KPIMarketing

Return Rate

ECommerce – percentage of items purchased online that are subsequently returned by the customer

What is Return Rate?

Return rate is the percentage of items sold online that customers send back. It shows how well products match expectations and how good the shopping experience is.

Returns are costly in shipping, handling and lost sales, so a high rate can quietly eat margin and often points to problems with product information, sizing or quality.

How this KPI is measured

Function
Marketing
Sub-function
eCommerce
Industry
All Industries
Type
Lagging
Impact
Operational
Unit
%
Measurement frequency
Weekly / Monthly
Formula
(Online items returned / Total online items sold) × 100

How to calculate it

Divide the number of online items returned by the total number of online items sold, and multiply by 100.

For example, if 10,000 items were sold and 1,200 were returned, the rate is (1,200 / 10,000) x 100 = 12%.

Break it down by product, category and reason. Some categories, such as clothing, naturally have higher rates than others.

Where it is used

  • Finding problem products

    Spot items returned unusually often.

  • Improving product information

    Fix descriptions, images and sizing guidance.

  • Managing margin

    Understand the cost that returns add.

How to improve it

Tips and common mistakes

  • Do not make returns hard to cut the rate. It damages trust and repeat purchases.
  • Some returns are healthy, such as bracketing sizes. Understand the reasons.
  • Track cost per return as well as the rate.

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