5 Ways to Incentivize Exchanges and Lower Shopify Refund Rates

Incentivizing Exchanges
Ecommerce retailers can’t reach their business goals without a proper return policy and return management system.
As an integral part of online shopping, nurturing the post-purchase experience builds customer loyalty, even if the customer wasn’t satisfied with their original purchase.
Many retailers prefer leveraging product exchanges over refunds because it allows them to keep all or part of the revenue from the original purchase while still keeping a product in the hands of the customer.
However, most customers just like getting their money back. So, having a high exchange rate often requires some encouragement from the retailer.
Here are four creative ways to incentivize exchanges over refunds:

1) List Exchanges First for Return Type

In ecommerce, website design significantly impacts how customers interact with the brand.
In fact, 40% of consumers leave an aesthetically unappealing site before even shopping.
So, it’s important to take that design into consideration when trying to promote certain consumer behavior.
When it comes to incentivizing exchanges, you can do this by simply listing exchanges as the first return type on your returns portal.
Exchanges First Returns Portal
Through the psychological effect of primacy bias, people have the tendency to pick one of the first options presented to them. When exchanges are listed first, customers are more prone to select this option.
When refunds are listed as the first option for returning an item, more customers are inclined to request their money back.

2) Have an Extended Returns Window for Exchanges

You can also incentivize exchanges by making them the more convenient and comfortable return option.
When retailers provide a longer return window for product exchanges over refunds, customers are comforted knowing they have more flexibility and time to decide on whether their purchased product is the right fit.
In turn, this boosts customer loyalty because it shows that your brand makes decisions with your customers’ needs in mind.
Plus, according to the Endowment Effect the longer a person keeps a product, the more attached they feel to it, making it less likely they’ll ever even return the product.
And if they do, the options they’re left with are to either exchange the product for a different variation or to just keep their original purchase.
Either way, your products stay in your customer’s home.

3) Offer Free Shipping on Product Exchanges

Shipping is on the top of the list of things that people don’t like paying for.
So, the words “free shipping” feel Heaven-sent to online shoppers.
Offering free shipping on only exchanges encourages customers to take advantage of that return type over the others.
It makes it seem like exchanges are the better deal because
1) You don’t have to pay for shipping and
2) You still get to keep an exchanged product
Whereas if the same customer were to request a refund, they would lose money on shipping the product back and have nothing to show for that lost income.
Free Exchanges Return Policy Example
Here's an example from Charix Shoes of a return policy that incentivizes exchanges by charging a restocking fee only on refunded products. While they offer free shipping on all returns, the restocking fee acts the same as charging for shipping on all returns other than exchanges.

4) Make Product Exchanges Easier

60% of returns on Shopify occur because of the wrong size or style. This means that most of your customers would probably want to exchange their product anyway for the right fit. They just want to avoid the hassle of doing it online.
Many ecommerce retailers still process their returns through manual emails and phone calls back and forth to the customer and product handlers.
This takes a lot of time — time that many retailers and customers do not have. Customers may choose to request a refund over an exchange because the process sounds or appears less cumbersome.
Automating your returns management and exchange process takes away that inconvenience.
By automating returns, your customers can request an exchange, pick the new product they’d like to exchange their original purchase with, ship the first product back, and get the new one ALL without ever having to talk directly to a customer service rep.
Plus, every single action is documented so that there’s no confusion about what happened with each return. This also creates a bank of returns data that can be used to make insightful business decisions as you grow.
Once your returns process is automated, more customers will choose exchanges as a no-brainer!


Exchanges give ecommerce retailers the opportunity to retain earned revenue while keeping their products in the hands of shoppers.
More than that, they reaffirm that your customers actually like your products. There’s just something else about the shopping experience that’s causing them to purchase the wrong one at first.
Incentivizing exchanges and automating the returns process enables you to understand where the discrepancies lie so that you can make the necessary changes to get the right products in the hands of your customers the first time around.
This will help you retain more revenue, increase your customer lifetime value, and build brand loyalty in the long run.