eCommerce Return RatesBy the Numbers: 5 Steps to Keep Your Returns in Check

July 15, 2022 | 14 min read

eCommerce Return Rate

In a Nutshell

This article will teach you how to calculate your eCommerce return rate, how return rates affect merchants and the benefits of keeping your rate low. We’ll also provide you with 5 steps to reduce your return rate without causing chargebacks.

eCommerce merchants rely on accurate and timely analysis to generate leads, factor expenses, and measure performance. Your Key Performance Indicators (KPIs) are the metrics you use to evaluate these statistics, set benchmarks, and take corrective measures when called for.

One of the most significant KPIs you should be tracking is your eCommerce return rate.

What is an eCommerce Return Rate?

eCommerce Return Rate

[noun]/* ē • käm • ərs • rə • tərn • rāt/

An eCommerce return rate refers to the measure of transactions that are returned by online buyers, as a share of overall purchases.

In a general sense, your eCommerce return rate measures the frequency with which your online customers return goods. This is an important KPI, because return rates for eCommerce have a significant impact on revenue and customer retention rates.

Having an above-average return rate suggests that there may be issues that require your attention. It could point to problems with the quality of your merchandise, or with the fulfillment or delivery of orders. It could also mean that you’re not communicating with buyers as effectively as you should.

By tracking your eCommerce return rate, you can pinpoint problems and address them before they spiral out of control.

How to Calculate Your eCommerce Return Rate

Figuring out your generalized eCommerce return rate is simple. All you to do is follow this formula to calculate product return rates:

If you fulfill 10,000 orders in one year, but 2,000 of them were returned, you would have an eCommerce return rate of 20%.

We should note that your generalized eCommerce return rate is still a somewhat vague indicator. For example, if you sell a variety of products, then looking at overall return rate may not reveal problems that could be detected with closer analysis. That’s why, in many cases, it’s helpful to examine return rates based on a variety of variables.

Also, setting a goal to maintain a 0% return rate is not a realistic expectation. You should strive to keep returns at their lowest possible rate for your industry, but recognize that some returns will be unavoidable.

Common Question

What’s a “good” eCommerce return rate?

An objectively “good” return rate would rest somewhere between 0% and a percentage of returns considered average for businesses in your vertical. This figure fluctuates based on your business type and the industry you operate within.

Average return rates for eCommerce rest at around 20%. However, they can balloon to 30% or more around the holidays.

Return rates also vary by product and vertical. According to Shippo, the average return rates break down into the following categories:

Of course, it’s understandable why some products would see a higher eCommerce return rate than others. Apparel companies, for example, see a high retail return rate because it's improbable that a customer will always find the perfect fit without trying on merchandise. Health and beauty verticals are similar, as it's difficult to gauge a product’s efficacy without sampling it first.

What that fails to explain, however, is why eCommerce merchants, in general, are more susceptible to returns. To answer this question, we need to look at why buyers request returns in the first place.

Why Do Buyers Return Merchandise?

Every eCommerce merchant in business today will experience their fair share of returns. It’s just a part of doing business. That said, gaining a better understanding of why consumers return products will help you lower your overall return rate.

These are the four of the most common motivations for consumer returns in the eCommerce space:

  • The buyer didn’t like the item, or it didn’t fit their needs.
  • The product didn’t match the description provided.
  • The product was no longer needed or arrived too late.
  • The item was a gift that the returnee didn’t need.
Those are all legitimate reasons to request an eCommerce return. However, there are plenty of buyers who tend to abuse the process, too.

Stopping refunds is not the only step you can take to protect your revenue.


Return fraud is the act of returning merchandise to a retailer for a refund, in violation of the merchant’s stated returns policy. This is a major problem for online retailers. Because the merchant and buyer never interact directly, it can be a lot easier to conduct fraud attacks without being noticed.

Common return fraud practices include:

  • Using a fake receipt to claim invalid refunds.
  • Returning stolen merchandise for cash.
  • “Wardrobing,” or using and then returning an item.
  • Price tag switching
Learn more about return fraud

You CAN’T Prevent All eCommerce Returns

Your customer’s online shopping experience determines every facet of your business’s success. Happy customers still request returns from time to time. What they don’t do, however, is request chargebacks.

If customers aren’t satisfied with your products and services, they will try to get their money back…one way or another. In addition, unhappy customers often share their negative experiences online, which will hurt your business’s reputation.

Your brand is everything in eCommerce, and how you make a sale is as important to your bottom line as what you sell.

A low eCommerce return rate reflects positively on your business and implies that you provide your customers with a top-notch customer experience. It can also help you build and maintain a solid customer base and assign lifetime value to your brand. However, it’s crucial that you consider steps to reduce returns in the context of chargebacks, and look for ways to improve processes, rather than just stop returns from happening.

5 Steps to Reduce Your eCommerce Return Rate Without Causing Chargebacks

There are many different strategies and practices you can adopt to improve your eCommerce return rate. These five steps are a fantastic place to start:

Step #1 | Improve Your Listings

How you sell your items has as much influence over your return rate as your return policy itself. Why? Simply put: customers need to know exactly what they’re buying.

If the goal is to prevent returns altogether, there is no faster way to reduce that number than to focus on how you list and promote your products. Examples of information that can significantly improve your listings include:

Accurate and detailed product descriptions

Clearly explain all relevant details of the item, including size, color, materials, methods used, etc. Talk up your products’ features, but avoid overselling or embellishing.

