Ecommerce return rates are quickly becoming a challenge to the burgeoning sector, despite its unprecedented growth. In 2014, retail e-commerce sales amounted to $1.3 trillion worldwide. By 2022, this figure had reached $5.7 trillion, with growth in 2026 estimated to pass $8.1 trillion.
The plague of rising return rates in the ecommerce space is even prompting major retailers to introduce additional returns fees, which often end up being a double-edged sword.
Understanding and managing returns is key for small online businesses that want to succeed in this space. That’s why we’ve combed through a myriad of reports, studies, and articles to curate key statistics and offer actionable tips to help you manage your ecommerce return rates.
Ecommerce Return Rates Statistics
High return rates are part and parcel of running an ecommerce business. In 2022, approximately 30% of ecommerce orders in the UK were returned compared to about 8% that originated in brick-and-mortar stores.
In the US, however, approximately 16.5% of online orders were returned in 2022 according to a report by the National Retail Federation. In-store returns attracted the same rate of return.
US returns in 2022 accounted for $212 billion of merchandise. Approximately 10% of online returns in 2022 may have been fraudulent, resulting in as much as $22.8 billion lost to online return fraud.
Return fraud can take many forms, including returning stolen merchandise and wardrobing, which is when non-defective clothes or shoes are returned after the customer has used them. This could include “buying” a fancy dress, wearing it to a party without removing the tags, and then returning it, for instance.
On a global scale, online shoppers have no problem returning purchases they no longer want or do not like.
In 2022, 73% of online shoppers in India returned a product they’d purchased online. In China, 66% of online customers made a return, and in the US, 49% of shoppers returned an online purchase. This goes to show that potential customers in some of the biggest economies around the world expect to be able to make returns easily.
One tech giant in particular is largely responsible for this expectation.
Amazon: The Ecommerce Monolith and its Response to Returns
In 2023, Amazon was the leading ecommerce company worldwide with a market cap of $1.3 trillion at the time of writing. The nearest global rival, Alibaba, was a distant second with a market capitalization of $213 billion.
While Amazon doesn’t publish its overall returns numbers, the National Retail Federation estimates the average rate of return for online purchases was 21% in 2021.
Amazon’s logistics spend was $152 billion in the same year, which accounted for a third of their net sales. A portion of this was spent on their returns process. While Amazon does have a liberal returns process, it implemented a new feature in 2023 to help its customers and hopefully limit returns.
The new feature warns customers when a particular item is “frequently returned”, prompting them to check the customer reviews and description before making a purchase.
As businesses within the ecommerce industry look for ways to optimize returns, it’s key to remember that an average ecommerce return rate means very little when you’re a niche online retailer focusing on a particular segment. Your ecommerce return rate statistics will look very different depending on whether you sell clothes or garden tools, for example.
Clothing Return Rates
Clothing is by far the most returned category when it comes to online shopping. In 2023, 26% of US online shoppers said they returned clothing they’d bought online in the last 12 months.
Part of this comes with the territory. When people shop online, they can’t try on multiple sizes to see which one fits them best. Online shoppers typically tackle this conundrum in one of two ways; they order an item and send it back if it doesn’t fit, or they order multiple sizes of the same item to try on at home.
In 2022, 75% of online shoppers in the US sent back an item because it didn’t fit. A further 14% sent back items because they’d ordered multiple versions in the first place.
Amazon offers a try-before-you-buy service, having recognized this pattern. Customers can order a few different items to try on at home. On receiving the order, they have 7 days to select the items they want to keep, checkout, and pay for them. The rest of the items are returned.
Bags, Accessories, and Shoe Return Rates
Other fashion sectors are also affected by ecommerce returns.
In 2023, 18% of online buyers in the US said they returned bags, accessories, or shoes they’d purchased in the last 12 months. This accounts for the second largest category after clothes.
Food and Beverages Return Rates
In the US, 153 million online shoppers bought their groceries online in 2022. This number is expected to grow to 163 million by 2024. This accounts for about half the population of the country as a whole, representing a significant market.
In 2023, 12% of online shoppers in the US said they had returned food and beverages. In 2022, 8 out of 10 online shoppers who returned an order did so because the item was damaged or defective, Potentially accounting for the high numbers in this category.
