The return rate in the ecommerce industry has almost doubled since the start of the decade. This trend strongly suggests that shoppers on online marketplaces aren’t hesitating to return a product if they’re unhappy with their purchase.
Although introduced much earlier, eBay’s Money-Back Guarantee and Business Policies have become indispensable as the return rates surge, often leading to disputes between buyers and sellers.
These policies work hand in hand to ensure transparency, set expectations, and prevent potential misuse of the returns option.
Consequently, eBay sellers must adhere to the platform’s Money-Back Guarantee and deliver items to buyers promptly and as described in the product listing.
On the other hand, the Business Policies enable sellers to choose whether to provide buyer-paid or seller-paid returns for ‘remorse’ purchases.
In this article, we’ll walk you through setting up free returns on eBay and examine why they are critical to providing an excellent shopping experience to your customers.
Key takeaways
- eBay’s Money Back Guarantee policy applies to all transactions on the platform, regardless of the domain or the geographic location where a transaction was made.
- Sellers can use business policy templates to create eBay listings, specifying the conditions under which a buyer can return an item for free.
- The platform’s Cassini algorithm considers the availability of free returns when ranking a particular listing in the search results.
- Sellers must provide a solution to buyers whenever they submit a return request because they received a damaged item or an item that doesn’t match the description in the product listing.
- The return options available to buyers vary from one eBay marketplace to the next.
The importance of free returns for a seller’s overall performance on eBay’s marketplaces
The quality of the service sellers provide to customers is crucial to their performance on eBay.
Hence, all aspects of a buyer’s shopping experience, from the information a seller includes in a product listing to the efficiency of the fulfillment process, play a part in a merchant’s performance on the platform.
eBay evaluates sellers monthly and uses the Late Shipment Rate, the number of times a buyer received a damaged product or an item that didn’t match the description in the listing, to assign sellers an appropriate level.
Consequently, sellers who frequently fail to resolve issues raised by their customers are likely to fall into the Below Average tier and struggle to reach new customers.
Moreover, the Money Back Guarantee policy makes it mandatory for a seller to cover the return cost if the buyer receives a product that is damaged, faulty, or doesn’t match the description.
Business policies, particularly the Returns policy, allow sellers to further improve the quality of the shopping experience they provide to their customers by offering seller-paid returns and specifying the conditions under which a buyer can return an item for free.
Additionally, listings offering seller-paid returns rank higher in eBay’s search results than those with buyer-paid returns, presenting sellers with excellent opportunities to promote their products, drive organic traffic to their stores, and increase sales.
The ins and outs of eBay’s Money Back Guarantee policy
The Money Back Guarantee policy’s primary purpose is to protect all eBay users and ensure a fair treatment of all parties involved in a transaction.
Although it is mainly a buyer protection policy, the Money Back Guarantee also protects sellers by prohibiting buyers from making false claims, returning a different item from the one they received, returning items with missing parts, or returning items that the buyer used or damaged after receiving them.
On the other hand, a seller must cover the return shipping costs and issue a full refund to a buyer if:
- The seller fails to fulfill the return policy featured in the listing
- The buyer received SNAD (Significantly Not as Described) items
- The buyer received a faulty or damaged item
- The buyer didn’t receive the item by the seller’s specified delivery time.
It’s also important to note that under these circumstances, a seller must issue a refund and cover the return costs, even if the return policy for a specific listing states that they do not accept returns for that item.
A brief overview of eBay’s business policies system
The Business Polices feature allows sellers to set their payment, shipping, and returns policies for each listing they add to their store.
However, the seller’s return policy doesn’t override the eBay Money Back Guarantee, so sellers mostly use it to manage remorse returns.
The policy settings allow a seller to specify for which types of products they want to offer a free return. So, for example, a seller can choose to cover the returns costs for new products but opt not to accept returns for used products.
Additionally, sellers must cover the cost of returning an item if they indicated that free returns are available for a specific item in the listing, even if the returned item was damaged during the return process.
It’s paramount that all sellers’ business shipping policies and returns policies work in unison to establish transparency and provide buyers with a smooth shopping experience.
Hence, most sellers must use this option to specify the acceptable payment methods, indicate the available shipping options, including the availability of international shipping for specific items, and inform buyers upfront who covers the costs of returning an item.
Setting up a returns policy on eBay
Creating business policies is an integral part of making a product listing on eBay. The platform requires sellers to specify their business policy preferences before making a product available to buyers.
