eCommerce Blog on Running an Online Marketplace

How to Handle Order Returns on an eCommerce Marketplace

Product returns are a pain point for sellers on marketplaces. Returns can cut the seller’s profit, badly influence conversions, and increase spendings on logistics. No one likes product returns—neither the seller, nor the buyer. But the fact is that product returns are a normal part of selling online, especially on large eCommerce marketplaces.

According to the National Retail Federation, in 2020 customers returned products worth $428 billion—more than 10% of total retail sales. NRF estimates the cost of returns to be $101 billion.

An interesting fact about eCommerce product returns is that a lot of customers order multiple items just to return all of them or a part of them right after they receive the order.

This especially applies to online marketplaces selling apparel and shoes, where customers order multiple sizes, try them on, and return those that didn’t fit. Imagine: a customer orders the same T-shirt in three sizes, keeps one size and returns others, which results in a 66% return rate for this order! 70% of returns in fashion eCommerce stores and marketplaces are fit-related.

The biggest rate is in the women’s clothing industry—23%, then goes footwear with 20%, men’s clothing is in third place with 14%.

Actually, product returns happen across all industries. 25% of buyers return between 5% and 15% of the products they buy online.

In this article, we’re figuring out the reasons for product returns, the best practices to develop a return policy and handle returns on a marketplace, and how to reduce order returns on an eCommerce marketplace.

Why do customers return orders?

Online marketplaces and stores receive significantly more returns compared to brick and mortar shops.

20% returns in eCommerce
9% returns in offline

The most popular reason for return on fashion marketplaces is of course wrong size or style. Size too small—30%, size too large—22%. But there is a number of reasons that apply for all the industries:

The customer changes her mind

This is the reason for 12% of all returns. A customer can change his mind because of many factors: the product description was not precise enough, the product didn’t meet the customer’s expectations, and other factors.

What you can do here is convince you marketplace sellers to make product descriptions and images as precise and possible. Or you can create product listings for your sellers.

How to mitigate: Some marketplace platforms offer tools to keep the marketplace catalog nice, clean, and uniform. For example, our marketplace platform CS-Cart Multi-Vendor has the “Common products for vendors” feature. It allows the marketplace admin to create a product base with uniform product pages so that the sellers could only sell these products and use these listings.

A seller shipped the wrong product

This happens all the time on marketplaces, especially on large ones like Amazon. That’s why big players usually have a very thought-out return policy.

When you have large sales volumes, hundreds and even thousands of orders per day, you can’t eliminate all the mistakes in the order collection process. A small mistake in the CRM, order management system, or in the sorting and packaging routine can lead to shipping a wrong item.

How to mitigate: To avoid this, the marketplace seller needs to ensure that their staff is properly trained and don’t lose focus during the collecting, sorting, packaging and order shipment processes.

A customer doesn’t need the product anymore

This usually happens when the order takes too much time to arrive. The product might arrive too late and the customer just doesn’t need it anymore. The customer could get impatient and buy the same item from a local shop. Or maybe the customer needed the product asap for some event or trip—and when the product arrived, the event already ended.

Exactly the same thing has happened to me recently. I was going on a mountain bike trip and needed new brakes for my bike before I left for the mountains. The item didn’t arrive on time and I just bought the brakes from my local bike shop a day before my trip.

How to mitigate: To mitigate this type of return, the marketplace must provide buyers with clear shipping information, exact delivery date, tracking information, and real-time shipping estimation.

A product arrived non-functional

A product can become non-functional either when it’s damaged during the shipping process or it’s defective initially. Actually, the worst thing that can happen is a broken item during shipping—in this case, customer satisfaction and loyalty immediately goes down to zero.

A marketplace must have the RMA functionality that allows customers to initiate a return by picking the reason for return. If you’re getting too many returns because of the damaged products, keep an eye on your seller’s packaging and order handling procedures. Also, make sure the sellers use only trusted carriers for shipping orders.

If you’re getting returns because the items are defective, advise your sellers to check suppliers and warehouse conditions like moisture, temperature, and other storing conditions.

How to mitigate: A seller should reevaluate their packaging and order handling procedures, the warehouse conditions, and the quality of suppliers.

Gift returns

This type of returns often happens during or right after the Holiday season. People give gifts to each other and sometimes they are just off the mark. It’s really hard to give a perfect gift, especially if you don’t know a person well enough.

How to mitigate: Customers often don’t know what gift to choose for their close ones. They struggle to decide between several items. The best strategy to help customers pick the right gift is to make customer research and give them recommendations based on the research results.


Not a very popular reason for product returns but still, it happens from time to time. Sometimes people buy a product just to use it once and return for a full refund. Like buying a gaming console to play an anticipated game and returning the device. Or buying a dress to participate in an event and once the event is over—return the dress back to the retailer.

How to mitigate: Mention in your return policy that the returned item must not have signs of wear. This can help you recognize “wardrobers” and refuse to accept a return from them without severe consequences.

