How do you handle refunds and returns when you sell handmade items online?

How you handle refunds and returns when you make and sell handmade items depends on a few variables. Custom orders are handled differently than regular orders and the decision to accept a return depends on the situation. Here are some scenarios and ways to handle them.

Refunds for normal handmade items – Normal items would be things that you sell on a regular basis. They are what you always offer. On these items it can be a good idea to offer a 100 percent satisfaction guarantee. In theory you can simply take them back and resell them without too much issue. However you word your return policy, what you want to do is give the impression that you will take care of any issues should they arise. Avoid being too strict with your wording. If you boldly state “no returns accepted for any reason” a lot of people will choose not to buy from you regardless of your reputation or how good your items look.

Customer changed their mind after receiving – This is the down side to having a satisfaction or no questions asked guarantee. You really do not want people to simply change their mind and buy something to see if they like it in person. You may lose money when you pay for return shipping depending on your price-point.

Fortunately offering a satisfaction guarantee is more of a selling point and reassurance than something that people will abuse. If you are getting a lot of returns definitely talk to your customers, over the phone if possible, to see if there is a trend. Maybe there is an issue with your items or there could be color discrepancies with your photos.

Customer changed their mind before shipping - This is the best time for someone to change their mind if they are going to do that. This would be a case where you were paid up front and either haven’t shipped the item yet or you are currently making it. In either case, as long as it is one of your regular items it is best to make the customer happy and give them a refund.

Refunds and returns for custom items - Custom orders are different than normal items that you can expect to just sell to someone else. For custom items you will have two payments, the initial deposit and then the final payment. You should always send the customer detailed photos of their custom item prior to shipping so they know exactly what they will be receiving. The only time you would ever take back a custom item is if it was misrepresented somehow, which should not be an issue if you sent them photos, or if it arrived damaged. For a damaged item you would either make them a new one or repair the original one and send it back to them.

Deposit refunds for custom handmade items - Generally speaking, deposits are non refundable. If a customer changes their mind while you are building their custom piece you can give them the option of forfeiting their deposit and calling it even. Your 50% deposit should have covered at least the cost of the materials so you can break even and then choose whether or not to finish the custom piece. If you finish it you can still put it on your site either for sale, or as inspiration for other customers. It can also show what you are capable of making.

Refunds and fees – With Paypal you can click a refund button in each payment invoice to send the money back to the customer. If you do it this way you do not owe the Paypal transaction fee. If you sent them money normally through Paypal you would have already paid the transaction fee on their initial payment. The refund button allows you to break even.

This is fine if you have your own website but you may be out fees if you sell on a marketplace. You may be out the listing fee or closing fee depending on their policies. If an item sells and you end up refunding the customer, do you have to pay to relist that item? You should check and see.

Automatic Refunds – When people use credit cards or Paypal they can file disputes and get refunds regardless of your policies. Usually people will contact you first and try to work things out. Some marketplaces, like Ebay, actually require you to try and work things out before they issue refunds. You have to contact the customer through their message system so they keep track of this. If the seller does not respond or is unwilling to work things out, the buyer gets a refund. Ebay owns Paypal and requires you to use Paypal so they are good at handling issues like this.

I have actually gone through their dispute system as a buyer and they sided with me and refunded my full purchase amount. I had heard horror stories and was not expecting much but I was very impressed.

Preventing Refunds – The number one reason for a customer to request a refund is due to an item being misrepresented. For some reason it did not live up to expectations or look like the photos. This can just about always be prevented.

Make sure that your photos represent the exact item that you are shipping out. You will probably be using the same set of pictures over and over. With handmade items, variations occur. You always need to compare the photos your customer is seeing to the piece you just finished, even it you have made it a million times.

If your items hang on the wall, actually hang them up to make sure they lay flat. The same goes for items that have to be assembled. Put them together beforehand just to make sure there are no issues. Also make sure that it can be displayed to look exactly like it is shown in the photos. If they place your sculpture on their table, will it sit and have same profile as it did in the pictures? Variations can happen and people will have this particular view in mind and will be disappointed if their actual piece does not look the same.

Items lost in shipping - If you ship within the United States and do your labels online this just about never happens. In the rare event that it did, you would not usually refund the customer, you would make them another item, reconfirm their address, and then ship out the new item at your expense. If you have the item insured definitely file a claim but go ahead and send them a new item while you are waiting to be reimbursed. It is not your customer’s fault their item got lost.

Items damaged in shipping – Most of the time this is due to improper packing but things do happen. You really want to go overboard when packing your items. They should be able to withstand being dropped or having other boxes stacked on them. Assuming something did happen you would either send them a new item or repair the damaged one. It is up to you to decide which makes the most sense. Go ahead and file the claim but just like with lost items, take care of your customer and work on getting reimbursed from the shipping company later.

Return shipping labels – Fortunately if you do your shipping online, return labels are very easy. You can pay for it online and your customer can simply print it out, put it on the box, and drop it off at the shipping company. Please see Printing Return Labels for more information.

Learn How to Write Your Shop Policies

What has been your experience with returns of your handmade items? Do people take advantage of your policies?

Richard

Tags: damages, lost items, paypal, refunds, returns