Want to make returns easy and uncomplicated? Learn the average return rate and strategies to reduce returns in your retail business, especially for cross-border retailers dealing with duty refunds and duty drawback.

Ecommerce returns present a dual challenge for retailers and customers. For businesses, they can disrupt predictive sales and profit tracking. For customers, they are essential. However, the real cost driver is that many customers buy with the intention of returning some or all items, impacting cross-border retailers and their duty refund processes.

In response, businesses are expanding their workforce, increasing warehouse space, and establishing dedicated departments to handle reverse logistics. Returns are now a central part of the customer experience. But they don’t have to be a burden. How you manage ecommerce store returns—before and after purchase—can differentiate your brand, create a competitive advantage, and even make you more profitable.

What is the Average Return Rate for Ecommerce?

The average return rate for ecommerce was 16.9% in 2024, according to a report by the National Retail Federation (NRF) and Happy Returns. This means that for every 100 products sold, nearly 17 were returned. Factors contributing to a high return rate include customer dissatisfaction, incorrect sizing, or the product not matching its online description.

The average return rate can reach up to 30% for some retailers, especially during the holiday shopping season. Products requiring a specific fit, like clothing or shoes, often have higher return rates.

How Much Do Returns Cost Ecommerce Brands?

Collectively, consumers returned products worth a staggering $890 billion in 2024, according to the NRF report. Returns can be costly for retailers due to shipping, restocking, and loss of value. The cost to process a return can range from 20%–65% of the item’s original value.

There are also hidden costs associated with ecommerce returns. A significant part of this problem comes from “bracketing,” where shoppers buy multiple sizes or colors of the same item, planning to return what doesn’t work. This is common with younger shoppers. Reports show that half of Gen Z does this when buying clothes and shoes, while only a quarter of baby boomers do the same.

To combat rising costs, many stores have started charging for returns. Two-thirds of retailers introduced return fees last year, mainly because operations and shipping got more expensive. While this helped some stores reduce returns and increase exchanges, it also led to fewer sales and lost customers.

Return Policies in Ecommerce

An ecommerce return occurs when a customer sends back something they bought online. It can happen for various reasons, such as dissatisfaction with the product, receiving the wrong item, or the item being damaged. It usually involves the customer requesting a return, shipping the item back, and then getting a refund or exchange.

A return policy is a written set of rules that state what a store allows in terms of accepting returns. Having a return policy can help protect your business from too many returns, especially if products are used or damaged. It’s also important during holiday seasons, with 59% of consumers saying they are more likely to consider retailer return policies before making a purchase during the holidays.

Why Do People Return Items?

When asked why they returned items, DealNews found that 65% of online shoppers said they have returned items that didn’t fit. Other reasons consumers returned items include:

• Item was damaged or defective (56%)
• Didn’t like the item (44%)
• Item didn’t match the description (31%)
• Found a better price somewhere else (13%)
• No longer needed the item (12%)
• Buyer’s remorse (11%)
• Ordered the wrong item (11%)

The Impact of Ecommerce Returns

Retail as an industry is grappling with the rise in returns. The NRF report found that return rates have more than doubled since 2019, climbing from 8.1% to 16.9%. Brands are facing mounting pressure to address this challenge while keeping customers happy.

The issue lies in consumer expectations and business operations. Shoppers feel a generous return policy is a major factor in their purchasing decision, with 76% considering free returns essential when choosing where to shop.

But returns cost businesses money, logistical support, and staffing. Too many at once can easily impact revenue and supply chain operations. Yet, retailers are stuck because 67% of customers indicate they would avoid future purchases from a business after a negative return experience.

Looking ahead, returns are becoming a bigger focus for retailers. Two out of three say they plan to make returns easier in the next six months. They know they need to do two main things: make returns smoother for customers while also trying to have fewer returns overall.

How to Manage Returns

Having a clear-cut process to manage returns can make them less costly to your business. Keep these options in mind to help you build a better, more efficient process.

1. Customers Post Items Back to Your Warehouse

This is the most popular returns process for ecommerce-only brands that don’t also have a brick-and-mortar store. When a customer wants to return an item they’ve bought online, they post it back to your warehouse or fulfillment center. From there, the merchandising department inspects the product and confirms it’s eligible for a refund.

Retailers can save time on manual returns with return management apps. They speed up the process, give customers the status of their return, and update your inventory management system automatically.

2. Customers Return Items to Your Store

If you have a retail store, consider allowing ecommerce customers to visit it to return their items in-store. This is known as buy online, return in-store (BORIS). The returned goods can then be inspected and put back on the shelf for future customers.

Not only are store returns more convenient, but enticing customers to enter a store could prevent future returns. If a customer is returning a t-shirt that doesn’t fit, for example, they’ll have the opportunity to try on other sizes during their visit. That gives them more confidence in future purchase decisions—both online and offline—because they know their size.

3. Outsource Reverse Logistics

Returns management is a time-consuming process. But it’s one you don’t have to handle in-house. Third-party logistics (3PL) partners can handle the entire order fulfillment process—including returns. A provider offering reverse logistics stores a retailer’s returned inventory in a third-party warehouse.

When customers return an item the 3PL has previously shipped, it arrives back at their warehouse. Their team inspects the item and processes a refund. The approved returned item is then put back on the shelf to be picked for another order.

Ecommerce Returns Best Practices

Now that we know the process for handling ecommerce returns and the options available to you, there are still things you can do to reduce the number of returns you’re handling. That’s the end goal, after all—fewer returns mean happier customers and more revenue.

Here are seven ecommerce returns best practices to boost efficiency and cut costs.