Return fraud

It’s often criminal fraud that involves purchasing products with stolen credit cards or counterfeit money. For example, a fraudster pays for the order online with a stolen credit card he or she can’t get cash from and then returns the item and gets a refund.

How to mitigate: A seller can charge a restocking fee for their most expensive products. Also, it’s a good practice to use reliable payment services that protect marketplace transactions.

How to develop a clear return policy and why it’s important?

Clear return policy is the key to efficient return management on your marketplace. An easy-to-understand return policy not only reduces the number of returns but also helps to deliver a great customer experience.

A good return policy must be simply written and clear for customers. The purpose of your return policy is not just to protect you from excessive returns but also for making the return process easy and convenient for your customers.

There is a number of must-have things a return policy must include:

On Amazon, sellers have their own return policies along with the Amazon marketplace policy. A seller’s policy takes precedence over the marketplace policy. But Amazon states that to be eligible, the seller’s policy must offer equal or better return conditions than offers the marketplace policy.

A marketplace return policy should be easily accessible. Place it on the website in multiple places such as product pages, the company page, footer and wherever it fits. Print a copy and put it in every order you send out. A great practice is to complement the online return policy with a video that shows how to initiate a return.

An awesome example of a clear return policy is the Walmart marketplace’s policy. It’s available in PDF—a customer can read it on any device, save it to the hard drive or print.

What experts say

Alex Williams, an eCommerce business owner. A Certified Financial Planner, and the CFO of FindThisBest—a comprehensive guide for shopping retail products.

A return policy needs to convey to the customers what limitations and criteria a business needs to place on returns. 

Scenarios to handle returns on a marketplace

A marketplace is an eCommerce website with multiple independent sellers. The sellers are basically online shops gathered in one place, on one platform. Sellers store products in their warehouses, dispatch orders to customers, and as a rule they process returns themselves.

Pro tip: To ease the return process for customers, recommend your sellers to stick a pre-printed return label to every package they send out. In this case, the customer will only need to bring the item in the original box to the post office. No extra paperwork. The package will go back to the seller.

There are three major scenarios a seller can accept and process a return:

According to invesp research, 62% of shoppers will prefer to shop online if they have an opportunity to return the item to an offline store.

How to reduce the number of returns on your marketplace?

The two main reasons for return that can turn your customers away are the lack of product information and delivery of damaged items.

Not enough information about a productDamaged items
Bad descriptions, low quality pictures or no pictures at all—these can cause the wrong customer expectations. A customer orders the product → receives it → the product doesn’t meet the customer’s expectations → returns the item.This is the most frustrating thing for a customer. An item can be damaged during the delivery process, or even at the collecting and packing stage. Customer orders a product → anticipates it → receives a broken item → returnsnever comes back.

What you can do to make a product listing as informative as possible

When buying a product on a marketplace, a customer can’t see the item in real life before placing the order. From the beginning of eCommerce, this factor has been playing an important role in making a buying decision.

Product page in Yumbles, the UK marketplace of handcrafted food: detailed description, high-quality photos, product reviews, and values.

To convince a customer to buy a product, the product listing has to have a detailed description and visual representation. Here what you can do to make a product presentation better:

IKEA augmented reality demonstration

What experts say

Mellanie Ulrich, co-founder of

​​In my business, our first measure towards decreasing returns is making sure we upload high-quality images as well as a few videos on our Instagram page. It may seem self-evident, but the number of online listings that offer a single, fuzzy photograph of an item is far greater than it would otherwise be.

​​Setting aside some time to look over your current eCommerce products and double-check that each item has high-quality photographs, a thorough description, and, if required, videos is one strategy to decrease returns. At least four images of each product should be taken, one from each viewpoint.

What you can do to prevent a product from damage during delivery

A damaged item not only results in return but can also turn the customer away from your marketplace.

30% of items are sent back to a seller because they arrive damaged or defective.

Most often, marketplace sellers pack and ship orders to customers by themselves. So, you need to make sure they handle shipping the right way. You can take all the shipping into your hands as well. See best practices for shipping on marketplaces.


Product returns are a pain point of marketplaces. They can cut margins and decrease conversion. But an eCommerce marketplace just can’t go without returns. And it’s important to make product returns for customers as convenient as possible.

A customer usually returns products because changes his or her mind, doesn’t need a product anymore or just because the item arrives defective or damaged (this is the most frustrating one.)

To make product returns as transparent as possible, it’s important to develop a clear return policy. Three essential components of a return policy are: time frame for a return, return criteria, refund methodology.

A seller can accept returns in their warehouse or in a brick and mortar store if they have one. There’s also an option to delegate the return management to a third party logistics provider with their own warehouses.

To reduce the number of product returns, you need two things: the first is to provide the customer with maximum details about the product—descriptions, pictures, videos, reviews, and the second is to make sure the item arrives in one piece.

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