research the returns policies for small businesses like yours – you may be able to pick up a few tips.
  • Consider whether you’re in the position to offer free shipping.
  • Ensure that your policy covers you legally. Good legal advice is always worth the investment, but if you need a more budget-friendly option, there are a crop of legal start-ups offering services tailored to SMBs.

If you're not sure where to start, Finder and TermsFeed offer free returns policy templates, which can help you consider what to cover.

Creating an effective and legally robust returns policy helps to protect your business and can create a positive customer experience.

If you’d like to learn more about shipping and delivery for small business, take a look at the other articles in this series “How to choose a shipping cost method” and “Managing shipping times and supply chain”.

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