Formula
Return Rate = (Number of Returned Items ÷ Total Items Sold) × 100
Calculation Example
If 500 out of 10,000 products are returned, Return Rate = (500 ÷ 10,000) × 100 = 5%
Data Source
CRM Software, ERP Systems, Return Management Systems
Tracking Frequency
Monthly, Quarterly
Optimal Value
Lower is better; under 5% is ideal.
Minimum Acceptable Value
A high return rate suggests quality or fulfillment issues.
Benchmark
Industry benchmarks: E-commerce ~15-30%, Fashion ~20-50%, Electronics ~5-15%
Recommended Chart Type
Bar chart (to compare product categories), Line chart (to track trends)
How It Appears in Reports
Displayed in operations and customer service reports to assess product quality.
Why Is This KPI Important?
Indicates how well a company meets customer expectations.
Typical Problems and Limitations
High returns increase costs and impact profitability.
Actions for Poor Results
Improve quality control, enhance product descriptions, optimize packaging.
Related KPIs
Defect Rate, Customer Satisfaction Score (CSAT), Order Fulfillment Time
Real-Life Examples
An online store reduced return rates from 18% to 12% by adding detailed product images and descriptions.
Most Common Mistakes
Focusing only on reducing returns without improving customer satisfaction.
