What is Return Rate, and how do you calculate it?
In short – Percentage of sold items that are returned. A key marketplace metrics you should track.
Return Rate Formula
Return Rate = (Number of Returns ÷ Number of Units Sold) × 100%
Return Rate measures the proportion of purchases that are returned by customers. High return rates can indicate issues with product quality, descriptions, or customer expectations.
Reducing return rates improves customer satisfaction and profitability. This metric helps in identifying areas for improvement in product listings and seller policies.
How can you find your Return Rate?
You should generally be able to calculate your Return Rate with tools you already posess. If that's not the case, signing up for an analytics tool may make sense.
Among others, twosided is one of the tools you could consider. Out-of-the-box, you'll get over two dozens marketplace KPIs and detailed tracking for your supply, demand and other factors that determine marketplace health.
Explore other metrics
Order Frequency
Average number of orders placed by a buyer within a specific period
Cross-Sell Rate
Percentage of transactions that include additional products or services
Supply-Demand Ratio
Ratio of available listings to active buyers
Listing Quality Score
A metric evaluating the quality of product listings based on predefined criteria
User Net Adds
Net increase in the number of users over a specific period