Reducing your ecommerce return rate: 2025 strategies
Kelli Trapnell
·August 22, 2024
Calculating your return rate is the first step in strengthening your return policy, reducing your returns and improving your customer experience.
Returned items can be very costly for an ecommerce business, so retailers must be aware of how many returns are being initiated. By understanding just how many customers are engaging with your return process, you can identify if your ecommerce return rate is too high—and take action.
In this blog, we’ll cover:
- What is a return rate
- How to calculate your return rate
- Why an ecommerce return rate is so important to your online store
- How to use this information to reduce customer returns and improve customer loyalty
Let’s start by breaking down what a return rate actually is.
What is a return rate?
A return rate refers to the proportion of your total product sales that result in returned items. This figure can refer to online returns, in-store returns or both. Every ecommerce business will experience some amount of returns and that is not a problem in itself. Customers accept that there is a risk when ordering from an online store and are often happy to take the gamble, especially if the store offers a streamlined return shipping process.
However, the overall cost of returns to your business can cause issues if your return rate is too high. One way to tell if your product return rate needs reducing is to compare it against the average ecommerce return rate in your industry or country. For instance, the National Retail Federation (NRF) estimated that 16.9% of all purchases would be returned in 2024. Online shopping often results in a higher number of returns, due to customers not seeing the product in person first; NRF also found that online return rates were 21% higher than overall return rates.
How to calculate your return rate
To calculate your ecommerce store’s product return rate, look at a particular time period and divide the number of returned items by the total number of sales made during that time. Multiply this number by 100, and you will get your ecommerce return rate percentage.
For example: if you sold 10,000 items in a six month period and you also processed 4,000 returned items in that time, you would run this calculation: (4,000 / 10,000) x 100 = 40%.
Why return rates are so important
In this situation, an online retailer would want to take significant steps to improve its return process and reduce customer returns, to ensure that customer satisfaction – and the bottom line – remain strong.
When an ecommerce business is experiencing a high volume of returns, this suggests that more customers are unhappy with their purchases than usual. This could be for many reasons: items may not be as high-quality as expected; product descriptions might be inaccurate; items may have arrived damaged; or the customer may simply have changed their mind.
While some of these problems can’t be fixed, others can be resolved by the ecommerce store — and it’s worth making the effort. A poor returns experience can turn a customer away from a business for good, which contributes to your churn rate. If this happens multiple times, you may see a decrease in overall retail sales, in customer retention and in customer lifetime value. This can have a big impact on your overall revenue and profit.
Regularly checking your return rate is a great way to see if your actions are having the desired effect. If you update your product pages with better descriptions and the return rate goes down, you can be confident that you are addressing a real problem.
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Get instant accessHow to reduce your return rate
As we’ve mentioned earlier, there are many reasons why online shoppers may want to return items, and some are out of the merchant’s control. However, there are several easy steps to improve both the pre- and post-purchase experience so that your return rate goes down.
- Find out why returns are happening: If you use Loop’s returns management platform, you’ll be able to dig into your returns data to discover what’s really going on. Each time a shopper requests a return, they’ll fill out a survey responding to the reason for the return. From there, you can understand trends across the most returned items: Is a certain top being returned frequently because it was more sheer than the shopper expected? Do your jeans run too small? This data can inform your returns management strategy going forward.
- Enhance your product description pages: Armed with your return insights, you’ll now be equipped to improve your product description pages in line with your customers’ needs. Make sure to include images of your product from multiple angles—for apparel, it can also be helpful to showcase the clothing on several models with different body types, and include descriptions of the models’ sizes and measurements in the caption. You can warn shoppers to size up if a product runs small, or to size down if it runs large. By giving more accurate sizing information and showcasing your products on diverse body types, you’ll be able to reduce the number of products that come back due to a poor fit.
- Fix quality control issues: Your returns data may also illustrate QC problems, either with your suppliers or with your fulfillment and shipping providers. Are certain products falling apart immediately after the shopper wears them? Then it’s time to take a look at your manufacturing process and consider changing suppliers. Are products arriving broken or damaged? That means you may need to switch up your fulfillment or logistics processes, and invest in more durable packaging. When you discover flaws that occur frequently, it’s important to focus on solving those problems—which will lead to a better experience for your shoppers, resulting in lower return rates.
- Transform returns into exchanges: Even the best products will get returned if they don’t fit the shopper’s needs—but when that happens, what if you could convert those refund requests into exchanges? Using Loop’s seamless returns portal, shoppers can do an Instant Exchange, or request store credit that they can use towards a future purchase, even if the item costs more or less than their original product. By building better return policies that facilitate seamless, intuitive exchanges, you’ll be able to retain more revenue from your returns, and increase shopper engagement and retention rates.
Consider a returns management solution
If you are a Shopify merchant, make sure to take advantage of valuable integrations like Loop, which can help you with your return management. With these solutions, merchants can automate the ability to exchange an item, rather than return it, so that there is no need to deal with the hassle of refunds. This kind of streamlined experience can increase the likelihood of repeat customers. Loop also offers a returns workflow that prompts feedback, which makes it easier for merchants to track why certain items might be returned more frequently — and adjust their inventory and restocking accordingly.
Most importantly, merchants should keep in mind that their return rate will never be 0, but it can still be competitively low. A return rate is a great reflection of customer satisfaction; the lower it is, the happier your customers are. With a few simple steps and the help of a great partner, ecommerce stores can keep their return rate below average.
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