person packing books into shipping container

What to include in your shipping policy for your retail business

9 min read
Erik Deckers

When setting up a new shipping policy for your retail or ecommerce store, keep in mind that people want convenience, especially as more people are ordering online from their favorite brick-and-mortar retailers. Returns need to be easy, shipping needs to be free, and it all needs to be part of a bigger, unified shipping policy. There's a reason companies like Amazon, Walmart, and Target are all winning the ecommerce battle, and a lot of it has do with their shipping policy.

Related: How your small retail shop can compete with a big box store

Everyone who sells and ships products through UPS, Fedex or some other third-party logistics provider (3PL) has a shipping policy, or at least they should.

7 shipping policy best practices

If you don't have a shipping policy, here are a few best practices to consider when writing yours:

  1. If you promise two-day delivery, you must deliver.

  2. Make your returns policy easy and convenient.

  3. If you offer free shipping, do it on standard ground shipping.

  4. Make your shipping policy readable and easy to access.

  5. Enforce your policy with flexibility and understanding.

  6. Just make sure you enforce your policy!

  7. Ensure your shipping policy covers damaged boxes and goods.

Let’s dive in and explore these shipping policy best practices in detail.

1. If you promise two-day delivery, you must deliver

The Big Three have come under some fire during the pandemic because their two-day delivery promise has fallen short a few times. It's understandable and people are usually forgiving, but that doesn't mean you can make a habit of it. And as more people are ordering online because of the pandemic (and now the 2020 holiday shopping season), they're going to demand you deliver within the two-day promise you made.

That means you're pulling orders first thing in the morning and getting them on your 3PL's truck in plenty of time to make their two-day delivery window.

This can be a bit tricky if you're running a small operation, because you often have a small shipping department, or you're even doing it yourself.

If that's the case, you need to set up a schedule where the picking and packing always gets done first, or you may want to hire some temporary help. Because if you miss any two-day windows, you're going to have unhappy customers who either stop shopping with you altogether, or cancel their order, and you're out the original shipping and return costs, plus the lost sale. If nothing else, having the temporary help can put a stop to losses of unhappy customers and returned packages.

Location is also an issue.

If you're down in Miami, two-day shipping to Seattle can be expensive. If you've got cross-country customers, consider either setting up relationships with drop-ship capable vendors (vendors you buy your products from, but they hold and ship them on your behalf with your branded packaging and forms), or setting up a distribution center in a major delivery hub like Memphis, Tennessee (Fedex) or Indianapolis (Fedex and first-class mail).

Some larger store chains like Best Buy also ship orders right from their stores to local customers, rather than using up distribution centers. This lets them have cheaper two-day delivery with some more wiggle room, and it helps them move their in-store inventory more quickly.

While your shipping policy might not necessarily dictate your expansion and growth, you certainly don't want to create a policy that extends beyond your capabilities either. Make sure the two match.

2. Make your returns policy easy and convenient

Some click-and-mortar stores (a store with both a physical and online presence) have weird returns policies: They won't let you return online purchases to stores, make you call for approval first or will require you to return your order only to a third-party returns processor.

Part of your shipping policy needs to include a returns policy that's convenient for your customers. The easier it is, the happier your customers will remain.

While you don't have to offer the free returns that a store like Zappos does, you do want to make the returns as convenient as possible.

So, if you own a retail store and sell products online, let your customers return online orders to your store. You're already collecting and processing returns for your in-store sales; what does it matter if you're collecting those online returns as well? It makes things easier for your customer and it keeps them happier. And if you give them an in-store credit, they may stick around long enough to spend some more money with you.

Sure, this might cost you a little money in processing returns, but if you're worried about a few bucks instead of the loss of the lifetime value of a now-unhappy customer, you're not looking at the right numbers.

3. If you offer free shipping, do it on standard ground shipping

Don't knock yourself out trying to offer free two-day shipping. You don't have the budget or giant fleet of planes and trucks that the Big Three do.

