Having a return policy is a good way to retain customers and attract new consumers. If the company has confidence in distributing their products with a return policy, consumers will have faith in your products and buy from you. Return policy is very important in order to attract new consumers because the company shows confidence in the products they sell. Also, if the products are defective, customers will be grateful that they can return them back.
Downs of Return Policy
A lot of companies are reluctant to enforce a return policy because it might destroy sales if a lot of customers return their products (either defective or inferior). Also companies might be afraid of being sabotaged if the competitor is thoughtful enough to buy out their entire inventory and then return them back just to screw them up before the return policy expires.
Worst Case Scenario of Business Sabotage
Phase 1. Competitor buys a lot of your expensive products
Phase 2. You use the money to purchase more inventories or use it for R&D
Phase 3. Competitor returns all the products and demands a refund before the return policy expires
Phase 4. Shortage of cash makes it hard to refund which in turn creates bad publicity on not enforcing return policy
Ups of Return Policy
Everyone loves return policy because they can return the product if it wasn’t what they expected or because it was defective to begin with. Some consumers are cautious on companies with no return policy because they might think it is a scam or can’t trade it back if something is wrong. Return policy has the power to attract a lot of new consumers because they are getting a safe deal. Small companies make return policy hard to enforce (because of limited resources), but middle to large size companies should definitely enforce return policy to retain and attract new customers.
Return policy has it ups and downs. You might lose on sales because some customers might return your products if they no longer want it before the policy expire. You might also be sabotaged by competitors. However, return policy is the norm these days so not enforcing it will be a major disadvantage to your business. Return policy shows that you are sacrificing some profits for integrity, trust and good faith.
