Hi Jeremy. Why do returns result in the cost of goods sold for that item being reversed TWICE? And should we now throw out the COGS data that our integration software has sent from Shopify to our accounting software and do all that manually instead? I’ve love to hear your thoughts on that. Thank you.
I can’t work out if the COGS data is correct or not - are you finding that it isn’t now?
From what I’m seeing, I can only conclude that it’s incorrect. It wasn’t happening prior to late February. At that point it happened once or twice. Since a few days into March, Shopify has accounted for virtually all returns twice each in the Cost of Goods Sold report. I don’t know if it’s just the reports that are wrong, or whether it’s sending incorrect data to integration software that also sends data onward to accounting software, because I’ve cancelled the software I was using for that in favour of doing bookkeeping manually now.
(We were using the Amaka integration for Shopify and Xero, but cancelled it for other reasons before discovering this situation with COGS - and we spent about 12 person days re-doing our bookkeeping for a nine-month period. I’ve lost count of the number of different systems I’ve tried for integrations over a 7-year period, and from that I think it’s fair to say that generally companies who describe their integration as “seamless” are brazen liars.)
Can others please comment on what their Shopify COGS reports are showing for returns? Are they showing that each return reverses the COGS amount twice, which is what I’m seeing? And those with inventory software integrations might want to check whether that’s sending incorrect inventory value data to inventory and accounting software. I can’t comment on the latter because I cancelled my integration software before discovering this.
I’m pleased to announce that Shopify did something (or I just noticed it) regarding self service returns/exchanges. They now have an option to input what item a customer has requested for their exchange. When you input the item in this section, if it’s the same amount as the original item(s) in the order, it’ll zero out the ‘Expected Refund’ portion.
Here’s my suggestion:
(1) For known exchanges, do the process mentioned above and pictured below.
(2) For known returns and unknown exchanges, do not approve the return, but send a return label instead and wait for the item to be returned before approving.
Hope this helps, guys!
As an update to this issue, I’ve now found that the Shopify COGS report is virtually useless because it counts unpaid orders as if they’re products already sold.
40 or more percent of our sales value comes from orders created and fulfilled up to 2 months before we can claim payment under a contract, and some fulfilled and unpaid orders are returned (requiring the order to be changed), long before we can claim payment.
To boot, I’ve found that these days when a product is returned on an unpaid Shopify order, Shopify no longer substracts the returned item from the owed amount on the order, even after the return is “closed”, so the customer ends up owing twice as much in the case of an exchange on an as-yet-unpaid order. And the only way I know how to fix this is to duplicate the order, void the initial one, and change the new order to take the returned product out of the items appearing in the non-returned area of the new draft order.
I just can’t fathom how a company can be that stupid.
I don’t know how long this has been going on, because for months we’ve kept non-paid orders in Drafts just to avoid messing up our Amaka integration data, since that couldn’t handle changed orders of the fully fledged type. Now that we no longer use the Amaka integration, I’ve turned about 100 draft orders into proper orders, only to find that this no longer works as a way of doing business either, while it did while we were trying to use it that way in the early second half of last year.
Just reading this dilemma has me stressed out for you - my goodness! What work arounds have you guys established to lessen the workload of this mess?
Workarounds? None to speak of yet. We only recently cancelled our Amaka integration, so we’ve only just discovered some of these things. But as far as I can tell we’ll just have to duplicate the order and void the original every time we get a return or exchange on an as-yet-unpaid order. Don’t know yet what we’ll do about COGS.
It gets better! Today my Shopify product categories are in Chinese! Not kidding!
Hi Jeremy, have there been any subsequent announcements?
I spoke to a Shopify Plus rep today who implied that a fix to the issues spelled out here (returns being deducted from revenue) will be shipped by Shopify soon.
Can you shed any light on what those changes are and when they can be expected by merchants/partners?
Hello again -
This is a short message to let the community know this topic remains a top priority for us. We are continuing to explore options and as before, you can expect a follow up post on this thread with another update from the team. We appreciate your patience.
As a reminder, native exchange support was released to all Shopify merchants earlier this year! You can find documentation here. Additionally, you can cancel a return or remove a return item that is never sent back, and your sales will be appropriately adjusted.
Thank you, Jeremy. The best solution would be to revert back to the way self service returns once worked. Shopify has showcased and encouraged merchants to use their native apps/features, yet they are causing more harm than good. Thank you again for your diligence…
Really hope we get some news on this topic soon. I’m dealing with the exact same thing, trying to make sense of my analytics and I am just baffled at how unnecessarily complex this all got. No idea what my real sales are and no confidence that my other metrics are accurate either (COGS, Discounts, etc). And nearly impossible to narrow in on where all the discrepancies are.
Huge headache that I do not remember having before.
Any update on this?
This is still a huge issue and causing many problems with inaccurate figures for sales.
Essentially whether a customer requests an exchange via ZigZag, will receive store credit for their return or decides to keep an item after creating a label. As long as they create a label via ZigZag, this then goes against our sales as a pre-empted refund to the customer even though no actual funds may be returned to them. This leaves us with wildly incorrect sales data and net profit data, and as a small business this is hugely important for us to price products and create forecasts and to measure our real return percentage.
I can see why so many are hugely frustrated and especially with the robotic response from Shopify even though it is effecting so many customers.
I got a generic ’ We don’t have much control over 3rd party apps’ response after reporting and haven’t got much back from zigzag directly either.
Shopify please can you prioritise this as you are leaving too many businesses with incorrect accounts and analytics.
Right here with you on all points!!!
I don’t see how this is a solution — “Just be even more patient. Sounds like you forgot that we told you already this is definitely a top priority that’s taking half a year to figure out”
I’m terrified of this!!??!
Are there any updates here? Still causing so many issues for us. It makes no logical sense why Shopify are now treating exchanges as cash refunds!
Ye same, it’s a joke. Such a basic and easy thing to fix. I think they are doing this to force users to use their return solutions and not 3rd party apps.