Create a Comprehensive Return Policy

One way to make returns easier for your customers is by creating a comprehensive return policy that is easy to find. Your return policy should include information like:

• How long customers have to make a return
• The condition items must be in
• How and where customers can make a return
• Items that can be returned vs. exchanged
• What items can be exchanged for (full refund, store credit, etc.)

Utilize our return policy template to get started writing your own return policy. Make sure you link your return policy in the footer of your website as well as in prominent areas during the checkout process so that your customers can easily find it.

Make Product Information Accurate and Easy to Find

It’s standard practice to check that all public-facing content—including product descriptions—is accurate and detailed. If the product arrives differently than expected, there’s a high chance it’ll be returned.

To reduce returns and improve conversions, make sure the following information is included on every product page across your ecommerce site:

• Product weight and dimensions
• Materials used to make the product
• Size guides, including the size a model is wearing (if applicable)
• Your return policy

Use 3D/AR on Your Ecommerce Website

Shopping in-store naturally has some advantages over shopping online. Amongst the biggest is the customer’s ability to see, try on, and interact with products before they decide to buy them.

Augmented reality (AR) technology helps online shoppers experience the same thing. Customers can use it to see what products look like when they are tried on or placed in their home, or view next to an item they own for a size comparison.

Pack and Ship Items Securely

It’s easy to think that once an item has left your warehouse, it’s off your plate. The truth is that some items are returned because they arrived faulty or damaged. But you wouldn’t ship them in that state—something went wrong in transit.

Granted, your delivery carrier plays a big role in this. But there are steps you can take to minimize the chances of an item breaking or becoming defective through shipping—and therefore, being returned:

• Inspect every item of clothing before it’s dispatched to a customer
• Use protective material, such as bubble wrap, with a delicate item
• Add “Fragile” labels to parcels with easily breakable items inside (like glass)
• Use the correct parcel size so items don’t jolt around in transit

Make Your Return Process Sustainable

Most companies’ return processes don’t meet sustainability standards. In fact, the transport of goods and people is among the top contributors to global carbon emissions.

Preventing the likelihood of returns helps to reduce your ecommerce brand’s carbon footprint. The fewer packages that come your way, the less fuel and resources you use.

Unfortunately, you’ll still have to deal with returns. Make sure your ecommerce return policy is more sustainable by ditching the prepackaged free-return labels in your parcels. Printing those labels—even for customers who don’t need them—is wasteful. Instead, ask customers to go online and print their own labels when needed.

Keep Customers Informed About the Status of Their Return

The most important question to ask when assessing your reverse logistics process is whether you’re designing and optimizing the experience for the customer or for your business—ideally, it’s a mix of both.

When in doubt, default to the customer. First, keep them up to speed on the returns process while in the flow, either by email or, preferably, via Facebook Messenger or SMS. If your OMS facilitates this, that’s great. Second, get feedback and ratings on the returns process itself—that’s where you’ll find gold nuggets to set yourself apart from the competition.

Find a shipping carrier that supplies tracking information. Most offer tracking numbers for customers to see the location of their returned parcel. Once it arrives at your warehouse, send the customer an automated message to confirm you’ve got it. Give them an ETA on how long they should expect to wait for a refund.

Protect Your Business Against Ecommerce Return Fraud

Fraudulent return requests cause the biggest losses for 15% of all retailers, which is why tackling return fraud has become more of a priority for retailers.

If blacklisting customers isn’t an option for your ecommerce business, there are other things you can do to prevent return fraud:

• Choose a delivery carrier that supplies tracking numbers or proof of delivery. For example, a photo of the delivered package inside a customer’s open doorway.
• Offer only exchanges or store credit instead of cash refunds. There’s less incentive for someone to try to return a stolen item if they’re getting a like-for-like back.
• Offer an exchange window that’s longer than your refund window. This ensures your customer still has ample time to return, but makes an exchange more likely.
• Ditch free return shipping to make it harder for fraudsters to push their luck with return fraud.
• Only process returns if the item comes with a receipt or proof of purchase. This prevents people from returning stolen merchandise or items purchased from another retailer. You’ll also see the exact amount they paid for the item in case you do need to process a refund.
• Don’t accept returned items of clothing without the original tag or protective seal. This prevents wardrobing, which is when a customer wears an item and returns it as if it were new.

Adopt a Unified Approach

Most stores use multiple systems: one for online orders, another for in-store sales, and often a separate one for returns. This can lead to confusion, delayed refunds, and lost items.

The unified system shows real-time stock levels, so customers know exactly what’s available and where. When items are returned, they’re immediately added back to inventory, whether at a warehouse or local store. Combining all your sales and returns data uncovers different patterns, like which products get returned most and why, so you can better prepare and prevent future returns.

Unified commerce makes operations more efficient and improves your customers’ experience, turning returns from a problem into a business advantage.

Ecommerce Returns Are Inevitable, But Manageable

With almost a quarter of all online purchases eventually diverting back toward the retailer’s warehouse, ecommerce returns aren’t something you can ignore.

Do everything you can to prevent returns—from writing accurate product descriptions to picking and packing items securely.

Remember that a certain number of returns is inevitable. When it happens, keep customers informed about the status of their return. Choose sustainable options. Prevent return fraud by offering online store credit instead of cash refunds. Consider outsourcing reverse logistics if it’s becoming too time-consuming to handle in-house.

The returns process might be the final part in a first-time customer’s journey with you. But it’s still just as important as the first part.

Use Tariffs Mitigation Methods to Save Cross-border Returns Costs

Duty reclaim, duty drawback, Returned Goods Release are some of the multiple ways to mitigate tariffs. For expert guidance on managing crossborder returns and optimizing your ecommerce operations, consult with Trade Duty Refund. Our expertise in duty refunds and duty drawback can help you navigate the complexities of cross-border trade and ensure a seamless return process for your customers.