Talking Returns & Refunds on PayPal Radio

Since Jeff mentioned my segment with Jason on PayPal Radio last week I thought I’d follow up with some of the detail around what we discussed.

Sometimes a buyer contacts you after they receive your item and they say they're not satisfied.  You can feel from their tone that they’re thinking about filing a dispute if they don’t have their problem addressed. If you’re ever in that situation, you’ve got a couple options available if you want to avoid a formal complaint, the best of which is probably offering a return.  Another option is to contemplate offering a partial refund.  Jason and I had a good discussion about these two paths.

Research has shown that what buyers really want when they receive an item they are not satisfied with is an easy, simple return. This is probably a legacy of shopping in face-to-face stores, where you can go back to the store and return the item directly if you’re not happy. Top face-to-face merchants can often charge a significant premium over their competitors if they have a generous returns policy, because buyers are willing to pay more if they know they’re not going to risk any post-transaction arguments should they not be satisfied for whatever reason.

If you and the buyer agree to go the returns route, there are many options available.  You can do a return for a replacement item, a return for a full refund, or a return for store credit.  If you have an item that loses a significant amount of it’s value after it’s been open or worn, you may consider charging a restocking fee.  The key thing is to lay all of this out in your item terms and conditions prior to the sale, because introducing it after the fact can definitely make a buyer feel like they’re being abused.

To ensure that you’re protected in a return, insist the buyer uses delivery confirmation with shipping insurance.  Explicitly discuss packaging if the item is fragile.  If the issue is your fault, you should strongly consider offering to pay return shipping, which may communicate your good faith to the buyer and may avoid the neutral or negative.

If you go the partial refund route, be aware that offering a buyer a partial refund can be a little touchy.  You don’t want it to seem like you’re trying to buy them off. Maybe couching it as, “What would you have been willing to pay for the item you received?” Or, “How much do you think it will cost to fix/alter the item so that you’ll be satisfied with it?” would help to set the frame appropriately. Emphasizing your desire to see them satisfied prior to offering the partial refund can also keep the negotiation positive and solution-oriented. You can make the refund through PayPal’s multiple partial refund tool, accessible from the payment details. You can also make multiple refunds up to the amount of the original payment, and your fees will be refunded each time.

I think returns are underutilized on eBay and PayPal, and I’d like to see more tools and talk about them in the boards. It was great to get a chance to chat with Jason about them, too. That guy knows everything PayPal, it’s really humbling.  He’s well on his way to being the Griff of PayPal!