I've reported this to the support email, but wanted to mention it here too, in case any other business owners run into this.
Last night I had a customer accidentally order two of each item when they meant to order just one of each. After verifying their intent, I refunded one of each item and then fulfilled the rest. Good so far, the refunding is easy and works well.
Then I noticed that the order was still marked as "unfulfilled" - the refunded items still hanging there waiting to be fulfilled. Eh? That's not right. I had a feeling this wasn't going to work right, so I changed the email address on my fulfillment house for those items to my own for two reasons: to verify if it sends a fulfillment notification to the vendor and to prevent the vendor from getting a totally wrong notification. And then I told the system to fulfill those items so that the order would be marked as completely fulfilled (which is effectively closed for my purposes).
Sure enough, it sent the fulfillment notification for those refunded items. This is very stupid and should not work that way. When you refund items in an order, those items should be marked in some way that prevents them from being fulfilled. Can anybody see any reason why you'd want to go ahead and fulfill/ship an item you've refunded?
Just noticed this... the blue dot next to Orders in my menu won't go away. So that dot is connected to payment status then? And it's going to be there forever because of that refund and I'll no longer have a quick glance ability to know if there are new orders that need to be fulfilled? (I know I get emailed when new orders come in, but still, it's dumb to have an indicator that's so easily rendered irrelevant!!)
Diana here from the Shopify Support Team.
I get where you're coming from with this one--you were initially on the right track. If you refunded items, you simply needed to not fulfill them. The order would still be marked as 'Partially Refunded / Partially Fulfilled' in the Orders section, with a little orange flag that looks like this:
This is just for your own purposes--you can leave a note to yourself in your Timeline to remind yourself why that order is only Partially Fulfilled, but if you go ahead and Fulfill the refunded items like you did in your example, then the system will treat the items as if they've been sent out and will trigger the email notification, as you pointed out. People can and have sent out refunded items/orders for a number of customer service reasons, so we don't want to stop people from fulfilling items later on if need be. It may be a little frustrating to have this orange notification in your Orders list, but it may be a little easier to deal with when I explain about archiving.
That blue dot you mentioned in your follow-up post is indicating the number of Open orders there are; I'm sure you've noticed that once an order is marked as Fulfilled and Paid, the order sort of "greys out" and the blue dot goes away. It's archived itself, and is therefore not Open anymore. That is because there is a checkbox in Settings > Checkout that automatically does this step for you:
If, for whatever reason, the order isn't marked as 'Paid' or 'Fulfilled', the order won't automatically archive itself. But you can do it yourself manually by clicking the [ . . . ] button in the upper-right corner of the order details page:
This will grey out the order as if it was Paid and Fulfilled, and you'll notice the blue dot changes to reflect the current number of Open orders!
Hopefully that helps you out a bit and clarifies some stuff for you! :)