E-commerce Returns: How to Handle Shipping Returns and Exchanges

Returns are an inevitable part of e-commerce. How you handle them can make or break customer loyalty and significantly impact your bottom line. This guide covers everything from creating return labels to optimizing your return process.

The True Cost of Returns

Before diving into logistics, understand what returns actually cost:

Average total cost: $15-40 per return

Return Label Options

Prepaid Return Labels

What it is: You pay for return shipping upfront, customer gets a ready-to-use label.

Pros:

• Best customer experience
• Higher conversion rates
• Fewer support inquiries

Cons:

• You absorb all shipping costs
• Labels may go unused

Best for: Premium brands, high-margin products, customer-centric policies

Pay-on-Use Return Labels

What it is: You create labels, but only pay when the customer uses them.

Pros:

• Only pay for actual returns
• Still convenient for customers
• Reduces waste

Cons:

• Not all carriers offer this
• Slightly higher per-label cost

Best for: Most e-commerce sellers, balanced cost/experience

Customer-Paid Returns

What it is: Customer arranges and pays for return shipping.

Pros:

• Zero direct shipping cost to you
• Reduces frivolous returns

Cons:

• Worse customer experience
• May hurt repeat purchases
• More support inquiries

Best for: Low-margin items, final sale products

Creating Return Labels

With AtoShip

Navigate to Returns - Access the returns section

Enter original order - Pull up the original shipment

Generate return label - Create label with reversed addresses

Choose carrier/service - Select appropriate shipping method

Send to customer - Email or include in package

Return Label Best Practices

• Use the same carrier as original shipment when possible
• Consider tracking needs - Returns warrant tracking for protection
• Include insurance for high-value items
• Set expiration dates on prepaid labels (typically 30-90 days)

Setting Up Your Return Policy

Key Policy Elements

Return window - How long customers have (typically 30-90 days)

Condition requirements - What condition must items be in

Refund vs. exchange - Options you offer

Who pays shipping - Be clear about this

Exceptions - Items that can't be returned

Sample Return Policy

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Returns & Exchanges

We accept returns within 30 days of delivery for items in original, unused condition with tags attached.

To start a return:

Email [email protected] with your order number

We'll send a prepaid return label within 24 hours

Pack items securely and drop off at any USPS location

Refunds processed within 5 business days of receipt

Exchanges: Request your preferred replacement when starting the return. We'll ship once we receive the original.

Final Sale: Items marked "Final Sale" cannot be returned.

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Return Shipping Options by Carrier

USPS Returns

Services:

• Priority Mail - Fast, includes tracking, $100 insurance
• Ground Advantage - Economical, full tracking
• First-Class - For lightweight returns under 13 oz

Features:

• Pay-on-use labels available
• Free package pickup at customer's address
• Extensive drop-off network

UPS Returns

Services:

• UPS Ground - Economical for heavier returns
• UPS Returns Plus - Pay-on-scan billing
• UPS Print Return Label - Customer prints label

Features:

• Convenient drop-off at UPS Stores, CVS, Michaels
• Electronic notification when returned
• Higher weight limits

FedEx Returns

Services:

• FedEx Ground - Cost-effective returns
• FedEx Print Return Label - On-demand printing
• FedEx Returns Technology - Integrated solutions

Features:

• Drop-off at FedEx locations, Walgreens, Dollar General
• Real-time visibility
• Customizable return experience

Reducing Return Rates

Improve Product Information

• Better photos - Multiple angles, zoom capability
• Accurate descriptions - Size, color, materials
• Size guides - Detailed measurements
• Customer reviews - Real feedback with photos

Quality Control

• Inspect before shipping - Catch defects early
• Proper packaging - Prevent damage in transit
• Accurate fulfillment - Ship the right items

Customer Education

• FAQ section - Address common questions
• How-to content - Help customers use products
• Responsive support - Answer questions before purchase

Handling Exchanges

Exchange Process

Customer requests exchange - Specify what they want instead

Create return label - Send for original item

Reserve exchange item - Hold inventory if needed

Ship exchange immediately - Or wait for return (policy-dependent)

Receive and process return - Verify condition

Exchange vs. Return + New Order

Immediate Exchange:

• Customer gets replacement faster
• Risk of not receiving original back
• More complex operationally

Return First, Then New Order:

• Lower risk
• Slower customer experience
• Simpler to manage

Return Analytics

Track these metrics to optimize returns:

Return Rate

Formula: (Items returned ÷ Items sold) × 100

Benchmarks:

• Clothing: 15-40%
• Electronics: 5-15%
• Home goods: 5-10%

Return Reason Analysis

Track why items are returned:

• Wrong size/fit
• Item not as described
• Damaged in transit
• Changed mind
• Defective product

Cost Per Return

Track all costs associated with returns to understand true impact.

International Returns

International returns are more complex:

Challenges

• Higher shipping costs
• Customs paperwork
• Longer transit times
• Currency considerations

Solutions

Local return addresses - Partner with returns centers in key markets

Keep-it policies - Sometimes cheaper than return shipping

Return credits - Offer store credit instead of refund + return

Higher thresholds - Require minimum value for international returns

Technology Solutions

Returns Management Platforms

Benefits of dedicated returns software:

• Automated label generation
• Customer self-service portal
• Analytics and reporting
• Inventory management integration

AtoShip Returns Features

• One-click return labels - Generate from original order
• Multi-carrier options - Compare return shipping costs
• Tracking integration - Monitor returns in transit
• Automated notifications - Keep customers informed

Return Fraud Prevention

Common Fraud Types

• Returning different items
• Wardrobing (use and return)
• Receipt fraud
• Empty box claims

Prevention Strategies

Serial number tracking - Match returned items to originals

Photo documentation - Photograph items before shipping

Inspection procedures - Thorough checking on receipt

Customer history - Flag frequent returners

Shipping weight verification - Compare to expected weight

Conclusion

Effective return management balances customer satisfaction with operational efficiency. By choosing the right shipping methods, setting clear policies, and leveraging technology, you can turn returns from a cost center into a competitive advantage.

Start optimizing your return process with AtoShip's return label features—create labels in seconds, track returns automatically, and provide the seamless experience customers expect.