Shopify Exchange Flow and Full Value Discount Guide
Platforms: Shopify
A new exchange order flow— Full Value Exchange Order (Discount On/Off) has been introduced for the Shopify platform. All exchange orders— Replacement or exchange for cheaper or expensive items will now follow this updated process, except for cases where Shopify checkout is used to charge money (Shopify will create the exchange order after the payment is processed).
The new flow simplifies tax reporting and reconciliation by using a new discount code AfterShip Returns discount for all exchange orders. This applies to all types of exchange scenarios, whether you're replacing the same item or exchanging for different items.
When AfterShip Returns creates an exchange order, the discount code helps the platform generate an accurate exchange value for reporting purposes.
The discount includes:
Pre-discount value
Extra credit
Return value (if you are using the discount on flow)
Pre-discount value and extra credit (if you are using the discount off flow)
You can choose between the discount-on or discount-off flow based on your needs for easier reconciliation.
Do not select the discount-on flow if your products include tax. Shopify's accounting limitations will cause an understatement of gross sales due to the taxes on returns.
You have the flexibility to choose between discount flows:
Discount On flow, which applies the return item value along with pre-discount value and extra credit.
Discount Off flow, which only applies pre-discount or extra credit. The Discount-On Flow should be avoided if your products include tax due to Shopify's accounting limitations.
Go to Returns > Return policy > Refunds and exchanges in your AfterShip Returns admin.
Move to the Exchange item process section.
If you would like to choose the Discount Off flow, keep the Apply return value as discount on exchange order setting unselected.
If you would like to choose the Discount On flow, select the Apply return value as discount on exchange order setting.
If you would like tp add exchange items to the original order when a customer requests a return or exchange, select the Add exchange items to the original order setting. Learn more>
Save the changes
For the Discount On flow, AfterShip Returns applies the return item value, pre-discount, and extra credit as a discount to reduce the exchange value (Gross sales). Taxes are then calculated based on the Net Sales plus the Return Item Value (Gross Sales minus pre-discount and extra credit).
Do not choose Discount On flow If you are selling products including tax. Due to Shopify's accounting limitations, the gross sales will be understated by the taxes on the return
Example:
Same price variant exchange with no discount on the original order.
Return item and exchange item worth $100 + $8.52 tax.
AfterShip Returns will generate a discount transaction to add the $100 discount back on AfterShip sales adjustment report.
For the Discount Off flow, AfterShip Returns does not apply the return item value as a discount, only the pre-discount or extra credit value as a discount to reduce the exchange value (Gross sales). Taxes are then calculated based on the Net Sales, which is the Gross Sales minus the pre-discount and extra credit.
Example:
Same price variant exchange with no discount on the original order.
Return item and exchange item worth $100 + $8.52 tax.
In this case AfterShip Returns will not generate any discount transaction.
For 3PL (Third-Party Logistics) systems, Discount-Off flow is better as it will ensure that the exchange order reflects the true sales value, as it applies only the pre-discount or extra credit to the exchange order without affecting the original return value, simplifying the tax reconciliation process.
If you are using the Discount Off flow, the exchange order is accurate, no adjustment is needed for the exchange order. Only an offset adjustment in Shopify is generated for the original order.
If you are using the Discount On flow, the daily sales figures are accurately reflected in Shopify.
Overview
A new exchange order flow— Full Value Exchange Order (Discount On/Off) has been introduced for the Shopify platform. All exchange orders— Replacement or exchange for cheaper or expensive items will now follow this updated process, except for cases where Shopify checkout is used to charge money (Shopify will create the exchange order after the payment is processed).
The new flow simplifies tax reporting and reconciliation by using a new discount code AfterShip Returns discount for all exchange orders. This applies to all types of exchange scenarios, whether you're replacing the same item or exchanging for different items.
What is AfterShip Returns discount?
When AfterShip Returns creates an exchange order, the discount code helps the platform generate an accurate exchange value for reporting purposes.
The discount includes:
Pre-discount value
Extra credit
Return value (if you are using the discount on flow)
Pre-discount value and extra credit (if you are using the discount off flow)
You can choose between the discount-on or discount-off flow based on your needs for easier reconciliation.
Do not select the discount-on flow if your products include tax. Shopify's accounting limitations will cause an understatement of gross sales due to the taxes on returns.
