I’m just about to start up an eBay business selling high quality innovative baby products (creating a niche) so generally the products are expensive e.g. one product I’m selling for £600.

So would a 30 day money back guarantee be a good idea in a customer confidence/amount of returns ratio.

Many Thanks,
Matt

Thanks for your question, it’s a good one and it really doesn’t matter what you sell – guarantee is one of those elements majority of eBayers are trying to avoid. Almost always this results in un-satisfied customers, bad reputation and negative feedback. Even eBay states it very clearly that all Business Sellers have to accept returns for 14 calendar days after purchase is being made. But is it enough to state 14 day returns policy in small print at the very bottom of your listing? No, I think it’s not enough and you should be pro-active and give more confidence, especially if you deal with high priced items in an innovative niche.

If you just offer the basic, 14 Days return policy it really doesn’t work as a selling tool. For customers it’s more like, ok – if everything goes wrong, the product is broken or damaged in the transit, there’s a procedure in place to send item back. Does this sound encouraging enough to you? No, it doesn’t because it doesn’t boost confidence in the purchase, it will NOT improve your conversion rates. But this is exactly what 99% of eBayers are doing. If you’re one of them, you should seriously re-consider your returns policy strategy.

So what’s the solution? Partially Matt already answered the question – just give your customers total peace of mind by offering “No Questions Asked” money back guarantee! And time frame is not that important here although 30 days is a good option to go with. In fact, I have seen some research data that shows – the longer the guarantee period – the smaller number of refunds you’ll face. That’s why it’s not un-common to see even 180 Days or 360 Days guarantees. But of course, you want to keep your risks to minimum, especially in the beginning so yes, I recommend to go with 30 days in your situation.

Keep in mind – to offer any kind of guarantee, you have to be sure your product is top quality and that it does exactly what’s said on the tin! If the product you sell is good and offers the solution to a problem in EXACT way you have explained in the listing, you’ll face very few refunds if any at all! So Matt, make sure your product is top quality and offers good value for buyer’s money.

Also, it’s very important to position your Guarantee offer in a visually appealing form – like using a professionaly created, static banner. I don’t know what kind of products you’ll sell but I’m sure there’s something catchy you can come up with to attract visitor’s attention. So for example, if you would sell golf clubs, your guarantee offer could look like this:

“Hit like a Pro Gofer within 30 Days OR we’ll give your money back!”

You see – this is not a 30 day guarantee alone – it’s a promise that buyer will fulfil his/her needs by buying the product! It clearly says WHY you should purchase the product in first place!

Speaking about returns ratio – as I said, if your product will be top quality and offers good value for money, returns should be less than 5%. By working on some customer relationship elements, by “over-delivering” you can probably bring it down to 2% to 3%. But generally speaking, anything less than 10% should be acceptable.

Depending on your profit margins, returns won’t be a big problem as you can simply calculate into your price tag. Let’s say you have 5% returns – every 20th product is being returned. So to cover this you just have to add 5% on top of your prices (or just accept smaller profit margin). In not every situation a refund will be a loss, not at all! If the product is returned in a sealed condition, you can re-sell it again. If the packaging is opened, you can sell it as slightly used/opened product and still get the main part of the investment back.

To summarize it up, offering a guarantee is definitely something you want to do. If you position your guarantee properly, it will definitely help you to sell more items and even when taking refunds into count – make more profit at the end of the day!

• Tweet