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Best Practices for Returns and Refunds in Canadian eCommerce

As an online retailer in Canada, it’s crucial to have a well-defined and customer-friendly ecommerce return policy. Best practices for returns and refunds in Canadian e-commerce can help you keep your customers happy, maintain brand loyalty, and ultimately boost your bottom line.

In this blog post, we’ll explore the key elements of a successful returns and refunds policy and how to implement them in your e-commerce business.

Why Returns Matter in E-commerce

In the world of online shopping, returns are an inevitable part of the customer experience. According to a recent study, the average return rate for e-commerce purchases in Canada is around 20%. This means that for every five purchases made, one item is likely to be returned.

While returns can be a hassle for both the shopper and the retailer, they also present an opportunity to showcase your commitment to customer satisfaction. By offering a seamless return experience, you can build trust with your customers and encourage them to shop with you again in the future.

The Current State of eCommerce Returns in Canada

The e-commerce industry in Canada has experienced exponential growth, and with it, the number of ecommerce returns has risen significantly.

Studies show that Canadian online shoppers have a higher return rate compared to brick-and-mortar shoppers.

This can be attributed to various factors, such as the inability to physically examine products before purchase and the convenience of online returns.

Here are the key ecommerce returns and refund statistics for Canada:

  • The average ecommerce return rate in Canada is 20%. Some industries have even higher return rates, such as apparel at 25%.
  • Almost half (48%) of Canada’s online shopping population returned an online purchase over the past year, a 30% increase from 2019.
  • 81% of Canadian online shoppers look for a hassle-free returns policy before buying, and almost half (45%) have avoided repeat purchases from retailers who didn’t offer a convenient returns process.
  • 79% of consumers expect return shipping to be free, while only 49% of online retailers provide this service. 92% of shoppers say how easy the returns process is has a significant impact on their decision to buy again.
  • The top reasons for returns are wrong size/product (65%), item damaged/defective (56%), and not liking the item (44%).
  • 72% of online customers expect their refund credit within five days of a merchandise return, and 88% say they stop or limit shopping with a retailer if it takes too long.

eCommerce returns are very common in Canada, with almost half of shoppers returning items.

And that’s why you need to focus on providing a hassle-free, fast and free returns process to meet customer expectations and drive repeat business. Apparel and clothing have the highest return rates.

Elements of a Customer-Friendly Ecommerce Return Policy

To create a customer-friendly eCommerce return policy, consider including the following elements:

  1. Clear and concise language: Use simple, easy-to-understand language to explain your return policy. Avoid legal jargon or complex terms that may confuse your customers.
  2. Reasonable time frame: Give your customers a reasonable amount of time to return items. The industry standard is 30 days, but you may choose to offer a longer window to stand out from the competition.
  3. Free return shipping: Offering free returns can be a major selling point for online shoppers. Consider absorbing the cost of return shipping to make the return process as hassle-free as possible for your customers.
  4. Easy-to-find information: Make sure your return policy is prominently displayed on your website, including on product pages and at checkout. Include a link to your policy in your order confirmation emails as well.
  5. Multiple return options: Give your customers the flexibility to return products in the way that’s most convenient for them. This may include mail-in returns, in-store returns, or drop-off locations through partners like Canada Post.

Streamlining Your Return Process

Once you have a customer-friendly return policy in place, it’s important to streamline your return process to make it as efficient as possible. Here are some tips for managing ecommerce returns:

  1. Automate where possible: Use returns management software to automate tasks like generating return labels, tracking return shipments, and issuing refunds. This can save time and reduce the risk of errors.
  2. Communicate proactively: Keep your customers informed throughout the return process. Send them updates on the status of their return and let them know when they can expect to receive their refund or exchange.
  3. Train your team: Make sure your customer service team is well-versed in your return policy and processes. They should be able to answer customer questions and resolve issues quickly and efficiently.
  4. Analyze your returns data: Keep track of your return rate and the reasons for returns. Use this data to identify trends and make improvements to your products or policies as needed.

5 Top Returns Management Software

While at it, here are 5 top returns management software options that could be a great fit for Canadian e-commerce businesses:

Loop Returns:

Focus: Loop specializes in turning returns into exchanges, aiming to retain revenue for the retailer.

Features: Automated returns portal, exchanges prioritized over refunds, integration with major e-commerce platforms.

Pros: Great for increasing customer lifetime value, reduces refund costs.

Cons: Might not be ideal if your business model relies on high refund rates.


