How to handle returns and exchanges without altering total sales?

[JadaGarland]

Hello, I opened my online boutique a little over a week ago and had my first return. The customer just wanted to exchange the item for a larger size. I did not see an option for just an exchange (I'm pretty sure there is I just didn't see it at the time) so I went ahead a processed a return without a refund so that I could just send the item in a larger size. I wasn't sure how to get make a shipping label without creating an order so i created an order and marked it as paid. Everything will be fine for the customer, but this adds money to my total sales that shouldn't be there. How can I remove that order/money from my sales? 

[Shay · Accepted solution]

Hi @JadaGarland 

Thank you for reaching out about this exchange you created on your store. I understand that you accidently have this order tracked as being paid for twice. I can help you resolve that and also provide you the steps to exchange an order in the future. 

To resolve the paid draft order for the return shipping label:

Open the draft order, unarchive the order (if it is archived) and use the refund option at the top of the order page. In the reason for refund I recommend adding a note for the original order number and noting that this was an exchange and the customer already paid for this order. Since this order should be marked as manually paid, no return is sent to the customer and no notification should be sent out.

To exchange an item on future order:

Help Center - Order editing 

Help Center - Create return shipping labels

When you need to exchange an item on an order the easiest way to do so is to use the return item option within the order details. If you purchased a shipping label through Shopify Shipping in your store admin, and your store is eligible to also print return labels, under the "More action" tab in the order details should be an option to create a return shipping label. 

Once the item has been returned, and marked as such you can then choose to either edit the order to remove and replace the item in the order (some limitations to this, see linked help doc above for more info) or create a draft order for the new item. 

When creating a draft order, if the item has already been paid for, you can adjust the pricing of the item by applying a manual discount in the draft order before completing it. This way you don't have your order history tracking 2 orders payments for the same order.

I hope this helps you get this situation resolved!

-Shay

[gho_bryan]

After marking the item as returned, how do you apply the payment to the new items added to the order as the exchange? It's only giving me the option to refund the original payment to the customer, then turnaround and send a new invoice to collect the same amount for the exchanged item.

[Shay]

Thanks for the reply @gho_bryan 

Since I can't see the original order and it's current state right now I would actually recommend reaching out to our live support to help you resolve this. Generally, when exchanging the item and marking it as returned you will not have to refund the order as well. You would just add the new item into the order using the edit order option and the order will balance out. 

To contact our live support for additional help please follow this link: Shopify Help Center - Contact Support, sign into your store account, search for your issue and use the contact support button at the bottom of the search results to see all our live support options. They will be able to have a look in more detail and help you get this order resolved. 

-Shay

[vssc]

Hi - I just want to confirm if this is the right way to process an exchange - or should I unfulfil and edit the original ordeR?

Thanks

[Shay]

Hi @vssc 

Great question! I don't recommend unfulfilling the original order and changing it as that would not be an accurate representation of the order history. The original item was fulfilled, but exchanged. So ensuring that your order details show that an item was replaced is important for your own records and for the customer's. 

You can read more about creating returns and refunds in our Help Center here: Creating returns and refunds · Shopify Help Center. 

[vssc]

Hi Shay - A great question but one Shopify refuses to answer. So what do you recommend? You're saying we shouldn't edit an order - That means, as of now, the only way is to return and refund an order and then hope the customer will order again? Why must Shopify add so much friction - have you guys calculated how many customers will take the refund and forget to re-order? Or won't want to go through the process all over again?

So can PLEASE SOMEONE FROM SHOPIFY TELL US WHAT THE BEST WAY OF EXCHANGING AN ITEM IS - SOMETHING THAT DOESN'T MESS UP REPORTS OR TAXES OR ANALYTICS? 

[vssc]

Hi -  when returning an item and then adding a replacement via editing Shopify is forcing us to refund + take payment again. It's not adjusting what was paid versus the updated amount. So what is to be done? Really, I don't understand why Shopify refuses to make exchanges possible!

[Shay]

Note: An item marked as fulfilled means it was processed and sent out to the customer, or left the warehouse. If an item has not been shipped yet, then marking it as unfulfilled and removing it from the order is a suitable option.

The steps for returning and exchanging a product should look like this!

Open the order you need to return/exchange on and choose Return Items from the top of the order summary page. You will be provided a list of all products in the order and you can choose how many items are being returned and if you are providing return shipping for the product. Fill in the information like in the screenshot below and then click "Create Return".  

You will now see "Return in progress" for any returned items in the order. From here you can upload your return shipping label, refund the item back to the customer or mark the product as returned without refunding. 

If you wish to exchange a product, you would mark the exchanged item as returned without using the Refund Customer button. This way the customer doesn't need to be charged twice.

Now to apply the exchange and update the order with a new product the customer wants; you will go to Edit order in the order summary and add the new item(s).

• If the prices are the same, you can apply a 100% discount to the new item with the reason being "exchange" to zero out the price.
• If the new product is more than what they originally paid, you can apply a discount for the value of their original item and then process a charge for the remaining amount.
• If the new product is less than the original item, zero out the price using a discount and then refund the original item, subtracting the amount for the new one from the refund. 

