Online shopping has given customers speed and convenience, but it has also created an expensive habit: sending things back. Free return labels and easy refund policies make it simple for shoppers to treat their homes as fitting rooms. For retailers, every parcel that makes the journey back to the warehouse carries a hidden price. Extra shipping, inspection, repackaging and lost selling time quietly drain profit margins and turn returns into a permanent cost of doing business.
Key Takeaways
- Online return rates remain far higher than those in physical shops, with fashion and footwear consistently at the top.
- Serial returners – customers who order heavily and send most items back – account for roughly a quarter of the total value of UK returns.
- Accurate product descriptions, clear size guidance and category-specific policies can reduce costs without deterring honest customers.
- Data collected through returns portals and warehouse checks helps identify over-ordering patterns, packaging problems and fit issues before they grow.
Online returns and refunds statistics
Returns are now a defining feature of ecommerce. Industry research puts the average online return rate close to seventeen per cent, almost twice the figure reported by brick-and-mortar stores. Fashion leads the list: clothing alone accounts for about a quarter of all returned items in the United Kingdom, and shoes and accessories follow close behind.
Other key findings show the size of the problem:
- Average UK ecommerce return rate – Recent UK and global surveys put the online return rate around 16-17%, while physical store return rates are reported near 9%.
- Clothing and footwear return rates – Fashion remains the highest-return category, with multiple UK studies showing clothing and shoes regularly exceeding 25–30% of orders, far above the overall ecommerce average.
- Frequent returners’ impact – Serial returners, about 11% of UK shoppers, generate roughly £6.6 billion in returns each year, accounting for around 24% of total online non-food returns.
These figures underline why retailers now treat returns management as a core part of their business rather than an after-sales service.
Online retail returns and their impact
The cost of a return goes well past the refund that appears on the balance sheet. Every parcel sets off a chain of tasks: customer service authorises the request, carriers handle the reverse journey, warehouse teams unpack and inspect the product, and merchandising decides whether it can be resold, discounted or written off. Items that miss the current selling season may have to be marked down, while unsellable goods add disposal costs and environmental pressure. In fast-moving sectors such as fashion, the delay between return and resale also distorts stock counts and future sales forecasts.
Further Reading: The Complete Guide to Managing Expenses for Online Retailers and Resellers
What are the reasons people return items?
Customers return products for many reasons, some unavoidable and others preventable.
The most common include:
- Incorrect size or colour, particularly in clothing and footwear.
- Damaged or defective items caused by poor packaging or rough handling.
- Product descriptions or images that do not match the actual item.
- Over-ordering, where several sizes or styles are bought and only one is kept.
- Confusion about policies for customised or perishable goods
Retailers that track these reasons and share the findings with product and operations teams can often reduce repeat issues and cut unnecessary refunds.
Key problems of online returns
To a shopper a return is a quick label and a trip to the drop-off point. For the retailer it is a complex operation that affects stock accuracy, cash flow and customer service. Items in transit create gaps in inventory records, and stores that accept online returns risk long queues if staff are not trained for mixed-channel processing. Fraud prevention becomes harder when policies are generous, yet customers still expect rapid refunds. Balancing cost control with a positive experience remains one of the toughest challenges in modern ecommerce.
E-commerce returns: what is the average rate?
Benchmarks help retailers see where they stand. Across the UK the typical online return rate sits around seventeen per cent. Fashion categories regularly exceed that figure, with clothing and footwear generating the highest volumes and accessories not far behind. Retailers that invest in detailed size charts, accurate images and prompt customer support consistently report lower return levels than competitors that rely on generic product descriptions.
What is the cost of returns for e-commerce brands?
The true cost of a return is rarely limited to the price of the item. Retailers must pay for every step in the journey back to stock, including:
- carrier charges for the reverse shipment;
- staff time to receive, inspect and repackage goods;
- replacement packaging and labelling;
- markdowns when products cannot be sold as new.
UK studies show that parcels returned by courier are often more expensive to handle than items brought back to a physical store. Each extra touchpoint adds to the operational bill and narrows already thin margins, making efficient returns management essential for profitability.
E-commerce return policies
A clear return policy shapes customer expectations and protects profit. The most successful retailers publish their rules in plain language, avoid hidden conditions and provide a simple process for initiating a return. Good policies cover deadlines, acceptable item conditions, refund methods and any restocking fees. Transparency builds trust, yet the policy must also discourage casual or abusive returns. Many retailers find that offering free returns for first-time customers while tightening conditions for repeat offenders strikes the right balance.
Key elements of an effective policy:
- An easy-to-find page on the website and clear links at checkout.
- Precise time frames for returning different product categories.
- Instructions for packaging, labelling and approved carriers.
- Details on refunds, exchanges and store credit options
How to build a successful e-commerce return programme
Reducing return costs requires more than a good policy. A structured programme looks at the full journey from purchase to resale and removes friction at every step. Retailers that succeed in this area usually begin with a thorough analysis of current return data. They identify the most common reasons for returns, the categories with the highest costs and the suppliers that create repeated quality issues.
Once the data is clear, improvements can follow:
- Enhance product pages with precise measurements, high-resolution images and real customer reviews.
- Introduce quality checks before dispatch to catch defects early.
- Provide convenient drop-off locations to keep courier charges under control.
- Train customer service teams to guide shoppers towards exchanges rather than refunds.
These measures lower return volumes, speed up processing and improve customer satisfaction at the same time.
Further Reading: How to Control Rising Advertising Costs as an Online Retailer
What are online retail returns best practices?
Best practices combine customer care with strict internal controls. Retailers known for efficient returns usually:
- Keep all return requests within a centralised platform so that data is consistent.
- Monitor return rates by product, supplier and season to spot patterns quickly.
- Issue refunds only after inspection to prevent fraudulent claims.
- Use clear email updates to keep customers informed throughout the process.
Choosing the best software for handling online returns
Technology is now essential for managing the volume and complexity of online returns. A strong platform should automate label creation, track parcels in real-time and update inventory as soon as a return is received. Integration with accounting and warehouse systems keeps financial records accurate and prevents stock discrepancies. Mobile functionality is equally important, allowing staff to approve refunds and capture images of returned goods from any location. When evaluating software, retailers should prioritise systems that offer detailed analytics so finance and operations teams can understand the true cost of returns and plan accordingly.
The best software for handling returns in e-commerce
Several specialised platforms dominate the market for returns management. Solutions such as Happy Returns, Loop and ZigZag focus on automating every stage of the process, from customer initiation to warehouse receipt. Key features usually include automated carrier selection, branded return portals, real-time tracking and one-click refund authorisation.
Many integrate directly with popular ecommerce platforms, making them accessible even to smaller retailers. The best choice depends on company size, product category and the complexity of cross-border shipping, but all successful tools share two traits: accurate data and seamless integration with existing systems.
Track your returns efficiently with Wallester
Wallester Business offers a distinctive approach to controlling return costs by combining virtual payment cards with detailed expense management. Retailers can issue dedicated cards for return shipping, refunds or supplier reimbursements, each with its own spending limit and instant transaction alerts. This setup gives finance teams real-time visibility of every payment linked to a return and makes it easier to reconcile carrier charges with actual parcels received.
Key benefits of using Wallester Business include:
- Instant creation of virtual or physical Visa cards for return-related expenses.
- Real-time monitoring of carrier and refund payments in one dashboard.
- Automated receipt capture and expense categorisation for precise reporting.
- Integration with accounting platforms such as Xero and QuickBooks to keep financial records accurate.
By using dedicated cards and live data, retailers can spot irregular charges quickly, prevent overspending on carriers and maintain clear budgets during peak return seasons.
