{"id":7102,"date":"2024-09-20T10:53:32","date_gmt":"2024-09-20T02:53:32","guid":{"rendered":"https:\/\/www.trackingmore.com\/blog\/?p=7102"},"modified":"2024-09-20T15:40:34","modified_gmt":"2024-09-20T07:40:34","slug":"ecommerce-returns-benchmark","status":"publish","type":"post","link":"https:\/\/www.trackingmore.com\/blog\/ecommerce-returns-benchmark\/","title":{"rendered":"eCommerce Returns: Key Benchmarks and Trends for 2024"},"content":{"rendered":"

A strong understanding of the return rate dynamics gives eCommerce businesses critical information that helps them optimize operations, enhance customer satisfaction, and drive profitability.<\/span><\/p>\n

However, by using only your own eCommerce return rates as reference, it is unlikely that you can make the most informed decisions regarding your returns management strategy.<\/span><\/p>\n

This article serves as a benchmark study on return rates. While it may not cover every detail, it should provide valuable insights into your return performance. We will examine the return rates by industry, examine common causes of returns, and offer strategies for improvement based on the factors influencing these rates.<\/span><\/p>\n

By the end of the article, we hope you can get insights into the eCommerce return rate that you can eventually apply to your return management strategy.<\/span><\/p>\n

What are eCommerce Returns?<\/b><\/h2>\n

The idea of eCommerce returns is no different from brick-and-mortar returns. It is represented in percentages and reflects the number of returned products relative to the total amount of orders sold by the eCommerce brand. The formula is as follows.<\/span><\/p>\n

Return Rate = (No. of Returns \/ Total Number of Orders) x 100%<\/b><\/p>\n

The average return rate for the eCommerce industry typically ranges from <\/span>20-30%<\/span><\/a>. Compared to the traditional brick-and-mortar stores at around 8%, this figure presents to be 2 to 3 times of the norm.<\/span><\/p>\n

Similarly, another metric called the Return Merchandise Authorization rate, or RMA rates can be used to look at returns. It works similar to eCommerce return rate but takes into account the formal authorizations to return a defective or unwanted item (having an RMA number) rather than the actual returns made by the customer. However, the logic is quite similar.<\/span><\/p>\n

While the numbers may seem threatening, it is also important to acknowledge that eCommerce returns are far more common than you think. It is an essential part of your eCommerce business. According to the National Retail Federation, online returns accounted for <\/span>$212 billion in 2022<\/span><\/a>, around 16% of all online sales.<\/span><\/p>\n

A better way to think of it: A certain eCommerce return rate is a healthy indicator of customer engagement, while too high can be detrimental. Then, it begs the next question: How should one understand eCommerce return rate?<\/span><\/p>\n

Just Like a Magnifying Glass<\/b><\/h3>\n

By tracking eCommerce returns, businesses can gain valuable insights into customer behavior, product quality, and overall operational efficiency.<\/span><\/p>\n

Viewing them through return rates reveals essential information about the shopping experience that your eCommerce business offers. For instance, elevated return rates in specific product categories may highlight product quality issues, sizing discrepancies, or misleading product descriptions. This then encourages businesses to delve deeper into the data instead of simply accepting high return rates as setbacks.<\/span><\/p>\n

Instead of fearing these return rates, companies should develop effective returns management strategies, which we will cover in the next section.<\/span><\/p>\n

Thinking Return Rates as Cohorts<\/b><\/h3>\n

To gain deeper insights into return rates, consider analyzing them through the lens of <\/span>cohort analysis<\/b>. This approach allows businesses to segment returns based on specific customer groups or purchase periods, hence achieving a better understanding of return behaviors.<\/span><\/p>\n

Your Return Policy Matters<\/b><\/h3>\n

Your return policy plays a vital role in shaping the customer experience and influencing return rates. A transparent, customer-friendly return policy not only encourages purchases but can also alleviate the negative impact of returns. However, a lenient policy can also be reflected in the form of higher return rates than your competition.<\/span><\/p>\n

eCommerce Return Rates and Trends<\/b><\/h2>\n

Diving into eCommerce return rates requires looking into benchmarks. Fortunately, industry groups and companies have published statistics on average return rates, offering valuable insights into trends across different aspects influencing the return rates. Let\u2019s look into the most recent benchmarks together.<\/span><\/p>\n

eCommerce Return Rates by Industry<\/b><\/h3>\n

The most obvious choice of benchmarking will be via industry. Our research founds 3 sources of comparison for now: Statistica, Shippo, and Mailmodo.<\/span><\/p>\n

1. Statistia<\/b><\/h4>\n

According to <\/span>Statista’s latest data<\/span><\/a> in 2024, each eCommerce category has distinct return rates, with an industry-wide average of 20%. The clothing and apparel category leads with the highest return rate at 26%. Here is the return rate ranking by category:<\/span><\/p>\n