What is Return Rate?
Return Rate measures the percentage of sold products that customers send back to a retailer or brand. It’s a key ecommerce metric for tracking product satisfaction, fulfillment accuracy, and the overall health of post-purchase operations.
Why Return Rate matters?
A high return rate can signal issues with product quality, sizing, descriptions, or shipping expectations. Conversely, a low return rate often reflects accurate listings and satisfied customers. Monitoring return rate helps ecommerce brands balance customer experience with profitability, as returns directly affect net revenue and operational costs.
How Return Rate works?
Return rate is calculated as: (Number of Returned Orders ÷ Total Orders Shipped) × 100. Some businesses also measure it by units instead of orders. Returns can be voluntary (e.g., buyer’s remorse) or involuntary (e.g., damaged or incorrect items). Analyzing returns by product type, customer segment, or channel helps identify root causes and reduce costly repeat patterns.
Example in ecommerce
A DTC apparel brand notices that one jeans style has a 25% return rate compared to the store average of 8%. Customer feedback reveals inconsistent sizing. The brand updates its size chart and adds customer fit photos, cutting that product’s return rate in half within two months.
Common mix-ups
Return rate is sometimes confused with refund rate, which measures how many transactions are refunded — even if no item is physically returned. It’s also distinct from chargeback rate, which occurs when customers dispute payments through their banks rather than returning products.
Best practices
- Track return rate by SKU, category, and acquisition channel for actionable insights.
- Provide accurate product descriptions, sizing guides, and clear images to reduce returns.
- Offer exchanges or store credit to retain revenue while maintaining customer satisfaction.
- Automate return workflows for faster processing and better visibility.
- Analyze reasons for returns regularly to inform product design and merchandising decisions.
Industry benchmarks
- Average ecommerce return rates range from 10–20%, depending on category.
- Apparel and footwear often exceed 25–30%, while beauty, accessories, and home goods average 5–10%.
- Best-in-class DTC brands aim to keep return rates below 15% without compromising customer trust.
Related terms
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