Hi all,

I am going to market a physical product. It is delivered to the customer by post. The cost of the postage is about 30% of the full price.
The customer is informed of the price of the item and the price of shipping.

In the sales letter I offer the usual guarantee: if you are not happy send me back the item and I will refund you money.

But, should I refund the price of the item only or should I refund the item plus the shipping cost?

I think it is fair that I refund only the price of the item. But I may be wrong and customers would not expect less than a full refund of item plus shipping.

What would you do?


Thanks in advance for any opinion,
Guillermo

We only refund the cost of the product and never had a problem.

If I understand Guillermo's posting correctly, he's talking about refunding the original shipping costs that were charged to the customer. It does not appear that he's saying he'll also pay for the customer to ship it back. If my understanding is correct, then he would not be encouraging more returns.

In terms of pure economics, the answer here is the same as always: Test both ways and see which one leaves you with a larger ROI.

But in terms of marketing ethics as well as strength of guarantee (which often -- but not always -- results in a larger conversion rate), consider this:

In your offer, you are making a promise to the customer. If (in the customer's view) the product doesn't live up to that promise, one of you will have to eat the original shipping costs.

Why should it be the customer? Why should it be the one who was disappointed, rather than the one who (again, in the eyes of the customer) failed to keep the promise?

A guarantee that requires the customer to lose out on the shipping charges is NOT a genuine application of "risk reversal."

Let's say the shipping charges are $10, and you don't refund that amount. Then your "risk-free guarantee" is, "If it's not as good as we say it is, return it to us and you'll end up paying the cost of returning it as well as an additional $10...in addition to your disappointment and your investment of time."

I'm not suggesting you are wrong if you keep the shipping charges. But the fact that "many companies do that" isn't a good enough reason.

Best,
Dan O'Day

That's right, only the original shipping costs.
I will never pay the postage of sending the item back to me. That's too much!!

I think that what I am going to do is to refund only the price of the item.
I will test this for a few months and see how it works.

If the requests for refunds are low enough I will extend the guarantee to refund also the shipping cost.


I am offering a free sample of the product, with free delivery. So customers have the chance to try the product before they order.
If they take advantage of this opportunity and then they do order, the only reasons to request a refund can be that:
- the item gets lost in the post
- the package is badly damaged while in transit

I cannot think of any other reason. I hope that I will have to pay very few refunds.

Ricky, Dan, thanks for your opinions.

Cheers,
Guillermo

We ONLY refund price of product and NEVER had a problem in 3 years.

Our return rate is very low but even the ones that do return, have never even questioned us refunding just the purchase price and not the shipping price.

It's not big deal I don't think unless your shipping is over $10.00.

Yeah, shipping costs to foreign countries could be an issue ...