Toys Return Rates
In 2022, 41% of customers buying toys, games, and books said they typically shop for these items online. Only 21% of customers said they usually shopped in physical stores, and 38% said they shopped both online and in-person “equally”.
In 2023, 9% of customers shopping online in the US said they have returned toys. This is, perhaps, unsurprising considering that in 2019, a study by personal finance website WalletHub found that more than a third of Americans return gifts they’ve received during the holiday season.
A fifth of the gifts returned over the holidays were toys.
Still, online retailers selling toys can take heart in the fact that the worldwide sales revenue from online sales of toys, hobbies, and DIY items is growing.
In 2022, the worldwide sales revenue for this segment was estimated at $703 billion, with a projected upward trajectory. By 2026, online retailers selling these items can expect the worldwide sales revenue for this segment to surpass $1 billion.
Furniture and Household Return Rates
Furniture is a valuable ecommerce segment which generated around $29 billion in sales in 2022. The global furniture ecommerce market is expected to reach $41 billion by 2030.
While in-store furniture and household shopping continues to be the preferred option around the world, about a fifth of global consumers said they bought home and garden products online on a monthly basis in 2023. In the US, the figure stood at 31%.
In 2023, 8% of customers shopping online in the US said they returned furniture and household goods. While this is a lower rate than other categories, furniture returns can be a logistical nightmare, since it’s bulky, difficult to move, and difficult to store.
This is where augmented reality can play a role. One study found that customers using virtual reality to visualize products before purchasing them were less likely to return them.
Return Statistics in Other Segments
Online retailers selling clothes, bags, accessories, and shoes are the worst hit by far in terms of returns. They’re closely followed by online shops selling food and beverages and consumer electronics, such as TVs and smartphones.
In 2023, 11% of consumers in the US returned electronics, while only around 6% returned DIY and garden products.
The table below shows an overview of the most returned online purchases in the US by category as of 2023.
Ecommerce Return Rates and Customer Satisfaction
A hassle-free return process often translates to customer loyalty. Nowadays, customers expect to be able to return products easily. In fact, 86% of customers check retailers’ return policies before making an online order.
In 2022, 78% of US shoppers said they would be less likely to buy again from an online store if they had a poor return experience. Another 87% of online shoppers in the US said free returns were “important” to them when they shopped online.
And half of shoppers in the US abandoned their online purchases altogether because there was no convenient return method on offer. Many customers don’t necessarily want a refund from a return. In fact, nearly half of customers said they’d be happy to exchange an item rather than opt for a refund.
In 2022, approximately two-thirds of shoppers in the US said they’d be more likely to shop at an online store that offered:
- Immediate refunds
- Free returns
- No packaging requirements when returning
In fact, the number one preferred method for online returns in 2022 was in-person and box-free drop-off at a third-party location. 30% of those surveyed preferred this method. Further, 24% of those surveyed said they wanted a box-free return to a brick-and-mortar store.
Surprisingly, packing up items and scheduling a home pick-up was only third on the list of preferred methods when it came to returns. Only 18% of respondents said this was their preferred method. The typical online shopper seems to prefer visiting a physical store when it comes to returns.
The pie chart below shows how customers feel about different return methods.
How to Reduce Your Ecommerce Return Rate
Ensuring you have a simple returns policy is a great way to encourage return customers and maximize your customer lifetime value. But nobody likes to deal with returns; your customers don’t want the hassle, and you don’t want the hit to your profits.
Here are some ways to reduce your ecommerce return rate.
1. Create Detailed Product Descriptions
Ensure that your descriptions are as accurate and detailed as possible. Include measurements, materials, and any other relevant information. There’s no need to oversell the item. Detailed and accurate product descriptions will help customers understand exactly what they’re buying and reduce the chance of dissatisfaction.
2. Take High-Quality Product Images
Use high-quality images and videos to showcase your products. If you have the means, implement an augmented reality feature allowing your customers to “try” on your products at home before they’ve even ordered them.
3. Create Size Guides for Clothes and Shoes
If you’re selling clothes and shoes, make sure you provide a detailed size guide. One of the most common reasons why customers return products is because they don’t fit in the first place. Make your job easy by providing accurate size guides so they can pick the right size from the get-go.
4. Have a Clear Return Policy
Make sure your return policy is clear and easily accessible. This can help manage customers’ expectations and reduce the likelihood of unnecessary returns.
