How do you calculate return rate for an ecommerce brand?
Return rate is the value of returned orders as a share of gross sales. It's calculated as returns divided by gross sales, where gross sales are sales before discounts and returns. For a consumer brand, returns cut directly into margin through refunds, shipping, and unsellable stock, and they often point to product or fit problems.
Formula
Returns ÷ gross sales
Example
A hypothetical footwear brand has $400,000 of gross DTC sales in a month and $36,000 of returned orders. Return rate = $36,000 ÷ $400,000 = 0.09, or 9%.
How to read it
Lower is better. Returns lag the original sale, so a big promotional month often shows a higher return rate the month after, and a spike right after a holiday season is expected. Look at it by product and size where possible; an average can hide one style with a fit problem.
What moves it
- Sizing and fit accuracy on apparel and footwear
- Product quality issues or damage in transit
- Free-returns policies and return window length
- Holiday gifting and promotional order volume
- Product page photos and descriptions that set the wrong expectation
What to do when it's flagged
- Pull returns by SKU and return reason to find the specific products driving it
- Fix size guides, product photos, or descriptions for the worst offenders
- Review packaging and carrier damage claims
- Reprice or tighten the returns policy if return shipping is eating contribution margin
How Inflection tracks it
Inflection's KPI Monitor flags return rate as Watch above 8% and Critical above 15% by default; each client's thresholds are adjusted to their business.
Gross sales and returns come from Shopify, so this measures the online store (DTC) channel.
Updated 2026-10-11. Example figures are hypothetical.