Return Rate

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Return Rate

A return rate is the amount of products returned to a company by its consumers out of the total number of products bought, expressed as a percentage. A calculated return is dependent on dividing the number of products returned by the total amount sold, and then multiplying the digit by one hundred. For example, let’s say an eCommerce store sold 1000 items. However, only 50 of those items were sent back. The store would calculate its return rate by dividing 50 by 1000 and multiplying it by one hundred, meaning it would have a return rate of 5%.

Understanding your return rates is crucial as this metric often provides insight into the success and effectiveness of both your products and your product information. A high return rate often means that the product received didn’t match what the customer expected to receive, and this results in a business spending more money to process the return, restock products, and issue refunds. Additionally, a high return rate impacts both the customer and the environment; when a customer receives a product that doesn’t meet their expectations, trust in the company is eroded and they are less likely to purchase a product from that same store or recommend the store to others. Regarding the environment, returns demand extra resources for shipping and packaging which contribute to more waste and emissions. Those that aren’t dispatched are directly sent to landfills and degrade whilst inducing toxic chemicals.

Providing consumers with the proper information upfront can help customers make informed purchase decisions, which means that purchased products are less likely to be returned, creating higher customer satisfaction and less damage to both the environment and the organization.

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Return Rate

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