What is covered in this video?
In this video, we explain how to handle a Shopify return when the customer is returning the item, but you are not refunding the money because you plan to send a replacement order instead.
This situation often happens with exchanges. For example, a customer may return an item because they need a different size, colour, or product variation. Instead of refunding the customer, you send them a new item.
From a VAT perspective, this needs to be handled carefully because the return and the replacement shipment are treated as two separate processes.
1. Why a zero return is used
A zero return is used when:
- the customer sends the original item back
- you do not refund the customer
- you plan to send a replacement item
- the replacement is handled as a new order
In this situation, the original item is returned, but no money is paid back to the customer. This is why the refund amount is set to zero in Shopify.
2. The original order is collected by EAS
The process starts with a normal Shopify order.
Once the customer places the order, Shopify records the sale and EAS collects the order information for VAT reporting.
You can also see the order in the EAS dashboard, including the product details and VAT connected to the sale.
3. Starting the return in Shopify
To begin the exchange process, open the original order in Shopify and start the return as usual.
You should select the item or items that the customer is returning.
Even though you are not refunding the customer, it is still important to mark the returned items correctly in Shopify. This tells EAS that the products have been returned.
4. Setting the refund amount to zero
At the final stage of the return process, set the refund amount to zero.
This is the key step.
From an accounting point of view, this means:
- the item has been returned
- the customer has not received a refund
- the customer is still owed a replacement item
- the replacement item should be created as a new order
In Shopify, the system may show that you still owe the customer the full refund amount. This is expected, because Shopify recognises that the item has been returned but no money has been refunded.
5. EAS collects the zero return
After the zero return has been processed in Shopify, EAS collects the return information.
In the EAS dashboard, the returned items will be shown as returned. This allows EAS to reimburse the VAT connected to the returned items through the VAT reporting process.
If shipping is also included in the return process, this can also be taken into account. However, in many exchange cases, shipping is not included because a replacement item will still be sent to the customer.
6. Checking the Shopify order notes
Once EAS has collected the return, Shopify will receive a confirmation note.
You can check the Shopify order notes to confirm that EAS has collected the return successfully.
When the confirmation note is visible, the return has been collected by EAS and no additional return action is needed for that order.
7. Creating the replacement order
After the zero return has been completed, the next step is to create a new manual order in Shopify.
This new order should contain the replacement item or items that you are sending to the customer.
EAS will then collect the VAT on the new order as a separate transaction.
This means the process works in two parts:
- the original order is returned with a zero refund
- the replacement item is sent through a new order
This allows the VAT for both the return and the new shipment to be handled correctly.
Summary
For a zero return in Shopify, the process is:
- open the original order in Shopify
- start the return as usual
- select the item or items being returned
- set the refund amount to zero
- process the return
- EAS collects the returned item information
- check the Shopify order notes for the EAS confirmation
- create a new manual order for the replacement item
- EAS collects VAT on the new order
A zero return is mainly used for exchanges where the customer sends an item back and receives a replacement instead of a refund. By processing the return with a zero refund and creating a new order for the replacement, EAS can handle the VAT reporting correctly.