Free ground shipping is still valuable.

So just offer free ground shipping instead of free shipping within a certain timeframe.

Set your shipping policy so free shipping only applies to orders of $75 or more. My favorite T-shirt and jeans click-and-mortar store, Duluth Trading Company, offers free shipping on orders of $75 or more, but will drop it down to $50 on special occasions. And I've been known to add a $15 T-shirt to my order just to get the free $10 shipping, which benefitted them more than it did me.

People are willing to wait for free five-day shipping as long as they know in advance that it's going to take five days.

So, take advantage of that love of free and either put a sales minimum on the free offer or offer it only for inexpensive ground shipping.

4. Make your shipping policy readable and easy to access

Don't treat it like the terms and conditions we all ignore on a new piece of software.

Make sure people can see it, or at least have access to it, somewhere during the ordering process.

Refer to it, even if it's a checkbox that says "I have read and agree to the shipping policy." (Just remember to hyperlink to the actual policy.)

There's nothing more frustrating to a customer than finding out a weird rule in a shipping policy has screwed up an entire order's return. Your customers will take their unhappiness out on you, even if it's something they should have realized or known in advance. (Remember, people are also crankier right now, so. . .) Keep your shipping policy clear, easy to understand, and highly visible.

5. Enforce your policy, but with flexibility and understanding

It's fine to have a strict shipping policy or to only allow returns under certain conditions, but it's important to have a little flexibility as well. For example, if you had a "no returns" policy on a clearance sales item, what would you do if the item were part of a fraudulent order or the customer died?

It can happen.

And if your rigid adherence to the policy is seen as mean and heartless, you can bet it will be all over social media in about three hours, and you'll be made to be the bad guy.

In those cases, you can either cling to your principles and make this the hill you want to die on, or you can have a heart, avoid a problem, and keep a happy customer just by allowing an occasional exception to the rules.

Related: How to protect your eCommerce business from return fraud

6. Just make sure you enforce your policy!

That doesn't mean you waive your policy for anyone who wants it. There has been an increase in ecommerce fraud, especially around buy online, pick-up in store (BOPIS) orders — according to, there has been a 55% increase in BOPIS fraud alone. For example, customers may suffer an account takeover, the bad guy orders a bunch of items (especially electronics), picks them up, and later returns them.

So it's important that you be extra vigilant this season, especially after the Christmas holiday, in monitoring all returns. Yes, it will be a madhouse, but how much worse will all the disputed charges and chargebacks be to your bottom line?

Train your employees. Require ID checks and receipts for returns. Check IDs for all credit card and debit card purchases, even those in the EMV chip card readers. And if you have an online store, beef up your online security and start requiring CVV codes to complete purchases.

7. Ensure your shipping policy covers damaged boxes and goods

Man packing large box

When a customer reports their order arrived damaged, you could always go the cheap route and say "too bad, so sad," but that person won't be happy with you. If you want a customer who says good things about you to their friends, replace the product with a new product and fight with your shipper to recover the damages.

You also need to tell your customer what to do with the damaged item. Should they send it back so you can deal with whatever the damage is, and possibly refurbish the product to sell and still make something? Or should they send you a picture of the item to determine next steps?

You'll need to find some way to have the customer prove it's faulty or damaged, so you can determine whether you should deal with fixing the damaged item, disposing of it or having the customer dispose of it.

This is where a generous returns policy can help you, and a stingy one will hurt you.

You'll need to work with your 3PL to get any reimbursements. In some cases, the shipper will provide a refund; in other cases, you may need to do that. (This is also where shipping insurance can become important, especially on more expensive items.)

A good shipping policy will explain exactly what a customer should expect in terms of costs, delivery time and the returns. You must ensure it's easy to understand and visible on your website. This can help you avoid all sorts of headaches trying to figure out the occasional shipping problem that comes across your desk.

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