What is an eCommerce Return Rate?

September 14, 2023/ Jarrod Wright /

Online store owners need quick and precise insights to find new customers, manage costs, and gauge how well they’re doing. Your go-to key performance indicators, or “KPIs,” help you make sense of all the data, set goals, and make changes when needed.

No one enjoys getting products returned, but it’s just part of the business. Even satisfied customers sometimes change their minds. That’s why keeping an eye on your online store’s return rate is super important.

What is an eCommerce Return Rate?

An online store’s return rate is basically how often customers send stuff back compared to how much they buy. It’s a key metric to watch because it really affects your bottom line and how many customers stick with you over the long haul.

When your return rate is low, that’s a good sign. It means people generally like what they get, and you’re doing a great job making your customers happy. A low return rate can help you grow a loyal following and make your brand something people want to stick with.

On the flip side, if you’re seeing a lot of returns, that’s a wake-up call. It could mean there’s something off with the products you’re selling or maybe how they’re being delivered. It might also mean you need to step up your game in talking to your customers so they know exactly what they’re getting.

How to Calculate Your eCommerce Return Rate

Calculating your online store’s return rate is a piece of cake. Here’s a simple formula to find out what percentage of your sales are getting returned:

(Number of Returns ÷ Total Products Sold) x 100

So, let’s say you sold 10,000 items last year, and 2,000 got sent back. Quick math: That means you’d have a return rate of 20%.

What’s a “Good” eCommerce Return Rate?

Your online store’s return rate can vary a lot based on different factors. What you’re selling, how good it is, how clear your product descriptions are, your customer service game, and what your return policy says — all have an impact

As a rule of thumb, if your return rate hangs around 20% to 25%, you’re pretty much in the normal zone for online shops. If it starts to climb over 30%, that’s a red flag. If you’re under 15%, give yourself a high-five — that’s exceptionally good!

Why Do Returns Happen?

Returns are a fact of life in the eCommerce world, but understanding why they happen is the first step to reducing your return rate. Here are some of the main reasons customers might decide to send something back:

Product Didn’t Meet Expectations

This issue is particularly prevalent in the clothing sector but can occur across all categories. For example, an iOS user might only experiment with an Android device to decide it’s not for them and return it. A smooth return process can leave a lasting, positive impression of your brand.

Inaccurate Product Descriptions

Customers rely on the information you provide through text and visuals. If the product doesn’t match the description or images, they will likely feel misled and opt for a return.

Returning a Gift

Gift returns, especially around the holiday season, are hard to avoid. Offering options like store credit or exchanges and factoring these into your seasonal projections is a smart way to manage this. Make the process straightforward to leave a good impression, even on first-time customers.

Ordering Errors or Duplicate Purchases

Sometimes, the error isn’t on your end but the customer’s. They might accidentally order the wrong size, color, or even buy multiples of the same item without intending to. A hassle-free return process can turn an awkward situation into a positive customer experience in these cases.

Pre-Planned Returns (“Bracketing”)

Some customers practice what’s known as “bracketing,” where they purchase multiple items intending to return some. Around 31% of consumers admit to doing this. For example, a customer might order multiple pairs of shoes to try on at home and keep only the one that fits best.

5 Tips to Reduce Your eCommerce Return Rate

While the above list isn’t exhaustive, these are some of the primary reasons for product returns. A well-crafted return policy and a deeper understanding of customer behavior can help you manage returns more effectively.

Improving your eCommerce return rate isn’t as daunting as it may seem. Here are five solid steps to get you going:

Step #1: Polish Your Product Listings

The way you showcase your products can be a game-changer for your return rate. A great listing with clear information is a fast track to fewer returns. Make sure you’re transparent about what customers should expect.

Step #2: Clarify Your Return Policy

No one likes surprises when it comes to returns. So, lay out all the fine print in an easy-to-read manner. If people have to squint to find hidden clauses, they’ll lose trust and might even skip the return to file a chargeback.

Step #3: Nail Down Order Accuracy

We’re all human, and mistakes happen. Sometimes, returns or chargebacks occur simply because the billing info didn’t ring a bell for the customer. Make sure your billing descriptors clearly point back to your shop.

Step #4: Put Customer Service Front and Center

You’d think this is obvious, but it’s surprising how often it’s missed. Top-notch customer service isn’t just about being friendly; it’s about anticipating needs and offering solutions before customers have to ask.

Step #5: Guard Against Return Fraud

Return fraud is big business, costing U.S. retailers billions yearly. For every $100 in returns, around $5.90 is lost to fraud. So, keeping an eye out for this is essential to your long-term success.

Last Update: September 14, 2023