Around 8-9% of all retail purchases will be returned. Jewellery tends to have a slightly lower rate of returns, but the financial impact of a high dollar return has a greater effect than the return of most other consumer products. A written return policy is an essential part of a retail business.
Manufacturing defects, lack of disclosure, misrepresentation, and incorrect gemstone identification should be automatically refunded without hesitation. It is your reputation on the line, be honorable and do the right thing.
Buyers and sellers have opposite needs
Thanks to excessively liberal return policies at many large big-box chains, many consumers feel that a 100%, no questions asked, cash refund, is standard policy for all retail stores. Modern consumers, Millennials in particular, want to have a feeling of confidence and security when they buy something, especially if it is as expensive as fine jewellery. They rely on returns as a safety net. A money back guarantee is a powerful selling point.
From the point of view of a retailer, a return policy must adequately protect the interests of the business and prevent fraudulent returns, which are on the rise. Customers have been known to “borrow” jewellery; buying an expensive item and returning after wearing it for a special event. Fraudulent jewellery borrowing costs time and money to clean, polish and return the item to selling condition.
Getting the right balance is tricky. It has to be fair and supportive of the interests of both sides. Policies that are too liberal could affect the bottom line. If your policies are too strict, you may lose customers. Each business will have different considerations. A small, local Mom and Pop that personally knows most of their customers could be very liberal while a high volume multi-store operation might need tighter policies.
“No questions asked” policy
Within a clearly stated time period, typically 2-4 weeks, the customer may return the item in new, unused condition for a complete refund. This is the easiest to manage but has its pitfalls. There will be a higher percentage of returns that should be offset by greater sales because the customer can buy with confidence. Make sure you have adequate financial resources to cover several refunds.
Exchange and hybrid policies
Many smaller stores struggle with cash flow and a large return can be a problem so they only offer exchanges for store credit instead of refunds. This keeps the money in your account and the customer coming back to the store.
The most flexible is a hybrid policy. Offer a full refund during a short approval period, and an exchange after that. It could be one-week approval and refund and 60 days exchange for store credit.
There are some product categories, like custom work or special orders that should be exempt from returns. You may want to exclude items bought on sale. Any exclusions must be spelled out in writing.
Your return policies need to be clearly defined and openly displayed in your store. They should be printed on your sales receipts and have the customer sign their acceptance. Mention any restocking fees in writing as well. Any exclusions or exceptions for that particular sale should be clearly written on the receipt and initialled by the customer.
Check with your credit card processor as they may have additional requirements to ensure your policies are followed. Inquire about any laws in force in your local and regional jurisdictions that cover refunds and consumer protection.
Once you decide on your return policy, an online search will find dozens of free templates to help build your store’s policies. Before you go to the expense of printing your policies and receipts, have you attorney check it to be sure you are in compliance with all laws.
A well thought out return policy is a roadmap to customer satisfaction. It tells your customer what they can expect from your store. It gives your staff a firm policy to follow. And if your team is sharp, they will see a return as a new opportunity for a sale.