# What is Return Rate?

What is Return Rate? The percentage of orders that get returned. Return Rate = returns / orders × 100. Averages: apparel 20-30%, electronics 8-15%, books 5%.

## How it works in practice

A high return rate is a 'warning sign' that something's wrong. Every return costs: shipping x2 + labor + product depreciation. A 25% return rate on a $55 AOV = about $14 average loss per returned purchase. Across 1,000 orders, that's $14,000 lost/month.

## Related metrics

- Reverse Logistics — return rate determines volume
- Net Revenue — returns lower net revenue
- Gross Margin — returns eat into margin
- Customer Experience — the return process affects repeat purchases

## Common misconception

'A high return rate means customers don't like the product.' Not necessarily. A high return rate in apparel can be normal (sizing issues). A high return rate on electronics is a problem. Always compare against the category benchmark.

## How to fix it

High return rate? (1) Analyze reasons — 'not as described,' 'defective,' 'wrong size,' 'changed my mind' — each needs a different fix, (2) Improve product content — more images, precise measurements, size guides, (3) Improve packaging — shipping damage, (4) Track defect rate by SKU.

## Real-world example

Apparel store: 31% return rate. Analysis: 72% due to 'sizing.' Added a virtual try-on + size guide + fit notes ('size S = 36/38'). Return rate dropped to 19%. Savings: $11,400/month in reverse-logistics costs.

## Where to start

Measure return rate by SKU, category, and reason every month. A return rate 1.5x above benchmark warrants immediate investigation. Set it up in GA4: Events → Refunds.

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Category: Operations · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/return-rate