Instant Exchanges

OVERVIEW

Waiting for an exchange to be approved can cause frustration for both customers and merchants. Customers want the product that fits them faster. For customers with their eye on a low inventory item, there's a chance that product may be out of stock by the time their exchange order gets created. For merchants, every out of stock exchange takes some manual work to get resolved, and the process ends with the customer getting a refund instead of a product they'll love.

Instant Exchanges in Loop solves these issues. Customers who choose to get an Instant Exchange will enter their card information, and their exchange order is created immediately. Loop places a hold on the customer's card for $1 or the amount of the items being returned - depending on your preference - to get the customer's card information. As soon as the product is in transit back to you, Loop removes the hold. Any customers that don't return the exchange product within a window you set will be charged for the new product.

In this article we'll cover:

• Customer Experience
• Setting up Instant Exchanges
• Instant Exchange Reporting 
• Instant Exchange Statuses
• FAQs

Customer Experience

The customer experience with Instant Exchanges is the same as a normal return until the final review screen before submitting the return. When the customer has a return with a variant exchange, Advanced Exchange, or Shop Now outcome they'll be given the choice of an Instant Exchange or processing their exchange after they return their product. 

If the customer chooses Instant Exchange, they'll be prompted to add their credit card info. Loop will create a hold on their card for $1 or the total amount of the exchange item(s) as set by you. The hold will stay in place for 7 days and then drop, regardless of whether the product is returned or not. If the return item has not been marked as "in-transit" within the return window you set, Loop will charge the card the full cost.

Loop includes a tooltip here to make it clear that they will only be charged if their original product is not en route to you within your set time frame. The return confirmation page will also reflect the hold.

Customers that do not want the hold on their card or are not interested in an Instant Exchange can choose to do a regular exchange without adding card information. Customers doing a regular exchange that includes Shop Now and an upsell amount will still need their card to pay the difference.

Reminder Emails: customers will be sent a reminder email to return their merchandise to avoid being charged. Emails are deployed on day 7 and 1 day before the charge date (day 14 if using default settings). More info on customizing Loop email notifications here. 

Setting up Instant Exchanges

Setting up Instant Exchanges is simple.

1. If Stripe hasn't already been connected, connect Stripe to your Loop instance in the Shop Now tab. Merchants already using Shop Now and capturing upsell should already have Stripe connected.
2. In Settings > Return Policies, click Edit on any policy you would like to activate Instant Exchanges for. Under the Exchange outcome, check the box to Allow instant exchanges, and customers will be given the option to get an Instant Exchange.
3. If you are a merchant that is using Shop Now, but not using variant exchanges (i.e. the Exchange outcome is turned off entirely) you can still leverage Instant Exchanges on Shop Now outcomes. Just turn on Exchanges, check the Allow instant exchanges box, then turn the Exchange outcome off again. Hit save, and Shop Now customers should now be seeing Instant Exchanges.

Once turned on, you have 3 choices to make regarding how Instant Exchanges will work:

• Authorization amount hold
  • $1 authorization allows Loop to collect the credit card information needed to charge the customer if necessary, without putting a big hold on the customer's card for 7 days.
  • Full return value authorization will place a hold on the customer's card for the full amount of the return product. Since a hold will fail if the card doesn't have enough funds, this can prevent Instant Exchanges using cards that may not have the funds necessary to cover the cost of the product.
• Time to return before charging.
  • Merchants can use this setting to extend the time period customers have to return their products before the card gets charged from the default 14 days. The time to return must be between 14 and 28 days.
• Requiring instant exchanges for all exchanges.
  • By default, IX will allow customers to choose whether they want to put in their card info and immediately get their exchange order, or wait and not worry about putting in a card.
  • Checking this box will require every customer to go the IX route if their return contains an exchange. Customers will be required to input credit card info to complete their return.
  • This setting is typically used by brands that move product very quickly, that run into a lot of out of stock exchanges.

While Instant Exchanges should work automatically without merchant intervention in most cases, please note that merchants do have the option to:

• Charge the customer manually if a product came back in non-restockable condition.
• Retry a failed payment.
• Manually refund the customer is the product is returned after the return window.
• Release the hold manually.

Instant Exchange Reporting 

This report will help you know which Instant Exchanges were charged (the customer did not send the item back), because we can’t modify the original order in Shopify (i.e. “un-return” the item) or add the charge into Shopify. This new report will help you to reconcile the charge and associated taxes.

The report contains the following data so that you can see which items were not returned and therefore charged for with Instant Exchange so that you reconcile in Shopify.

• SKU
• Date of the charge
• Charge Amount
• Net Sales + Tax
• Original Return ID that was an IX
• Order ID (original order)

Updated Report: New Revenue 

All IX activity is filtered out from the New Revenue report except successful IX charges, and added a column for type (Upsell, IX charge or Handling Fee) so that all Stripe charges are in one place.

Instant Exchanges in Shopify 

When an IX is resolved, a note is added to the original order in Shopify so merchants can quickly see the resolution. E.g.

When IX is charged: “Instant Exchange charged $xx.xx because {item} was not returned”

When IX is refunded: - “Instant Exchange refunded $xx.xx because {item} was returned”

Instant Exchange Statuses

Auth_Expired: This just means that the hold placed on the credit card has fallen off. Holds typically stay on a card for 5ish business days (it can vary based on the banking institution and presumably other factors, but that seems to be a general average). This ultimately doesn't have much impact to you, but if you go to charge a customer's card (if they didn't actually return the product but received the exchange) and the auth has expired, there is a chance that the charge will fail. The typical scenario where that occurs would be if a card is nearly maxed out: you put a hold on it which reserves that money. Then, the auth expires and the customer buys something to max it out fully. Now you can't charge that card since it's maxed out.

Returned: This means that the initial exchange was returned back for a refund. As you can see from the portal below, that instant exchange happened and then the customer decided to return it after the fact for a refund.

Auth: This means that the card was charged the authorization hold. To the example of Auth Expired above, this is what happens chronologically before that takes place.

Charged: This is the status when the card is fully charged (the most likely scenario being the customer received an instant exchange but never followed through on their return, leading you to charge the customer for the product).

FAQ

Is this feature included in my Loop plan? Instant Exchange (IX) is available as an a la carte feature and is not included in any Loop plan. To add IX to your plan please reach out to support@loopreturns.com or your Merchant Success Manager.

How much is the hold placed on the customer's card? The hold is in the amount of the of the exchange item. If there is upsell involved in the transaction, any upsell is charged immediately.

We don't use tracked labels or labels generated by Loop - can we still use Instant Exchange? While it is technically possible, it requires more work to manage manually and is not a recommended configuration.

Does this impact the return window? No. Your return window will stay the same. Instant Exchanges does cut down on the standard amount of time customers have to send their original product back.

Is there a Stripe fee for these holds? No. Stripe will only charge payment processing fees if the customer is actually charged.

Does this feature completely resolve out of stock exchanges? No. Since customers are given the choice of whether or not to request an Instant Exchange, there may be some customers that continue to go the regular exchange route, which could result in OOS exchanges. We do anticipate that Instant Exchanges will further decrease the frequency of these events.

What happens if the customer returns their item after their card is charged for the Instant Exchange? If the customer ends up returning their item, the return will go into the Needs Review tab. If their return is in good shape, you can refund the Instant Exchange charge by pushing the Refund All button under the Payment Information section on the return.