Within your policy, make sure you protect yourself against ecommerce return fraud as best as you can. You could:
- Offer store credit instead of a refund
- Require a receipt or proof of purchase before offering a refund
- Charge for returns to discourage “wardrobing”
5. Showcase Reviews
You’re not always going to get glowing reviews. Showcase the good and the bad to help people make an informed choice. Certain negative reviews may discourage buyers, but it’s best to discourage them before they’ve made the purchase rather than deal with a return after they’ve received it.
6. Implement Quality Control and Good Quality Packaging
The vast majority of returns happen because the product is damaged in some way. If you have a comprehensive quality control process in place, this can significantly reduce returns for this reason.
Spending a few extra cents on high quality packaging is also key. This can prevent damage and, therefore, returns.
7. Send an Order Confirmation
Send an order confirmation email that includes details of the purchased products. This keeps customers informed of their order details while also giving them a chance to double-check what they’ve bought before it’s shipped.
8. Ask for Feedback
Always ask for feedback when a customer makes a return. This can provide valuable insights into why returns are happening and how you can prevent them in the future.
How to Calculate an Ecommerce Return Rate
Calculating your ecommerce return rate is crucial as it gives you insights into customer satisfaction, product quality, and the overall performance of your business.
To work out your return rate, you need to divide the number of items returned by the total number of sold items and then multiply that number by 100.
The formula looks as follows:
Return Rate = (Number of Returned Items / Total Number of Sold Items) x 100
This rate can be calculated over any given period – weekly, monthly, quarterly, or yearly – depending on what suits your business needs.
How to Monitor Your Returned Items
Getting that “number of returned items” figure is key to working out your return rate. You have a couple of options depending on where you’re hosting your shop.
Some platforms offer free reports that calculate your return rate for you, while others might require a little more leg work.
If you have a Shopify store, you’ll be able to view your return rate via the Analytics page. This is housed within the “Product orders and returns” report. You can view your return rate over a specified period.
Amazon allows you to generate reports showing your customer returns as well. And if you’re on WordPress, you may find yourself using WooCommerce to create your e-commerce business. WooCommerce has several reports available too. If you access the “Sales” reports, you’ll be able to see any refunds issued over a certain period of time.
Why You Should Monitor Your Rate of Return
Monitoring your return rate can help you identify trends and patterns so you can adjust your strategy accordingly. For instance, if returns jump after the holiday season, you’ll be able to mitigate or at least plan for the potential profit hit before it happens.
Likewise, working out what products have a high return rate can help you zero in on issues with product quality, or perhaps the way the product is described and presented. This is where customer feedback is important and both qualitative and quantitative data play a role.
A successful ecommerce business means running a tight ship when it comes to returns. Monitoring your returns means you can stay on target or follow best practices to improve your rate of return.
How do Ecommerce Returns Work?
Ecommerce returns involve a process called “reverse logistics” where goods move from the customer back to the business. Here’s a quick overview of what a simplified e-commerce return process might look like.
The Customer Initiates the Return
The customer decides they want to return the item. This could be due to various reasons; the product might be defective, the wrong size, or the customer might have simply changed their mind. The return process begins on the business website or online shopfront where the customer requests a return in line with the published returns policy.
The Business Verifies the Request
It’s then up to your business to verify the request. This usually means checking whether the item comes with a receipt or proof of purchase, as well as whether the return is within the specified return period (usually between 14 days and three months).
The Customer Returns the Product
If the request is approved, the customer sends the product back. Your business might provide free return shipping with a shipping label which the customer then attaches to the package containing the returned product.
The customer may need to arrange a collection or drop the package off at an agreed-upon location. If your business has physical premises, the customer might be able to drop the package off in-store.
The Product is Received and Inspected
Once your business receives the product, it should be inspected for damage. If the product meets the returns criteria, then a refund or exchange is initiated. The refund could be a direct refund to the original payment method or given as store credit.
The Returned Product is Either Restocked or Disposed Of
Depending on the reason for return and the condition of the product, the returned item can either be restocked for resale or disposed of if it’s damaged. Some retailers opt to throw the product away even if it isn’t damaged because it costs them less time and resources than reselling would.
This less-than-environmentally-friendly option resulted in 9.5 billion pounds of returned goods ending up in landfills in 2022. That’s enough to fill 10,500 fully loaded Boeing 747s, according to reverse logistics company Optoro.