Returns and refunds
A return removes the revenue and keeps most of the cost. In return-heavy categories and markets it is routinely the single largest profit leak in the store.
The problem
The refund is one line in a report. Outbound shipping, return shipping, inspection, repackaging, restocking and unsellable units are spread across other places, or never recorded at all.
Returns are also not evenly spread: they cluster in specific products, sizes, colours and reasons.
How to measure it
True cost per return = outbound shipping + return shipping + handling time + repackaging + (write-off rate × COGS) − any restocking fee recovered.
Return rate per product, not per store, plus the recorded reason. Fit and expectation problems are avoidable; change of mind is partly structural.
What to change
- ◆Improve the product pages behind the worst offenders: sizing guidance, real photography, dimensions and materials.
- ◆Fix the small set of products responsible for a disproportionate share of returns before touching your return policy.
- ◆Review free-return promises on heavy or low-margin items where the round trip exceeds the contribution.
- ◆Track whether each change moves the rate for that product, rather than the store average.
Estimates, not your numbers. Everything on this page is based on public ecommerce benchmarks and the signals a public storefront exposes. It is an indication of where profit typically leaks — not a measurement of your finances. Connect your store to replace estimates with your actual numbers.
Frequently asked questions
Should I charge for returns?+
It depends on your market and category — in some countries free returns are effectively an expectation and charging costs you conversion. Measure the contribution of the affected orders before changing policy.
What counts as the true cost of a return?+
Both shipping legs, handling, repackaging, any value lost when the item cannot be sold as new, and the payment fees that are not refunded to you.