13 Nov 2020
There’s no point in denying that most crafts businesses, particularly smaller ones, regard returns as, at best, a necessary evil, and, at worst, something that may eventually force them into liquidation.
ParcelHero ran a survey last year which revealed at least 200 smaller e-commerce businesses didn’t expect to survive beyond January 2020 if Christmas returns grew higher than they had reached the previous year. That tallies with ParcelHero’s own numbers: 47% of all ParcelHero shipments in the first days of the New Year were items being returned.
There’s no doubt shoppers are now keenly aware of their right to return any unwanted items bought online. The big problem for smaller businesses is that consumers now expect the same free returns that apply to damaged items to be given on unwanted goods as well – or they will shop elsewhere. Online marketplace craft sellers, in particular, are being pressured into paying the cost of returns even for unwanted items – or risk losing their all-important 5-star ratings.
Many small craft retailers say they are losing money on all returned items because of their very tight profit margins. This is an increasing problem for craft sellers as 8% of shoppers admit to returning three or more items a week. Consumers, used to the flexible return policies of e-commerce giants such as Amazon and ASOS, are 80% more likely to shop at a store with a free returns policy, with more than half of them saying it would ‘make or break the purchase.’
YOUR RIGHTS AS A BUSINESS
Let’s quickly look at the two major regulations. The first refers specifically to what used to be known as ‘distance selling’: The Consumer Contracts Regulation’s 14 day ‘cooling off period’ – which only applies to online, phone and mail order purchases. Online retailers must accept returns within 14 days of delivery – regardless of the reason.
• However, e-commerce sites are not required by law to stump up for the cost of return postage on items returned because the buyer has simply changed their mind and no longer wants the goods; though sellers do still have to cover the basic cost of the initial mailing to the customer. The second applies to both physical and online stores: The 30-Day Faulty Goods
Consumer Rights Act
• All retailers must foot the bill for damaged or faulty items returned within 30 days of purchase. That includes the postage for online returns.
• However, note that physical shops do not have to accept a return simply because the buyer no longer wants the goods.
Because of the special nature of the craft market there are a number of caveats to the above rules that won’t apply to large stores or to retailers selling only mass-produced items, but which can be a real help for small craft businesses.
Crafts retailers often sell items that are custom- made to order, or at least personalised with someone’s name or a specific message. Whether you are making a specific ceramic, a one-off t-shirt, or creating personalised greetings cards, these items are often unique.
If you have sold a bespoke item that is personalised or custom-made then the 14-day online purchase ‘cooling off’ period does not apply. The act specifically excludes ‘the supply of goods that are made to the consumer’s specification or are clearly personalised’ from the right to cancel.
That’s because personalised and bespoke items, such as a shirt with someone’s name on, would be very difficult for the retailer to sell again.
There are other instances when certain goods are not covered by the return rules. The most obvious one for jewellery makers is that pierced earrings are unhygienic to resell and therefore not returnable. The same goes for all jewellery made for any other piercings.
These hygiene rules apply to several other products as well, including cosmetics, swimwear and underwear. With the pandemic still raging, it’s important sellers don’t ignore these regulations. If these items are not in their original sealed packaging, are without their hygiene seals or tags, or look like they have been used or worn they cannot be returned because someone has changed their minds.
Similarly, if you are producing items such as facemasks, many stores are also refusing to accept returns on these, unless damaged or faulty.
You also don’t have to accept the return of products that deteriorate quickly or are perishable, even if bought online. Which means if you have created a flower arrangement or baked a special cake, these items are also exempt from the right to cancel.
If you have yet to launch your company and are just selling the occasional article as a private individual, it’s worth noting that the 14-day online returns requirement also does not apply to sales made by private individuals. To end this section, it’s worth repeating you do not have to refund a customer if they purchased an item at your shop or stall and:
• knew the item was faulty when they bought it
• damaged the item by trying to repair it themselves or getting someone else to do it (though they may still have the right to a repair, replacement or partial refund)
• no longer want the item (for example because it’s the wrong size or colour) unless they bought it without seeing it
In recent years we’ve been living in something of a Golden Age for niche crafts stores, thanks to the amazing variety of online businesses covering all our interests and hobbies. But this could be threatened by the increasing costs incurred to them by returns. Many small businesses believe the 14-day ‘cooling off’ period for online purchases under the Consumer Contracts Regulations is being exploited, One craft seller told me last year they had Christmas candle holders returned as unwanted, with wax still on them…
ParcelHero recently spoke to several craft and hobby retailers about the impact of returns on them. Imogen Shurey, founder of the online vintage clothing and handmade stores Velvet Cave and IncenseForTheDamned told us, “As a small business it can be quite frustrating having to accept returns as the money may already be spent. People are so used to being able to return things to big stores easily and often free of charge so it’s difficult to compete. For a company with a huge turnover the money lost doesn’t make an impact but too many returns could spell the end for a small business.”
Gavin Crayton, who runs Customer Services at multichannel scale model specialists eModels, and Eoghan Logue, of Anderton’s Music Mail Order Department, say their businesses simply can’t cover the costs for a customer wanting to return an item that is not faulty. And Atom Retro’s Sarah Fenwick fears that even with a returns policy so generous they advertise its terms, returns still cost the business in many ways: “We have to invest in staff resources to process returns. We also get a number of returns that are not resaleable and have to be written off at cost to the company.”
Adam Brewer, founder of the online video game memorabilia site Gamerbilia.co.uk, agrees returns “have the potential to be financially damaging because in some cases you can lose ALL your net profit on an order if the customer returns it.”
MANY HAPPY RETURNS
Before you decide to shut up shop entirely because of the returns problems, however, it’s worth bearing in mind returns can also give you an advantage. If your business can afford to cover the cost of people’s returned items, even for those who have changed their minds, that will give you a sales advantage over competitors who don’t offer this.
Many crafts businesses are based around smaller items such as jewellery that don’t cost a bomb to courier. Offering a pick-up returns service can be hugely attractive for shoppers.
Another advantage for UK-based sellers is that the cost of returning unwanted items for your customers is considerably cheaper than if they have purchased an item from overseas, such as the USA or, in particular, China.
Chinese sellers may be offering personalised pet collars, craft supplies or natural bath products similar to the ones you sell, and quite possibly at a cheaper price, but when things go wrong, returning items there becomes an expensive problem for consumers.
China, for example, offers far fewer consumer rights than when purchasing from a seller in the UK. While many of the sites, such as AliExpress, offer their own protection policies, these may only include a partial refund for some issues, such as items not being as described, ‘Which?’ says that buying goods which turn out to be fake from a website outside the UK can result in difficulties in getting a refund as that country may have different rules. Shoppers may also face a significant returns bill for goods that are faulty. Its advice is people should only spend money they are prepared to lose when buying from non-EU sites.
All of which suddenly makes your locally sold products seem a lot more of a bargain.
In the same way, if you own a physical shop, even though the law doesn’t require you to accept returns of goods because they were the wrong colour or size, or simply unwanted gifts, that doesn’t mean to say you can’t. You can display a notice setting out your returns policies listing terms which go over and above the basic law – for example a no quibble 7-day return policy. Remember, however, that whatever you decide is your policy, once on display in your shop, becomes legally binding for you.
Such a policy may give you the advantage over similar stores in your area that don’t go that one step beyond what is legally required.
Finally, I hope this look at the perils and possibilities of returns has inspired you to keep their importance in mind when planning your Christmas sales campaign this year – and keep your craft business from the brink of no return!
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