However, sellers don’t have to create separate policies for each listing, as they can use the same shipping policy for multiple listings.
It’s important to note that eBay’s business policies aren’t global. So, the legal requirements sellers must meet in their existing policies vary from one marketplace to another.
For instance, sellers on eBay’s German marketplaces are legally required to give buyers at least 14 days to return an item, while sellers in the US are not legally obligated to accept remorse returns.
Nonetheless, creating a returns policy is straightforward and similar to the process of creating a payment policy or shipping policy. The process is similar regardless of the marketplace since sellers must only create a template that they can add to their listings.
Here’s a quick overview of the Returns policy setup process:
Step 1: Go to the Seller Hub and navigate to the Business Policies dashboard. Choose the Create Policy option and select Return from the menu. Please be sure to opt in if you haven’t already done so.
Step 2: Proceed to name the new policy and add a brief description or a descriptive name that will allow you to differentiate it from other business policies.
Step 3: Indicate whether the policy enables the buyer to return items. If you want to create a seller-paid return policy, specify how long a buyer has to return an item (e.g., 14, 30, or 60 days) and choose if you want to accept international returns.
On the other hand, if you want to create a policy that makes the buyer responsible for covering the costs of returning an item, you must include this information in the policy.
Step 4: Once you save the policy, you can use it when creating a new listing or revising an existing one. Simply apply the policy from the menu to a specific listing or multiple listings.
Managing seller-paid returns on eBay’s international marketplaces
Participating in the eBay International Shipping program enables sellers to handle returns through the platform.
Although the program solves logistics problems for international sellers, it also creates high costs and can potentially affect sales. Moreover, sellers must meet specific criteria to qualify for this program, which means that some sellers are ineligible to take part in it.
More importantly, the sellers who opt into the program don’t have control over the international leg of their products’ journey, and they must understand the program’s limitations to know which products they can sell internationally.
Third-party logistics providers (3PL) like Webinterpret provide an alternative to the International Shipping program by allowing sellers to manage international returns from the dashboard, seamlessly integrating with eBay’s Seller Hub.
It’s worth noting that most 3PLs cover remorse returns and allow sellers to generate return labels and monitor the label’s status until it reaches the customer.
However, it’s important to remember that sellers can only manage returns from countries the 3PL service covers.
Estimating the cost of offering free returns on eBay
The cost of providing free returns on eBay can significantly cut into a seller’s profit margins. Still, the offering exclusively buyer-paid returns can affect the visibility of product listings and limit sales.
That’s why eBay sellers must pay close attention to their business’s Return Rate. This metric is calculated by dividing the total number of returns and sales for a specific period.
For instance, if a seller sold 300 items over a three-month period and accepted 10 free returns during that time, their Return Rate would be 3.33%.
Additionally, sellers should monitor their Return Shipping Label costs, the Cost of Goods sold, and other metrics that allow them to keep track of different shipping costs and estimate the total cost of returning an item to the inventory.
eBay provides sellers with several tools that allow them to keep track of their return costs, but these tools often don’t cover all the costs sellers sustain when a buyer returns an item.
So, using a 3PL service provider such as Webinterpret can help sellers better understand the actual cost of offering free returns to their customers.
Growing your business on eBay, one seller-paid return at a time
Free returns are among the pillars upon which successful eBay businesses are built. Still, their cost is a significant concern for the sellers on this platform, as high return rates often affect their profitability.
Setting up a returns policy is a mandatory step in the listing creation process. Although sellers don’t necessarily have to offer free returns for each product, the policy enables them to clearly communicate their preferred return option to buyers and attract customers.
Absorbing the reverse logistics costs provides eBay sellers with various benefits, from higher seller rank to more visibility and sales for their products. Consequently, finding a sustainable returns solution is paramount for businesses that want to grow their presence across eBay marketplaces.
Are you looking for a free returns solution that seamlessly integrates with the eBay platform? Webinterpret can help! Schedule a call to find out more about our all-in-one returns management solution.
About Webinterpret
Webinterpret supports merchants selling on eBay.
Our AI-based solutions enable more effective selling through automated listing localization, advertising, and returns, and ensure all products placed on EU markets are GPSR-compliant.
By giving your international customers a full, end-to-end local shopping experience, Webinterpret improves your conversion and helps establish your business globally.
