An Etsy Seller Asked:
Based on your Etsy guides, I decided to change my shop policies to allow for returns, exchanges and cancellations. How often in your experience do customers ask for one? I was afraid to do this at first (previously it was "only if I'm at fault for something") because I wasn't sure if it would lead to me being taken advantage of, but that might be a baseless concern.
We sell about 1000 listings per month, and even with our very generous return policy (which is: Free Returns & Exchanges No Matter What) we probably get 1or 2 refund requests per month. So mostly it's just a marketing tool to increase sales, because most people will not complain after they place their order. You want to eliminate the fear that if your customers are unhappy then they can't get the problem fixed. So by offering very generous return policies and exchanges, your customers will feel more free to purchase your items. Often times, even if the Customer is unhappy with their order, most people won't complain and will not ask for a refund or exchange their item. But in the event that they do, you do not want a 1-Star Review. It is better to give a refund than to get a 1-Star Review and then hurt your future sales. I'm unsure of the exact number for our Etsy Shop, but within the last 3 years, and out of 32,000 Sales, we have probably refunded at the very most 100 people. That is a 0.3% return rate. So, as long as you sell decent products on Etsy, you should feel confident that most people will not return your items.
This goes the same for Physical Products. We have sold thousands of products, and we have never had someone ask for a refund. The closest we came to this was that someone was unhappy with the way their item turned out, and gave us a bad review on Etsy. What I did was immediately send them a fixed item, without even talking to them. I simply shipped it in the mail with a $15 USD 1-Day Shipping option. The next day, the customer go their item, and immediately changed their review to 5 Stars. We took care of this customer, gave them a fixed item, and now we have a nearly perfect 5-Star rating for our Physical Items. So having generous Return & Exchange policies is absolutely crucial on Etsy. No one will want to come back as a repeat customer if you messed up and wont even own up to it. It's just better for your business to have a clear "Free Returns" policy.