Avoid Fraud and High Returns After Major Shopping Holidays

written by Carlos Alvarez
2 · 24 · 22

Returns and refunds are some of the most frustrating parts of running an eCommerce business. First, you need to deal with angry customers and have them send the product back to you. You also have to refund them or replace their product. Rates of returns and fraud are exceptionally high after major shopping holidays, which means you often deal with many claims at once.

A firm policy is often the best approach to these problems – let’s see other ways you can protect yourself from the annoyance and cost of returns and fraud.

Return or No Return?

A refund policy is critical to every online business. One of the first questions you will have to ask yourself is whether you want customers to return the item if they are unsatisfied.

Reselling returned goods is not an option for companies that sell undergarments, beauty products, foods, or medication. You should ask yourself why you want your customer to return the goods in these cases. You often pay for the shipping and processing when the item comes back to your warehouse. If you are planning to throw it out, you should consider letting the customer keep it. This saves them the hassle of returning and might build goodwill with the customer.

For other companies, you may be able to resell or refurbish returned goods. For electronics manufacturers, inspecting a defective device might help future design models.

Supplier Agreements

One of the worst things about returns is they are often not your fault. If you are a reseller, you work with suppliers that may send you defective goods. Even if you are involved in manufacturing, your raw materials could be the source of failures. Why should you be the one left picking up the bill?

Many supplier agreements have a policy covering defective goods or materials. The details of these agreements vary significantly between industries. They might be buried in the fine print of any contracts you have signed. Take advantage of these! Remember, you are the customer of your supplier, so they will often try to keep you happy. 

If defective materials or products are a problem, you should consider switching suppliers. Switching can be a hassle, but that will save you from dealing with unsatisfied customers and returns constantly. Track your return rates over time to see if a particular supplier is causing issues.

Avoiding Fraud

While millions of customers and businesses are honest, there will always be a few fraudsters out there on the internet. One of the most common types of scams is chargeback fraud. This is when a customer makes a purchase and then requests a refund from a credit card service, saying they was an error in the charge. Avoid chargeback fraud by working with a payment processing platform with chargeback protection.

Return fraud is related. This involves a customer returning a product that is ineligible for a return, such as sending a parcel back with illegally bought goods or damaged goods. Return fraud can be stopped through a combination of solid policies and tracking account activity.

Coming to Terms with Returns

Return rates are connected to many parts of your business. If you are experiencing a surge of returns, you need to find the causes. Are you overpromising in your marketing materials? Are your suppliers cutting corners? Is there a security vulnerability? While you will never avoid refunds entirely, tight control of your products and policies will save you a lot of headaches. 

Carlos Alvarez

Alvarez sums up his mission to help online sellers with a quote he heard early on in his career. New sellers constantly compare their Chapter 1 to another seller’s Chapter 20. They see what other veteran sellers are doing and they judge their success and failures by this benchmark. His goal is to show sellers a realistic path to success, and how they can enjoy every chapter of their own, unique journey.

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