How to Handle Dropshipping Refunds and Chargebacks

It can be a pain to deal with dropshipping refunds, chargebacks, and exchanges. But it doesn’t have to be as painful if you have a process in place. Build out standard operating procedures so your team knows how to handle dropshipping refunds and chargebacks. Follow these steps, and you’ll be able to simplify the process:

  1. Assess the situation.
  2. Address the situation.
  3. Document the situation.

Here we’ll go over each of these steps and show you how you can incorporate them into a consistent, reliable process for dealing with product refunds, exchanges, and chargebacks, which can give you more time to spend on building your dropshipping business. We’ll also provide you with some free template examples for your business that can help you get started.

Assess and Address the Situation

Both assessing and addressing the situation can be lumped together in the same step, as you kind of need to do both at once. While there are multiple issues that can arise, the most common problem you’re likely to come across in ecommerce is how to handle dropshipping refunds.

Does the Customer Want a Refund?

Screengrab of a refund decision tree

If a customer is looking for a refund for a product, make sure you have a return policy that details how refunds work. You should have both a customer-facing policy and an internal policy for how to handle dropshipping refunds step by step. You have some freedom when it comes to how your refund policy works.

When to Give a Full Refund

You could simply give the customer a full refund without question and let them keep the product, which is often the best solution if you want to avoid the potential headache of dealing with angry customers who aren’t worth the effort. Sometimes you may encounter customers who are simply impossible to please, in which case giving them a full refund can help you redirect your time and energy to more important matters.

Give a Refund with a Product Return

While giving a full refund might be easier to do with less expensive products, you could suffer more losses if you give a full refund for a premium-priced product. The best way to keep the customer happy with the refund without hurting your business in the process is to offer a refund in exchange for returning the product to a P.O. box or warehouse.

Incentivize Customers to Avoid the Refund

Giving a full refund might be ideal if a customer is angry and you’re unlikely to change their mind. But there are some instances when you may find that a customer can be persuaded to take back their refund and keep the product. The fact is that oftentimes it isn’t the product that customers are unhappy with when seeking a refund — they’re unhappy with a lack of effective communication

Here is where it’s best to empathize with the customer and understand their situation. If you can make the customer feel understood and provide an offer such as a free information product or discount, then the customer will be more forgiving and be more willing to hang on to their purchase.

Offer a Partial Refund With Incentives

You also have the option of offering a partial refund, along with incentives such as free information products for which you would normally charge, which can help you save more money while working to keep the customer happy with the outcome. For instance, you might offer something like a 35% refund for the inconvenience along with a free resource that would you wouldn’t typically give away. This is likely to leave the customer even more satisfied, considering they get a partial refund, they can keep the product, and they get bonuses on top of that original purchase.

Is the Customer Submitting a Chargeback?

Screen Grab of How to Deal with Chargebacks

Customers may inadvertently charge their credit cards as they forget what they’ve purchased and subscribed to over time. It can be easy to lose track of what you’re buying online. So keep in mind that the occasional customer may submit chargebacks if they forget that they made a purchase and no longer want it. 

Unfortunately, many people also take advantage of chargebacks in an attempt to get products for free. So you’ll need to be aware of this potential issue as you develop and implement chargeback processes.

If a chargeback is submitted, you’ll want to assess and address the situation accordingly. Follow these steps:

  • Check to see if the product shipped.
  • Make sure you have the tracking information for the order.
  • Gather all evidence, including tracking, billing, shipping, and email communication that a platform like Stripe or PayPal may request.

If you can submit all the necessary information to support you in the event of a chargeback dispute, the simple truth is that you will win. If you can prove that the product shipped and you can submit all the tracking details, billing information, and email correspondence in an organized PDF or another document that supports your argument, you will likely win a majority of these disputes. You can then recycle that template and use it for future chargebacks.

Document the Situation

You should always maintain proper recordkeeping in any situation, whether it’s for a refund, chargeback, or exchange. Even if you have a good understanding of how to handle dropshipping refunds and chargebacks, people who work with you may not; different customer service teams do things differently. You need to maintain cohesion across your entire company with processes and systems, which good documentation can help achieve.

Use Email Templates

One way to keep customer service consistent, regardless of the situation, is to create email communication templates that employees can use. Send these to your teams, and you’ll be able to provide the same response to customers in similar situations. This will prevent the customer from encountering inconsistencies when communicating with your business. 

Create Chargeback Templates

Knowing how to handle dropshipping refunds isn’t enough. You also need to have a plan for chargebacks. To efficiently handle chargeback disputes and make evidence-gathering easier for your team, create chargeback templates as PDFs or other formats that make it easy to organize and present proof of shipping, tracking and billing information, and email communications when attempting to win a dispute.

Record Loom Videos

Business owning creating standard process documentation for refunds and chargebacks

Another way to show your customer support teams precisely what to do in any given situation is to create Loom video recordings. Loom makes it easy to record your screen and voice. You can use them to create helpful in-depth training videos that illustrate various procedures. Your employees can then watch these videos whenever they need to and learn about your processes. Then, you won’t need to walk each new employee through the process.

Template Examples You Can Use

If you want to get some ideas for what to include in the templates to share with customer service teams, then you can implement some of the following.

Here’s an example template that you can use as an initial reply to a customer inquiry:

Hey! So because our [X] ship directly from our overseas factory, shipping can sometimes take a little bit longer! You should have your [X] within the week. Please let me know if you have any other issues!

Thanks!

For a second reply after the customer responds, you can send the following:

Hey, we do apologize greatly for the delay. We had such a large influx of orders that it backed up our factory. If you do not have your [X] in the next 4-5 business days, please let me know. We will issue you a full refund along with getting you your [X] for free.

Thanks!

If the customer is still not satisfied, then you may need to reach out once more. You can send them this third reply:

We just refunded you your full purchase price. Again, we are really sorry about all this confusion. You will still be receiving your [X] — it just may take a few more days. Again, we are hugely sorry about this.

Thanks!

These three simple templates can help you figure out how to handle dropshipping refunds. Even better, the templates help your team consistently communicate with customers to ensure satisfaction.

Want to learn more about processes and systems about how to handle dropshipping refunds and chargebacks? What about every other aspect of your dropshipping business? If so, then check out our free Ecommerce master class, where you’ll learn everything you need to know to become a successful dropshipper and provide exceptional customer service. Tagged : / / / /