Setting the stage

Small, mid-sized, and large retailers and brands alike are capturing more sales and expanding their pool of customers as eCommerce continues to grow. But with more sales come more returns:  20.8% of all products ordered online are returned, compared to just under 9% of brick-and-mortar sales. Now more than ever, companies need to have a solid returns policy in place. For companies operating as their own marketplace, selling on other marketplaces, or using drop ship models, a good policy not only improves the relationship with customers but with suppliers/sellers as well.

When Cancellations Occur 

More retailers are using marketplace and/or drop ship models to curate an expanded assortment of items. This adds a layer of complexity to all canceled and returned items.  Who is responsible for accepting the return, the retailer or supplier? And what happens to the unwanted or damaged merchandise?

Another crucial area of consideration is payment. In a marketplace model, commissions are paid out upon sale, while in drop shipping, invoices are sent and paid on a variable basis, depending on partner agreements. Depending on how quickly a cancellation occurs after purchase, payment may have already been parsed out and sent from the retailer’s point-of-sale system to the supplier/seller or, in the case of a marketplace, the payment may have been split at the time of purchase. In either case, it’s critical that trading partners communicate and work together to understand the financial impact of returns, prioritize returns prevention, and determine how to recoup costs if possible.

Prevention is Key

The best solution for combatting the messy eCommerce returns process is to prevent returns. A few key areas to focus on prevention include:

  • Customer service: Having a well-trained customer service team to help prevent returns and resolve problems is invaluable. Orders should be processed quickly and accurately, and it is imperative to monitor seller/supplier performance to ensure timelines are being met.  
  • Process/Automation: Although speed is key for delivery, one industry practice some marketplaces employ is to automatically, briefly delay the order payment to ensure supplier inventory is accurate and allow for any last-minute adds or changes on the customer side.
  • Seller agreements: These should include frequent inventory updates to ensure inventory is accurately reflected on the site and that detailed product descriptions and images are included, to help consumers make informed purchases that they’ll be less likely to return.
  • Technology: Having appropriate fraud prevention technology in place helps prevent cancelled sales and minimize the chance of paying out/receiving commissions for an invalid transaction. To learn more about improving life after purchase through proper fraud prevention and last mile delivery, check out this webinar with Forter.

The Returns Opportunity

There are, of course, many instances when a return is unavoidable. For that reason, having a well-defined returns policy is important for strong relationships between retailers, suppliers, and end customers. Clearly outline policies and agreements between parties and incorporate automation to ensure that returns are processed smoothly and you, as a marketplace owner, have complete visibility. Investing in appropriate third-party systems to facilitate the communication between customer, warehouse, and shipper ensures that instead of just sitting on the floor, returned packages can be put back into stock for resale (when appropriate). The ultimate goal should be to create a great experience for the customer so that they’ll want to purchase again.


A return policy that eliminates confusion and resolves issues when an unsatisfactory item is delivered will help boost customer satisfaction. In fact, 92% of consumers surveyed said that they will buy from a given retailer again if a product return process is easy. Collaborating with partners on a comprehensive returns policy and clearly communicating it to business partners and customers can help eliminate confusion, improve the customer experience, and build strong relationships.


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