Making returns work for you: best practice for SMEs
17 April 2026
5 top tips on turning your returns policy into a competitive advantage.
Returns are an inevitable part of running a business, but they don’t have to be a headache.
As a smaller organisation, how do you find the sweet spot between keeping customers cheery and protecting your bottom line? Your next peak period always creeps up quicker than you think… so here are some of our top tips:
1. Know why your returns policy matters
Your returns policy is the safety net that gives customers the confidence to buy from you
in the first place. 51% of UK consumers say return policies have affected their purchase decisions, with 37% of policy-conscious shoppers picking based on the variety of returns channels available.1
As Sanjay Aggarwal, Founder of Spice Kitchen, explains: “You need to make returns seamless and easy for people. We want to show we really care about customers and that’s how we retain them long-term.”
Efficient, customer-focused returns processes also help to build brand loyalty. In fact, 78% of online shoppers agree that a good returns experience would make them more likely to shop with a retailer in the future.2
Whatever your policy, make sure it’s easy to find on your website and clearly states the timeframe for returns; what condition items need to be in; who pays for postage; and how long refunds take to process.
2. Reduce returns before they happen
In 2024, UK online returns reached a staggering £27 billion3, with the average cost to process a single returned item now reaching upwards of £154… often wiping out profit margins entirely.
Refunds are just the tip of the returns cost iceberg. Beyond logistical and processing fees, returns can affect your ability to resell items at full price, complicate inventory forecasting, and consume valuable staff time.
The good news? Many returns are preventable. 46% of returners said they did so because the item did not fit as expected; the same proportion said the item didn’t meet expectations of quality, colour or size; and 33% said items were damaged.5
Ensure items are quality checked and safely packaged, and that photos are accurate for colour. For fashion brands, accurate sizing guides are essential. If the model is 5ft 8 and wearing a size 10, say so: it helps shoppers visualise the piece on themselves.
Mary Leigh, Founder of pet brand Equafleece, focused on this: “We were up to 18% returns at one stage. Every year we try a new method of helping the customer to size, whether it’s improved videos; a new sizing calculator on the site; training our phone staff to answer sizing queries; and implementing a live chat.”
Of course, some returns are inevitable – so choosing the right delivery partner, one that offers a seamless and speedy returns process, can help you refund and resell easier and faster.
3. Decide whether to charge for returns
One of the biggest questions small businesses face is whether to offer free returns or pass some costs on to customers. Free returns can increase sales, but they can be expensive. Paid returns help to discourage frivolous behaviour – particularly important when research shows that 11% of customers are “serial returners”, generating nearly a quarter of all returns.6
Ben Hampson from TEMPLESPA says one size doesn’t fit all: “If they’ve had an allergic reaction, then of course it’s free. But other situations are on a complete case-by-case basis.”
Many retailers are now charging for returns. As Daniel King, Founder of Urban Industry, notes: “I’m glad bigger retailers like ASOS are starting to charge for returns now and tackle abusive returns, because them doing it means us smaller companies can do it too.”
Consider offering free returns to new customers (52% of shoppers say free returns would most encourage them to choose one online retailer over another7) or for faulty items, while charging a reasonable fee for change-of-mind returns once customers are established.
4. Offer convenience with Royal Mail Tracked Returns®
Sanjay from Spice Kitchen says: “We offer Royal Mail Tracked Returns® which includes access to their out of home network.
That means with Tracked Returns, Sanjay – and you – can offer customers access to over 130,000 drop-off locations across the UK. That includes 115,000 Postboxes for smaller items; 1,400 Parcel Drop-boxes; 3,000 Parcel Lockers (and growing!), 8,000 Royal Mail Shop locations (in local convenience stores), 11,500 Post Office branches and 1,200 Customer Service Points. Your shoppers will love the flexibility.
For ultimate convenience, you can also offer Parcel Collect, where posties will pick up returns from over 30 million doorsteps… and we can even bring the label!
Items arrive back within 2-3 working days, and you can access daily return reports via the returns portal, to help you process refunds quickly and resell returned items faster. The service also includes up to £150 compensation on the rare occasion things don’t go quite right.
5. Invest time in the returns experience
Every return is a chance to reinforce your customer service credentials. As Nicky Morgan, Customer Service Manager at Stripe & Stare, puts it: “The customer needs to feel part of the team, and you have to invest time in their returns.”
Respond promptly to return requests, process refunds quickly, and consider offering exchanges before refunds – that will increase your odds of keeping the sale and could strengthen the relationship too. If you’re overwhelmed, why not consider investing in a low-cost AI chatbot that could help you tackle front-line requests?
By being transparent about your terms, offering convenient options through Tracked Returns, and focusing on prevention, you can turn returns into an advantage for your small business.
Want to make returns easier for your customers?
With Royal Mail Tracked Returns® you can access over 130,000 convenient drop-off locations, build brand loyalty with our returns portal that can be fully customisable to your brand and we’ll even go to customers with Parcel Collect, for complete end-to-end convenience and ease.
Visit royalmail.com/deliverreturns
Footnotes
1 ‘Free returns and flexibility: What UK shoppers expect from retailer return policies’, YouGov, 2025
2 Mintel Consulting, Online Retailing Consumer Report 2025. Research conducted with Online Shoppers.
3 “The Cost of Serial Returners in 2024”, Zigzag/Retail Economics, 2024
4 “The Reverse Logistics Revolution”, Warehouse & Logistics News, August 2025
5 ‘Free returns and flexibility: What UK shoppers expect from retailer return policies’, YouGov, 2025
6 “The Cost of Serial Returners in 2024”, Zigzag/Retail Economics, 2024
7 Mintel Consulting Online Retailing Consumer Report 2025. Research conducted with online shoppers
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