Keeping track of some key return metrics can help you better understand how your products are doing and make informed decisions for your business.

What are Return Metrics?

Returns metrics are a set of key data points that eCommerce stores can track in order to gain insight into how their products are performing and how customers are interacting with them. These metrics include things like return rate, refund rate, and repeat return rate. 

Tracking these metrics is important in order to identify trends and areas for improvement. For example, if you notice that a specific product has a high return rate, it may indicate a problem with that product’s quality or design. 

Additionally, tracking returns metrics can help you understand how satisfied their customers are with their purchases and identify areas where you can improve your customer experience.

What Return Metrics Should You Track?

Tracking these return metrics helps you get a better sense of how your products are doing and how you can improve them. ReturnGO’s return analytics dashboard can help you easily track your return metrics and monitor your returns process.

Return Rate

Your return rate is the percentage of total orders that are returned. The return rate is calculated by dividing the number of returned orders by the number of total orders. 

The formula to calculate the return rate is:

Return Rate = (Number of Returned Items / Number of Total Items Sold) x 100

For example, if you sold 1000 items and 100 of them were returned, your return rate would be:

(100 / 1000) x 100 = 10%

If you have a high order return rate, it may indicate a problem with your product offering, customer service, or overall business strategy. 

To lower your return rate, consider improving your product descriptions, clarifying your return policy, streamlining your return process, and optimizing your customer experience.

It’s important to analyze your return rate alongside other metrics such as return reason and time to return, to gain a more complete understanding of the reasons for your high return rate and take steps to address the problem.

Product Return Rate

Your product return rate is the percentage of products that are returned. The product return rate is calculated by dividing the number of returned units for a specific product by the number of total units sold for that product. 

The formula to calculate the product return rate is:

Product Return Rate = (Number of Returned Units / Number of Total Units Sold) x 100

For example, if you sold 100 units of a specific product and 10 of them were returned, the product return rate would be:

(10 / 100) x 100 = 10%

This is a key metric to track because it can help you identify trends and problem areas within your products. For example, if you notice that a certain product has a higher return rate than others, it may indicate a problem with that product’s quality, design, or product description.

A high product return rate might indicate that your product descriptions or images are misleading, or that your customers are having trouble using your products as intended.

Time-To-Return

Your time-to-return metric is the average amount of time between when a product is purchased and when it is returned. 

To calculate the overall time-to-return, you will need to find the average time-to-return for all products. 

The formula to calculate the average time-to-return is:

Overall Time to Return = (Sum of Time to Return for all Products) / (Number of Products Returned)

For example, if you have 10 products returned and their respective time to return is 5, 7, 10, 12, 15, 8, 20, 25, 30, and 35 days. The overall time to return would be: (5+7+10+12+15+8+20+25+30+35)/10 = 19 days.

This metric can help you understand how quickly customers are realizing that they are not satisfied with their purchase, and can help identify issues with specific products or customer groups that may contribute to fast returns. 

Refund Rate

The refund rate is the percentage of returns that are refunded. To calculate your refund rate for eCommerce returns, divide the number of refunded returns by the total number of returns, and then multiply by 100 to get a percentage.

The formula to calculate the refund rate is:

Refund Rate = (Number of Refunded Returns / Total Number of Returns) x 100%

For example, if you had 100 total returns and 50 of those returns were refunded, your refund rate would be:

(50/100) x 100 = 50%.

This metric can help you understand how often customers are requesting refunds and then you can encourage exchanges instead.

By tracking this metric, you can identify which products or categories have a higher refund rate and address the issue accordingly. 

Repeat Return Rate

Your repeat return rate is the percentage of returns that come from repeat customers. It is calculated by dividing the number of returns made by repeat customers by the total number of returns and then multiplying by 100 to get a percentage.

The formula to calculate the repeat return rate is:

Repeat Return Rate = (Number of Returns from repeat customers / Total Number of Returns) x 100%

For example, if you had 100 total returns and 40 of those returns were made by repeat customers, your repeat return rate would be 40/100 = 0.4, or 40%.

Keeping track of repeat returns can help you identify customers who frequently return products. This can be an indication of a larger problem such as inadequate customer service or substandard product quality.

By addressing the issues that are causing repeat returns, you can improve your customer satisfaction and reduce future returns.

Return Cost

Your return cost is the cost of managing the return process, including shipping, restocking, and handling. 

To calculate the total cost of returns for your eCommerce store, add up all of the costs associated with each return to find the total cost of returns.

The formula to calculate the total return cost is:

Return Cost = (Cost of Shipping + Cost of Restocking + Cost of Handling + Lost Revenue + Lost Sales)

For example, if you had 100 returns over a certain timeframe, and shipping each returned item back to the warehouse costs $5, restocking each returned item costs $3, handling each returned item costs $2, lost revenue due to returns is $1000, and lost sales due to returns are $800, your total return cost would be:

(100 x $5) + (100 x $3) + (100 x $2) + $1000 + $800 = $2200

This metric can help you understand the financial impact of returns on your business.

With the help of all of these return metrics, you can get a better understanding of how your customers are interacting with your products, so you can identify problem areas and make informed decisions. 

Remember that returns can be a good thing – they give you the opportunity to provide a positive customer experience.