Focus: Automated and customizable returns process with a strong emphasis on branding.

Features: Instant exchanges, automated label creation, flexible return rules, branded returns portal.

Pros: Excellent for enhancing the customer experience and building brand loyalty.

Cons: Can be more expensive than other options, might be overkill for smaller businesses.

AfterShip Returns:

Focus: Comprehensive returns management with robust tracking and analytics.

Features: Automated returns portal, multiple return methods, detailed reporting and analytics, integrations with shipping carriers.

Pros: Offers excellent visibility into your returns process, helps identify trends and areas for improvement.

Cons: Some features might be complex for smaller businesses with simpler needs.

Happy Returns:

Focus: In-person return drop-off network combined with online returns management.

Features: Physical Return Bar network, online returns portal, box-free and label-free returns, aggregated returns for cost savings.

Pros: Convenient for customers who prefer in-person returns, can reduce return shipping costs.

Cons: Physical Return Bar network might not be available in all areas of Canada.


Focus: Comprehensive returns management with a strong focus on automation and efficiency.

Features: Automated returns portal, customizable workflows, restocking automation, integration with various e-commerce platforms.

Pros: Streamlines the returns process from start to finish, reduces manual effort and errors.

Cons: Might have a steeper learning curve compared to simpler solutions.

Choosing the Right Software

The best returns management software for your Canadian e-commerce business will depend on several factors, including:

  • Your business size: Some software is better suited for small businesses, while others are designed for larger enterprises.
  • Your return volume: If you have a high volume of returns, you’ll need software that can handle the workload efficiently.
  • Your budget: Returns management software varies in price, so consider your budget when making a decision.
  • Your specific needs: Think about the features that are most important to your business, such as automated returns, exchanges, or analytics.

I recommend researching and comparing different options to find the software that best meets the unique needs of your Canadian e-commerce business.

Many providers offer free trials, so you can test out the software before committing to a purchase.

The Benefits of Offering Free Returns

While offering free returns may seem like a cost to your business, it can actually pay off in the long run. Here’s why:

  1. Increased customer loyalty: Customers who have a positive return experience are more likely to shop with you again in the future. In fact, studies have shown that customers who receive free return shipping are more likely to make a repeat purchase than those who have to pay for return shipping.
  2. Reduced cart abandonment: Offering free returns can also help reduce cart abandonment rates. When customers know they can easily return items if needed, they may be more likely to complete their purchase.
  3. Competitive advantage: In a crowded e-commerce market, offering free returns can help you stand out from the competition. It shows that you stand behind your products and are willing to go the extra mile for your customers.

Handling Holiday Returns

The holiday season is a busy time for e-commerce retailers, and it’s also a time when returns tend to spike. To handle the influx of holiday returns, consider the following tips:

  1. Extend your return window: Give customers a little extra time to return items after the holidays. This can help reduce stress and improve customer satisfaction.
  2. Communicate your policy clearly: Make sure your holiday return policy is clearly communicated on your website and in your marketing materials. Consider creating a dedicated page or section for holiday returns.
  3. Staff up: Make sure you have enough staff on hand to handle the increased volume of returns. Consider bringing in temporary workers or cross-training existing staff to help with returns processing.
  4. Prepare for reverse logistics: Have a plan in place for reverse logistics, including how you will process returns, restock items, and dispose of damaged or unsellable products.

The Future of eCommerce Returns

As e-commerce continues to grow, returns will likely become an even bigger part of the customer experience. To stay ahead of the curve, consider investing in returns management technology and exploring new ways to make returns easier and more convenient for your customers.

Some emerging trends in e-commerce returns include:

  • In-store returns for online purchases: Allowing customers to return online purchases at brick-and-mortar stores can provide added convenience and flexibility.
  • Return pickup services: Some retailers are experimenting with return pickup services, where a courier comes directly to the customer’s home to pick up the return item.
  • Returnless refunds: In some cases, retailers may offer customers a refund without requiring them to physically return the item. This can be a good option for low-cost or hard-to-resell items.


Returns are a critical component of the e-commerce customer experience, and getting them right can have a big impact on your business.

By developing a customer-friendly return policy, streamlining your return process, and staying on top of industry trends, you can turn returns from a cost center into a competitive advantage.

Remember, best practices for returns and refunds in Canadian e-commerce are all about putting the customer first. By making returns easy, convenient, and hassle-free, you can build loyalty, drive repeat purchases, and ultimately grow your e-commerce business.

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