What is returns rate in ecommerce?

You can count it three ways.

• By orders. Orders with a return, divided by all orders.
• By units. Items returned, divided by items sold.
• By value. Refunded value, divided by revenue.

They give different numbers for the same shop. One customer who returns one item from a five-item order is a return by order, but one-fifth by units.

Add the time window. Returns for January orders can still arrive in March. A rate calculated on day 10 will look better than the same orders on day 60. Our terminology: always say the unit and the window.

An ad platform records the sale when its tracking sees it. It does not learn about a later return unless you send that information back. So reported results can look better than the business result.

A return also costs more than the refund. Postage, handling and unsellable stock all hit margin. That is why returns sit inside contribution margin, the revenue left after variable costs.

Return-adjusted ROAS corrects ad results for returns. How to feed returns back to the platforms is covered in adjust Google Ads conversions for returns.

For ZFD: We ask whether the ROAS you see is before or after returns. The gap can be where the margin went.