Jeff here for POD Insights the podcast and YouTube channel. In this episode I’ll be talking about an update to Etsy’s return policies for sellers and also why returns are not a good fit for the print on demand business model. Does the new feature for setting a return policy by listing make sense for your shop? Stick around and let’s talk about it.
Etsy Return Policy Update
Starting on October 31, 2022, Etsy is offering sellers the ability to set a return policy for each individual listing in your shop. This means you can accept returns for some listings but not others. This updated flexibility is intended to help sellers who offer different types of products in their shop. For example, let’s say you do your own heat transfer printing on apparel and you sell personalized designs. You might want to offer returns on regular listings but not on anything that has been personalized. Instead of having one returns policy that applies to your whole shop, you can specify on any listing that requires personalization that you do not accept returns for that item. This is a win for sellers with a shop like this.
You’ve likely noticed a banner in your seller dashboard within the last week or so about this. If you go to the Settings link on your seller dashboard menu and select Policy Settings, you’ll find more information about the returns policy updates. You may even see a pop-up window about it if you haven’t been to your policy settings page recently. If you have not set a return policy for your shop yet, now is a great time to head to that page and set it up. It’s important to have a return policy for your shop for several reasons. First, your customers should be aware of your policy for returns. You can also make them aware through your listing descriptions, but setting a formal shop policy also helps you stay in good standing with Etsy. It’s also an eligibility criteria for the Etsy Purchase Protection Program, so if a customer opens a case that qualifies for the program, it’s important that you have your shop policies in place. This is especially true if you don’t accept returns, and I’ll explain more about that later.
The information on your settings page will provide most of the information you need to either confirm that your existing policies can be carried over into the new Return Policy settings on October 31, make changes to the policy that applies to all listings, or create an additional return policy to apply to some listings. However there’s also an article that providers further information on Etsy’s site that I’ll link to in the blogpost for this episode on podinsights.net.
The new functionality works more like your shipping profiles. You can have more than one return policy saved and then apply it to specific listings. If you’re a seller who offers some items that require personalization and others that don’t, then having two returns policies makes a lot of sense. This will allow you to accept returns for non-personalized listings and not accept returns for personalized ones. Many sellers already do this, however the only way to communicate this difference in policy historically has been to just say it in your listing description or in listing images rather than in your formal shop policy. Now you can have a formalized shop policy that identifies which items can be returned. This kind of feels like something that should have been available all along, but it’s nice to have it available now.
If you’re a seller who does not accept returns for any listing in your shop, then you won’t have much that you need to do before October 31st. Just go to your policy settings page and there will be a blue section asking you to confirm that you want your existing policy applied to all listings by clicking the “publish” button, and you’re done. The page will show you what the updated policy will look like on your listings and shop page, and if you already had a “no returns” policy in place, it won’t look much different. You can always come back to this page in your shop settings after October 31st to make changes to your returns and exchanges policy or add an additional policy.
I do want to mention one thing about the EU regulation that requires sellers to offer returns. I am based in the US and do the vast majority of my sales to customers in the US, and I want to put the disclaimer out there that I’m not an expert on these regulations. But my understanding is that if you are a seller based in an EU country, you are required to accept returns up to 14 days after delivery. Customers located in an EU country can also assert this right to return even if the seller is not based in the EU – meaning if you’re located in the US like me and you sell to a customer who lives in an EU country, they can assert their right to return for up to 14 days even though my business as a whole is not subject to the regulation. However, there’s more to the story.
First, I’m not entirely sure that this regulation applies to print on demand products. Printful has actually taken the position that print on demand products fall under one of the exceptions to the regulation. Specifically, on their site they say this:
the right of withdrawal may not be provided for:
1. the supply of goods that are made to the consumer’s specifications or are clearly personalized;
2. sealed goods which were unsealed after delivery and thus aren’t suitable for return due to health protection or hygiene reasons,therefore Printful reserves rights to refuse returns at its sole discretion.
https://www.printful.com/policies/returns
So they’re saying that number one, “the supply of goods that are made to the consumer’s specifications”, applies to all print on demand products. It clearly applies to anything personalized, but they are more broadly applying that exception to all print on demand products. Printful may not be the world’s largest corporation, but they are a company that had $289 million in revenue in 2021, so I think we can assume they had some lawyers review this regulation before they made this decision.
I could not find a returns policy specific to the EU on Printify’s website, but they do have a general returns policy and that is that they do not accept returns. In the case of Printify, “they” means their print providers since they don’t own the fulfillment companies on the platform, so it’s possible that they defer to the returns policy of each provider with something like this.
