The return rate is a key performance indicator closely followed by eCommerce managers to measure the performance of their online store. KPIs also closely followed because often synonymous with loss of profitability and margin, here are the average return rates observed around the world.
The calculation of the eCommerce return rate
Here’s how to figure out the return rate for an online store:
- (Total products returned / total products sold) * 100:
This formula helps you see which specific products customers return most often.
- (Total number of returns / total number of orders) * 100:
This one shows you the overall return rate, not just for a specific product. It’s a good way to spot general trends in your returns.
eCommerce average return rates by Country?
According to a recent study conducted by Statista , the average eCommerce return rate observed worldwide is 39% in 2022 , which is far from certain countries which reach return rates of more than 70%, such as India with 73%.
Average return rates by country in 2022:
- India: 73%
- China: 66%
- Germany: 51%
- Switzerland: 51%
- United States: 49%
- UK: 49%
- South Korea: 48%
- Spain: 42%
- Canada: 39%
- France: 39%
- Italy: 39%
- Brazil: 31%
- South Africa: 29%
eCommerce average return rates by product category
eCommerce return rates vary by product category. In 2022, a Statista survey showed varying return rates across categories like clothing, footwear, cosmetics, and home furnishings. Unsurprisingly, apparel has high returns due to sizing or color discrepancies, while cosmetics and home decor have lower rates. Implementing sophisticated return strategies is crucial for businesses with high return rates.
AR technology has proven effective in reducing return rates. Brands like Sephora and L’Oreal pioneered virtual ‘try-ons’, while Home Depot and Wayfair offer AR apps for home goods placement. Over 61% of consumers prefer eCommerce sites with AR technology, emphasizing the importance of AR in the purchasing process. Next, we’ll explore reasons behind consumer returns.
Top Reasons for eCommerce Returns
1. Product Descriptions Not Matching the Actual Product (28%)
One of the leading causes of product returns is the mismatch between product descriptions and the actual product. When customers shop online, they rely on product descriptions, images, and specifications for making informed purchasing decisions. If product descriptions do not accurately represent them, it can create false expectations and disappointments. This can lead to customers returning the product and asking for a refund, thereby increasing return rates and decreasing profits. Moreover, when customers experience this problem, they are less likely to make future purchases from the same seller.
2. Incorrect Size or Fit (26%)
When customers receive clothes or footwear that doesn’t fit them properly, they are more likely to return the product. This not only results in a loss of revenue for your business but also incurs additional costs such as shipping and restocking fees.
Moreover, the process of returning and reordering a product can cause frustration and disappointment for the customer, which can harm their overall brand experience. To avoid this, it’s crucial for e-commerce sellers to provide accurate and detailed information about sizing, like measurements and fit guides, to help customers make informed purchases.
Offering multiple sizes and free return options can also encourage customers to take a chance on a new brand or product. By addressing sizing issues, you and your customer support team can improve customer satisfaction and reduce the number of returns, ultimately leading to increased profits and a better brand reputation.
3. Damaged or Defective Products (14%)
Damaged or defective products can cause a rise in e-commerce returns for several reasons. First, customers expect the products they receive to be in good condition and match the description you, as a seller, provided. If a product arrives damaged or turns out to be defective, the customer is likely to return it for a refund or exchange. This not only results in a higher return rate but also lowers customer satisfaction and trust in the brand, leading to negative reviews and potential loss of future business.
Moreover, processing and shipping damaged or defective products can be costly for an e-commerce business. You may have to bear the return shipping costs, handling charges, and the cost of replacing the product. This can significantly impact the company’s bottom line, especially if the damage or defect is widespread and affects a large number of customers.
To mitigate the impact of damaged or defective products, e-commerce businesses should have quality control measures in place to ensure that the products they sell are in good condition before shipping them to customers.
4. Unsatisfactory Product Quality (9%)
Customers have high expectations regarding the quality of products they purchase online. If a product doesn’t meet these expectations, they are likely to return it, leading to a higher return rate and lower customer satisfaction.
Poor product quality can also lead to negative reviews, which can harm a company’s reputation and deter potential customers from making a purchase. In addition, the cost of processing and shipping returns, as well as replacing the product, can be significant, especially for small e-commerce businesses.
To minimize the impact of unsatisfactory product quality, you should ensure that the products you sell are of high quality and meet customer expectations. This can be achieved through rigorous quality control measures and product testing, as well as sourcing from reliable suppliers. Moreover, offering a clear and fair return policy can help manage customer expectations and minimize the number of returns due to poor product quality.