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What is Product Return Rate?

Product Return Rate refers to the percentage of total products returned during a period.


Product Return Rate formula.

Return Rate = [Returned products in a time period / Total products ordered in the same time period] x 100


Tracking product return rates can give insights into your customer preferences. The key in managing returns is to manage customer expectations and avoid a refund by exchanging the item for another one that suits your customer better.

Within product returns, you may wish to drill down into understanding whether or not your business can successfully match the customer to another product. If the customer cannot find something they like, but wish to remain a customer, they would instead accept an exchange for store credits. The higher the exchange rate (as opposed to a refund), the better for customer relationships.


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What are the industry benchmarks for Product Return Rate?

Return rates vary according to the industry. Some industries and businesses are more susceptible to high return rates than others. For E-commerce, the average return rate lies within the range of 20%-30% (Source: Hubspot).


How can you improve Product Return Rate for your store?

You can reduce customer returns by setting the right expectation up front, ensuring that products ship out promptly and safely, and measuring the performance of your shipping partners. Add high-quality visuals of your products. 23% of products are returned due to inaccurate depictions of the product. Using high-resolution images with a detailed view of the product can bridge the gap between the customer’s expectations and the reality of the product.

Gather customer feedback for a product return. This will help you understand the reasons for the returns and identify problems with products and processes.

Add product reviews and ratings for each product and encourage customers to provide accurate and insightful product reviews. Product reviews are effective indicators of quality. According to a study conducted by Boston University, products with average higher ratings result in not only higher sales, but also lower returns.


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