So regardless of what my totally non-legal and non-expert opinion is on this matter, it seems that both Printful and Printify have taken the position that print on demand is not subject to the EU return policy regulation for online sales. However, that doesn’t mean you should totally ignore it, especially if you’re a seller located in an EU country. Even if your formal Etsy shop policy is to not accept returns, I would suggest adding some context into your listings, such as in the description and listing images. You can make it extra-clear to customers that your items are made to order and that’s why you don’t accept returns, and you can also choose to be somewhat lenient on that policy and provide refunds if a customers is not happy with their purchase in order to avoid potential claims citing the regulation – this is getting into strategy so I’ll go more into detail on that in a minute.
Lastly, if you’re a seller who does not live in an EU country, you can simply choose to not sell to customers who live in EU countries. You do this by editing your shipping profiles to remove all EU countries as well as the “everywhere else” option if it’s there. My personal Etsy shop gets about 95% of sales from the US, and about 5% from Canada, Australia, and the UK. Don’t forget, the UK is no longer a part of the EU. Because of this, I adjusted my shipping profiles earlier this year to only ship to those countries. I wasn’t making enough sales to EU countries for it to be worth worrying about, but you’ll have to make that decision for yourself.
POD and Returns
Now let’s talk about returns in the context of the print on demand business model and then we’ll talk about my strategy for returns and exchanges. Specifically, I want to point out I’m talking about returns and print on demand drop shipping with platforms like Printify and Printful. Normally when I simply say print on demand I’m referring to the print on demand drop shipping business model where one of those platforms handles the order fulfillment process for you by routing orders to a production partner. However, sellers who do their own printing or make products using heat transfer graphics and keep a supply of blank products stocked are also using the print on demand business model because they are making each item to order. This is just print on demand without the drop shipping part of the equation. I’m making this distinction because the implications when it comes to returns are different. If you are handling the order fulfillment and inventory and shipping is already part of your business model, then you already use a specific physical business address for your shipping labels, and you in theory can handle physical inventory if you received some finished products back as returns. It may not be a perfect fit for your business model and there are certainly expenses and logistics to consider, but in general accepting returns feasible. The problem for print on demand drop shipping sellers like me is that none of that is true.
Accepting returns if print on demand drop shipping is your business model goes against the very foundation of the model itself. The print on demand part of the equation eliminates the need for an inventory of finished products, but drop shipping adds the benefit of removing the business owner from the entire order fulfillment process, eliminating significant barriers to starting the business. Using a platform like Printify allows you to start a business on a marketplace like Etsy or your own website without investing in printing equipment, inventory, overhead expenses, or shipping supplies. By accepting returns, you’re re-introducing something that was intentionally removed – the inventory. It’s like hiring someone to do work for you but still doing the work yourself. Returns brings back in the requirement to manage inventory of finished products and the logistics of return shipping. If this sounds too conceptual or philosophical, let’s talk about the realities here.
Right out of the gate, let’s talk about the main reason why returns are terrible. Most of us sell print on demand apparel of some type. You may sell mugs, stickers, or other items as well, but most of us sell t-shirts, sweatshirts, hoodies, or other apparel. Apparel returns are a losing proposition because it’s rare that you can actually resell the item that you get back. You don’t have a clearance rack that you can put returned items on at a marked-down price, you sell brand-new, unworn products. Once someone has tried something on, it’s not a brand-new, unworn item anymore. Sometimes all it takes is a try-on. Admittedly, a couple times in the past I caved an accepted a return rather than just giving a refund just because I wanted to see if it would work out. One of those was a sweatshirt and when it arrived, it had the person’s hair on it and an overwhelming smell of their perfume. It was simply not something anyone would want to receive, and you also cannot wash the item and call it new. Accepting a return for apparel items is usually going to result in you getting back an item that you can’t do anything with. So you have to ask yourself…if you can’t resell it, why do you want it back at all? That one reason alone is enough to convince me not to accept returns. However, that does not mean that I never give refunds. There’s a big difference between not accepting returns and being a strict, unaccommodating seller. Let’s play out three different scenarios and see what the outcome is for the customer, and for the seller.
Let’s say that you have a customer who bought a t-shirt. They message you and say that they’re unhappy with it. They complain about the quality and the fit and say that it’s not what they expected, but there are no apparent defects that would warrant a reprint or refund from your print on demand provider. So whatever you do, you’re on your own.
Scenario #1: Your shop policy is that you accept returns, and you pay for the return shipping. So you message the customer back and tell them that you’re happy to accept the return and they can use the attached shipping label that you’ve paid for. You can get the return shipping label from Etsy directly or from an outside shipping provider. You also let them know that you’ll provide the refund when the tracking information update or when you receive the item, whichever you decide you want to do. In this scenario you’ve made it easy for the customer and they are not paying for return shipping, so although they will have to wait a little while to receive their refund, they’ll likely be happy with the outcome. You, on the other hand, are not so happy. Not only are you losing money on the original order since you’re giving a refund and not getting a refund from your print provider, but now you’ve also paid for the return shipping label. Not to mention, you likely won’t be able to resell the item that you get back unless they never tried it on and it’s in perfect condition, which is not dependable.
