How Should Returns be Handled for Drop-Shipped Products?

Online sellers, be they individuals or larger companies, sometimes reject drop-shipped order fulfillment because they’re concerned about the management of returns. It’s becoming easier to process returned merchandise, as both the suppliers and sellers work towards simplifying the process. At this point, it’s not much more convoluted than handling returns from direct-to-consumer sales.

Handling Returns for Drop-Shipped Products

Returns can be situational and you’ll have to provide the best solution for both you and your customer.

You may want to:

  • Have the product shipped back to you.
  • Have the customer ship the product back to the drop shipper.
  • Replace the product without the having the customer return the item.
  • Refund the purchase price without the customer returning the product.

It depends on the situation and the product price.

If you use an ecommerce platform, processing refunds is as simple as a click or two.

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Creating Your Return Policy

Make sure you have a detailed return policy that includes the conditions for accepting returned merchandise. For example, you may only accept unopened/unused items. These policies must reflect those of your supplier(s) if you don’t want to be stuck with the item and its cost.

Publish your return policies on your website and make the critical points clear in product descriptions. Include details like your return window, exemptions and geographic restrictions. Have a look at successful retail websites for examples. Put yourself in your customers’ shoes and recall times when you’ve had to return a product. Use a policy generator tool to cut your work in half, such as Shopify Canada’s free Return Policy Generator.

“Avoid the scary stuff,” BigCommerce recommends. “Try not to use phrases like “you must” and “you are required” or, one of the worst, “we are not responsible for.”

Your return policy can have a direct impact on conversions, be it positive or negative.

Your Return Policies Should Reflect Those of the Dropshipping Supplier

The first step is learning about the individual drop shipper’s return policy (they can vary widely). Some wholesale suppliers allow products to be returned directly to them by the customer. They may restrict returns to damaged products or their own errors (such as shipping the wrong item). Otherwise, you’ll have to accept and process the return like any other merchant.

Verify that the supplier will accept the return before asking the customer to ship it back to them. Follow their specific procedures to the letter, including any return authorization codes they issue after approval. Put a return process in place that’s initiated by the customer contacting you for approval before they send the product back.

Instruct customers to use tracked shipping for the product they are shipping back. This will protect you both in the event that the shipment doesn’t arrive. Let them know if they don’t use tracking and the item doesn’t show up, they will no longer be eligible for a refund.

Note any time limit for returning products to the wholesaler. Let the customer know about this policy if they’re returning directly to your supplier. If they’re returning the product to you and you’ll be shipping it back to the supplier, make your return window smaller for the customer so you have time to get it back to the supplier before their return window is closed.

Canadian Consumer Laws Regarding Returns

Check into the laws surrounding returns at the provincial and federal level. For example, Consumer Protection BC covers what consumers can do if they’re not happy with an online purchase. You can flip the perspective to ensure you don’t violate consumer rights.

Other than laws applying to consumer rights, businesses are allowed to set their own refund, return and exchange policies. You are obligated to make those policies accessible, which is most easily done by adding a page to your website and providing a link to that page under your customer information menu, preferably on every page.

Typically, Canadian merchants aren’t legally required to provide refunds or exchanges, but there are exceptions.

“Does a business have to accept the return of a product? Can I get my money back? The answer to this question depends on what is wrong with the product,” says LegalLine. “If the goods you purchased do not work as advertised, are defective in a way that you did not know about at the time of purchase or what was delivered was not what you ordered, you likely do have a right to a refund or, at least, a replacement.”

The Cost of Accepting Returns

Return shipping can make it impractical to accept low-cost items. The high shipping rates in Canada makes it that much worse. Be clear in your return policy that you don’t refund the shipping costs paid by the buyer when they purchased the item. Weigh the benefits of free returns against the cost of the item. If it’s less expensive to offer a full or partial refund, go that route.

What you do with the product once it has been returned is up to you. You can send it back to the wholesaler or, if there’s nothing wrong with it, resell it offline or online.

Consider a restocking fee to help offset the cost of returns, especially if you’re processing them yourself and must ship the item back to the wholesaler. Otherwise, you’ll have to absorb the cost of shipping from the customer to you, and then from you back to the wholesaler, as well as any restocking fee charged by your supplier.

Make it VERY clear in your return policy and in your product description that there will be a restocking fee, not only for transparency but also to avoid violating consumer rights. It might even reduce your return rate as buyers want to avoid the fee. It can be tricky, however, since it can trigger a negative review. That said, if they’re returning the product you probably won’t get a positive review anyway unless you’re able to appease them in some way.

You can go with an “all sales final,” no-returns approach, but it can have a serious impact on your sales. Guarantees are one way to establish the trust level you need to make sales online, especially when selling to new customers. Even a limited refund guarantee is better than none at all. If you do have a final sale policy, be prepared for more chargebacks.

Salvaging the Customer Experience

No seller likes to have returns or issue refunds, but it’s going to happen. You can salvage the situation by being prepared, transparent, and focused on the customer.

According to a recent Canada Post survey, 50% of Canadian online shoppers say the return policy of merchants impacts their decision to buy from them.

  • 63% of online shoppers will abandon their cart if they’re concerned about return policies.
  • 79% will stop shopping from a retailer if they have a negative return experience.

“Solid and easily accessible store policies create a sense of security for customers when they’re buying something from you, especially since they can’t try the product beforehand,” says print-on-demand drop shipper, Printful. “They’ll know what to expect if something goes wrong with their order.”

If at all possible, offer more than one way to return the product. You might be able to arrange for an offline store to accept your returns for you, for example. The pickup point could benefit from additional foot traffic.

Accommodate as many return scenarios as you can afford, utilizing policies that will pay for themselves in one way or another. Sometimes, all that means is doing whatever it takes to make your customer forgive the issue and shop with you again in the future. A happy customer is worth their weight in gold.

Once the return has been dealt with, take a good, hard look at the product to decide if you’re willing to continue to put your brand behind it. One of the benefits of drop shipping is you don’t have to carry inventory. If a product has a high return rate, remove it from your product line. Too many returns can result in your business losing its customers, payment processor or marketplace account.

Return Fraud

Return fraud is a serious threat and the parasitic activity is prevalent online. Perpetrators can range from one person trying to get a free product to large criminal organizations. Stay on top of the latest threats and do everything you can to protect yourself against them. We have some tips for you in eCommerce and Online Sales Fraud Prevention in Canada.

Should You Refund?

The following infographic has a handy flow chart to help you determine if you should refund or not.

Should You Refund Infographic

Courtesy of

Are drop-shipped returns causing you grief? Please ask any questions you may have in the comments below.


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Digital Business & Marketing Manager at Online Business Canada | Website | + posts

Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In 25 years of working online, she has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available on Amazon.

Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on, and, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.

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I have to say this worries me more than anything. It’s my last nagging doubt. You answered all of my questions and I guess I’ll just have to try and figure it out as I go along.