If you have any specific questions about these steps please let me know here! You can also connect with our live support team at any time to assist you in walking through an order exchange. Feel free to share a link to this community post with them as well. 

[vssc]

Hi Shay, there are a couple of issues here: We have to pay GST on our sales in our region (India), and Shopify doesn't understand our GST - so we use a an app from your app store to create the proper reports + invoices. GST rates for our products also depend on pricing: 5% vs 12%. So refunding will create a credit note (messing up the tax reporting) and the new order will not have any taxes / will have lower taxes - both of which would be illegal.

The other is that we use a payments gateway - Razorpay. When we return an item, Razorpay will expect that to be refunded - we cannot process a 0 refund. We cannot also mark it as a refund and then create a new order for the full amount as we can't refund these manually - there's no option.   

So what is the way out?

[Shay]

Hi @vssc 

Thank you for sharing those additional details! I can definitely understand your concern about managing orders with some of the limitations you need to work within. 

In that case, I would not use the edit order functionality but instead mark the returned item as returned within the order details, and then for the new item/order use a draft order to manually set the price, taxes, etc. Since the customer is not paying for the exchanged product (if it is the same price) you can safely set the price to 0 as the customer paid already within the original order. 

I also took a look at Razorpay's support. Refunding a customer who paid via Razorpay is separate from the order management I am referring to within the Shopify admin. You can manually refund the customer from within your businesses Razorpay account and not through the Shopify admin to manage a partial refund. If you are marking a product as returned within the Shopify admin, it does not automatically mark the product for a refund until you click the refund button. The option to refund an item is separate from marking the item as returned. 

[vssc]

Hi Shay - thanks. 

But won't this affect our analytics - it'll create a false picture of how many sales we have in a month?

Also, what do we do when there's a balance to be paid by the customer? Say, their original order's for INR 1000 and in exchange they  pick something for INR 1500? 

[Shay]

Hi @vssc 

This should not negatively impact your analytics. The exchange of products is still being done with one product being returned and another product being sold, it is just happening across two orders instead of the same one. No different then if you gave a customer a store credit for a return for them to come back at a later date. The money has already been captured by the store, the customer just needs to finalize what they are spending it on.

If you are creating a draft order and the customer is getting a more expensive item, then you would fill in the product price, taxes included as per normal, and then apply a discount equal to what the customer has already paid. Alternatively, you can manually create the item and set the final price in the draft order. You would then manually reduce the inventory of the replacement product in your inventory afterwards. 

If the cost is more than what the customer previously paid, you will be able to send them an invoice so they can pay the remainder amount left on the order. 

In my screenshot below is an example of a draft order being made. You can see that I can add a discount, shipping and tax. I can click on each one of them to change the cost applied to those areas. 

If I prefer, I can instead add a custom item, which allows me to manually set the price for a one time item that isn't inventory tracked. 

And before finishing I would add notes to lead back to the original order and details on why this draft order was created. 

[vssc]

Hi Shay - the issue is that as Shopify doesn't make GST invoices, we use an app from your app store. Now, this app picks up every order created in the store. So if the customer pays the balance for an exchange item that's more expensive than the original item, it'll create a GST invoice for the balance amount. Now, our product GST rates depends on the price. So anything less than INR 1000 pre-tax has a 5% tax. Anything more than INR 1000 has a 12% GST.  So the app will make an incorrect invoice - if the balance is 500, it'll think the tax is 5% when it should be 12%. The only way I see is to actually refund them and then ask them to pay for the new item in cases where there's a price difference in the new and old items. Is that correct?

[Shay]

Since I am not familiar with the app itself and how it integrates into your store, I would reach out to the app developers to confirm that would be the best process and to also share feedback on how they can make this easier for merchants in the future. 

[vssc]

Hi Shay - I spoke to the app developers. They say there's not much we can do barring actually refunding customers and asking them to place an order again: There's no access to Returns information via an API, and we cannot do a just-in-theory refund as our Razorpay payments gateway plugin will actually process any refunds from the Shopify refund page (there's no way of marking a refund without the gateway actually refunding the cancelled item). 

[vssc]

Hi @Shay Any recommendations on what I can do?

[Shay]

Hi @vssc 

I wanted to clarify that marking an item as RETURNED and REFUNDING an item are two separate actions that are not directly connected.

You can return an item without refunding it and you can refund an item without returning it first. In the case of exchanges, you don't need to refund the item to the customer. You just need to create the secondary order using the draft order function and adjust the product price to subtract what the customer has already paid. They would then pay any increase in difference if the product price was higher. 

The only time you need to do a refund in this situation is when the customer is getting a less expensive item and you are refunding the difference to them. To avoid that you can also provide them the remaining amount as a custom gift card amount, depending on your refund policies for your store. 

[vssc]

Think I'd mentioned that tax rates in my region are dependent on product value. So billing them for the difference would result in an incorrect tax calculation.