Scenario #2: Again, your policy is that you accept returns, however you require the customer to pay for return shipping. This adds a possible point of contention because the customer is not likely to be thrilled at having to pay for return shipping, but ultimately they’ll probably do it if they want their money back. You still don’t provide the refund until you can confirm the item was sent back or you’ve received it. In this scenario the customer is less happy since they’ve had to pay the return shipping, however you’re slightly less unhappy since that wasn’t an added expense for you. You did still lose the revenue from the original sale though. So basically, nobody’s super happy in this scenario but nobody is totally unhappy either.
Scenario #3: In our last scenario, your shop policy is that you do not accept returns. However, in the case of this customer, you’ve identified through their message that they are quite unhappy and perhaps likely to leave you a one-star review or open a case against your shop. So you’ve decided that you will offer them a refund without having to return the item. You message them back and explain that you don’t accept returns because each item is made to order and there is no inventory of finished products, however you will agree to give them a refund since they’re not happy with it. You explain that they won’t be required to return the item and that they can donate it if it’s still in good condition. In this scenario you can process the refund right away since you’re not waiting for a return, so ultimately the customer is getting their refund faster. The customer is likely to be very happy with the outcome since they don’t have to mess around with shipping or pay for it, and they are getting their refund quickly. You are going to lose the revenue from the original sale, but that’s no different than our first two scenarios, and you’re not paying for return shipping just to get an item back that you probably can’t resell.
So let’s recap – in scenario #1 where you accept returns and pay for return shipping, the customer is happy and you’re really unhappy. In scenario #2 where you accept returns but the customer pays for return shipping, neither you or the customer is super happy, and in scenario #3 the customer is happy and you’re about the same as scenario #2, meaning not happy but also not really unhappy. This is why my strategy is to not accept returns but accommodate the customer with a refund in cases where they are upset and seem likely to leave a negative review or contact Etsy support – because I think it’s the best outcome for both of us – I’m minimizing my losses and not giving out my home address, and the customer is getting a refund quickly without having to pay for return shipping.
My Strategy
There’s a little bit more to my personal strategy so I’ll explain that before we wrap things up. You can always offer something to the customer before going straight to a full refund, depending on the situation. The key is just to pay attention to what they’re telling you. If they don’t seem that upset, you can try just explaining why you don’t accept returns before offering a refund and see what they say back. You could also try offering a partial refund if nothing is wrong with the item and they’re just not happy with it. I’ve done that a few times and the customer has accepted a 50% refund, which reduced how much I lost on the order. Lots of customers will be reasonable if your policy is not to accept returns but then you try to do something to help.
I also want to mention exchanges because I handle those requests differently. When someone asks me if they can exchange for a different size, which is the most common reason I get asked for an exchange, I again start by explaining that I don’t do exchange because everything is made to order and there’s no inventory of finished products. However, in these cases the first thing I offer is not a partial or full refund. I offer them a coupon code which will reduce the price of the item down to my cost so that I will not make any additional profit if they want to get a different size. So I just do a little quick math to figure out what percentage coupon will reduce the price so I’m making less than a dollar profit, and of course you want to use an Etsy fee calculator to do that because you still need to cover the fees. You also could choose to lose a little money if you really want to let them get a different size for a super low price – let’s say you want them to get another size for $10. Depending on what your cost is, you’re definitely going to lose at least a few dollars but it’s still better than losing all the revenue and profit from the original order. A little side-benefit to this is that you get another sale in your Etsy shop on that item, so now you have two sales instead of zero. If they accept the offer I create a coupon code for that amount and only include this one item so they can’t use it for other products. I’ve had customers take me up on this offer on several occasions and most importantly, nobody has ever gotten more angry after I offer this. I love this solution because it means I won’t lose money at all, and the customer still gets the size they want. They may not be super thrilled that they had to spend more money, but again most customers will be happy that you are trying to help vs. just saying “I don’t do exchanges”.
Ultimately, this is yet another topic that you can lump together under the umbrella of the “good customer service” principle. Regardless of why a customer or potential customer is contacting you, if you genuinely try to offer your assistance rather than turn them away with a one or two sentence answer, you’ll usually end up with a satisfied, if not super happy, customer. It may not always get you a 5-star review, but it should definitely help you avoid 1-star reviews.
Conclusion
I hope this episode helped you think about your Etsy shop return policies as you review everything before the October 31st updates. Don’t forget to head over to the POD Insights channel on YouTube and subscribe to be notified when new videos come out, and check out podinsights.net for a full article from this episode including links to any resources I mentioned.
Thank you to all listeners and viewers, I appreciate your support and engagement. The next episode might be the October print on demand update unless another topic comes up before then, otherwise it’ll be the October update so keep an eye out for that on your favorite podcast platform in a couple weeks.
Thanks for reading.