Customizing your exchange flow
You have the flexibility to choose between discount flows:
Discount On flow, which applies the return item value along with pre-discount value and extra credit.
Discount Off flow, which only applies pre-discount or extra credit. The Discount-On Flow should be avoided if your products include tax due to Shopify's accounting limitations.
How to set up
Go to Returns > Return policy > Refunds and exchanges in your AfterShip Returns admin.
Move to the Exchange item process section.
If you would like to choose the Discount Off flow, keep the Apply return value as discount on exchange order setting unselected.
If you would like to choose the Discount On flow, select the Apply return value as discount on exchange order setting.
If you would like tp add exchange items to the original order when a customer requests a return or exchange, select the Add exchange items to the original order setting. Learn more>
Save the changes
1. Discount On flow
For the Discount On flow, AfterShip Returns applies the return item value, pre-discount, and extra credit as a discount to reduce the exchange value (Gross sales). Taxes are then calculated based on the Net Sales plus the Return Item Value (Gross Sales minus pre-discount and extra credit).
Do not choose Discount On flow If you are selling products including tax. Due to Shopify's accounting limitations, the gross sales will be understated by the taxes on the return
Example:
Same price variant exchange with no discount on the original order.
Return item and exchange item worth $100 + $8.52 tax.
| New exchange order |
|---|
| Gross sales: $100 |
| Discount: -$100 |
| Net sales: $0 |
| Tax: $8.52 |
| Total sales: $8.52 |
AfterShip Returns will generate a discount transaction to add the $100 discount back on AfterShip sales adjustment report.
| Discount on | |||||||
|---|---|---|---|---|---|---|---|
| Gross sales | Discount | Return | Net sales | Shipping | Tax | Total | |
| Original order | 100.00 | 0.00 | 100.00 | 8.52 | 108.52 | ||
| Return | -100.00 | -100.00 | -8.52 | -108.52 | |||
| Adjustment | 108.52 | 108.52 | 108.52 | ||||
| Exchange order | 100.00 | -100.00 | 0.00 | 0.00 | 8.52 | 8.52 | |
| Offset Shopify adjustment - AfterShip | -108.52 | -108.52 | -108.52 | ||||
| AfterShip Returns Exchange Discount | 100.00 | 100.00 | 100.00 | ||||
| Total | 200.00 | 0.00 | -100.00 | 100.00 | 0 | 8.52 | 108.52 |
2. Discount Off flow
For the Discount Off flow, AfterShip Returns does not apply the return item value as a discount, only the pre-discount or extra credit value as a discount to reduce the exchange value (Gross sales). Taxes are then calculated based on the Net Sales, which is the Gross Sales minus the pre-discount and extra credit.
Example:
Same price variant exchange with no discount on the original order.
Return item and exchange item worth $100 + $8.52 tax.
| New exchange order |
|---|
| Gross sales: $100 |
| Discount: -$0 |
| Net sales: $100 |
| Tax: $8.52 |
| Total sales: $108.52 |
In this case AfterShip Returns will not generate any discount transaction.
| Discount off | |||||||
|---|---|---|---|---|---|---|---|
| Gross sales | Discount | Return | Net sales | Shipping | Tax | Total | |
| Original order | 100.00 | 0.00 | 100.00 | 8.52 | 108.52 | ||
| Return | -100.00 | -100.00 | -8.52 | -108.52 | |||
| Adjustment | 108.52 | 108.52 | 108.52 | ||||
| Exchange order | 100.00 | 0.00 | 100.00 | 0.00 | 8.52 | 108.52 | |
| Offset Shopify adjustment - AfterShip | -108.52 | -108.52 | -108.52 | ||||
| Total | 200.00 | 0.00 | -100.00 | 100.00 | 0 | 8.52 | 108.52 |
FAQs
Which businesses should opt for discount off flow?
For 3PL (Third-Party Logistics) systems, Discount-Off flow is better as it will ensure that the exchange order reflects the true sales value, as it applies only the pre-discount or extra credit to the exchange order without affecting the original return value, simplifying the tax reconciliation process.
Points to consider
If you are using the Discount Off flow, the exchange order is accurate, no adjustment is needed for the exchange order. Only an offset adjustment in Shopify is generated for the original order.
If you are using the Discount On flow, the daily sales figures are accurately reflected in Shopify.
Updated on: 12/12/2024
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