Dont worry, getting items returned happens to everyone eventually. You cant satisfy all of the people all of the time, and occasionally someones going to want to send something back to you. Turning returns into profits isnt easy but with a little determination, you can manage it.
Dont refund shipping charges: If followed our advice and youre now making a decent profit on your shipping charges by using cheaper materials, then you might still be able to come out ahead with returns. Just refund the charge of the items but not the shipping. I know sellers who make $1 profit on the sale and $2 profit on the shipping. If they get a returned item then they dont really mind: they still get to keep two-thirds of their profit.
Charge a restocking fee: Youre perfectly within your rights to charge a restocking fee, and thats nothing but profit for you. Bear in mind that this will get customers very annoyed, however.
Resell with a better description: Now that you know if theres something wrong with the item, you can write a more honest description. Surprisingly enough, items can sometimes sell for more the second time around, simply because word has had time to spread...