Dynamic product photography

Be sure to feature high-resolution images of the product from multiple different angles. Showcase the product in all its sizes and colors. Customers want to clearly see what they are buying.

Estimated shipping times

While you don’t have direct control over shipping times, it helps to give buyers a general idea of when their items might arrive. Fairly estimate the shipping time, and be up-front about any potential delays.

Provide the Right Alternatives

If an item is out of stock, it can help to direct customers toward similar items. You can facilitate their search, helping them avoid items that might not fit their needs.

Step #2 | Refine Your Return Policy

Any details that could complicate a customer’s return process should be clearly and vividly communicated to the buyer. Be up-front about those details; never try to sneak them into the fine print.

Failure to divulge pertinent return details in advance of purchase could lead to a higher retail return rate, as buyers will be less trusting. Even worse, this practice could cause buyers to skip the return process and file a chargeback instead. That’s why you should:

Lay out your terms

Include any applicable details for a return. How long does the customer have to return an item? What condition must it be in? Do you include any service/restocking fees? Don’t be vague with any of this information.

Highlight critical details

The goal here is to promote full transparency to improve customer satisfaction and reduce your eCommerce return rate. Using bold fonts to communicate pertinent details that could cause customer hiccups is an easy solution that you can achieve in seconds.

Get signatures

Include a copy of your terms of service and return policy in your sales agreements. This can be achieved via a pop-up form on your checkout page. Also, include a copy of the signed purchase agreement in your receipt or email purchase confirmation.

Consider free returns

You have to be clear-eyed about the fact that some returns will be unavoidable. For those cases, consider offering free return shipping. It can be a pain to pay for return shipping. It’s still much better than a chargeback, though, so providing a return shipping label is a better option.

Did You Know?

Free Returns can Encourage Sales

54% of buyers say that free returns or exchanges are a leading factor in determining whether they buy from a brand or not. If buyers are promised they can return goods for free later, they’ll be more likely to trust the merchant and complete a sale (even if they ultimately keep the item).

Step #3 | Target Order Accuracy

Businesses are managed and operated by humans. No one is above making the occasional mistake. Therefore, merchant error is still a concern for most businesses, especially eCommerce and retail.

To limit errors that could be affecting your bottom line, you should:

Optimize your descriptors

Some returns and chargebacks are initiated because the customer didn’t recognize a merchant’s billing details on their statement. Set effective billing descriptors for your company, including your “doing business as” name and other identifying visual cues.

Watch the details

Whatever you’re selling, make sure every item you package matches the invoice. Many of the errors that lead to a higher eCommerce return rate tend to occur at the fulfillment stage. You and your employees should set up organization-based systems for fulfilling and shipping orders.

Track shipments

Another trick to improve accuracy and prevent returns and chargebacks is to ship with carriers that provide tracking and proof of delivery. Buyers will be able to keep tabs on their goods, and can be made aware of any unexpected delays.

Set best practices

You and your employees should have an easy-to-follow, organized approach to order fulfillment and shipping/receiving. Best practices and methodology can improve any business and increase profits and customer satisfaction.

Step #4 | Prioritize Customer Service

This might seem like a no-brainer. That said, it’s overlooked on a surprisingly frequent basis.

Providing excellent customer service isn’t just about showing a friendly face or providing an affable support system online. It’s about thinking ahead and providing customers with options and support before they ask for it. This means:

Offering 24/7 support

While you are aware that the majority of companies offer some form of live support, you may not be aware of all the options. Call centers can answer questions and provide overflow support. Chatbots can address simple questions, or leave comments for support to act on later.

Offer SMS

Encourage customers to receive purchase and shipping confirmation and updates via text message. This provides the added benefit of a line of communication between you and your customers, both pre- and post-purchase.

Post-transaction communication

Sending an email or survey after the purchase is finalized is a great way to ensure your customers are seen and heard. Buyers will feel that they have an open line of communication to address concerns that might otherwise escalate to a refund or chargeback request.

Check-in periodically

If you communicated with the customer previously, make sure that you repeat the practice every couple of months to remind the customer that your business is available for their needs. A promo or coupon at this time may be appreciated.

Step #5 | Protect Your Business From Return Fraud

Return fraud is a severe problem that gets worse every year. According to the National Retail Federation, retailers lose $5.90 to return fraud for every $100 in returned merchandise. It costs US retailers more than $27 billion a year.

Preventing return fraud is critical to your success as a merchant. A few strategies to get it right out of the gate include:

Tracking shipments

Yes, this again. It’s wise to choose a carrier that will provide proof of delivery or require a signature to leave packages. This will help you prove that any goods in question arrived on time.

Offer in-store credit or exchanges

You might have a buyer who’s on the fence about a return and/or chargeback. Offering a 10-20% bonus for accepting store credit or exchanges can help you recover the sale and keep a goo relationship with the buyer.

Be return ‘selective’

Insist that returns be in their original packaging, and do not bear signs of visible use.

Have Questions About Return Rates?

eCommerce is constantly evolving. The methods you use to keep your eCommerce return rate low—without seeing a spike in chargebacks—need to evolve, too.

If you want to work with someone to help build the ideal refund rate and chargeback reduction strategy possible, Chargebacks911 can help. Chargebacks911 offers the most comprehensive chargeback management services and products available today. No other provider can deliver our level of transparent, end-to-end chargeback management, going beyond prevention to revenue recovery and future growth.

We’ll run the numbers; You’ll see the savings.
Please share a few details and we'll connect with you!
Over 18,000 companies recovered revenue with products from Chargebacks911
Close Form
Embed code has been copied to clipboard