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. This metric helps businesses understand key operational efficiencies, areas for improvement, and strategic opportunities to drive growth and user engagement.
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
Net Promoter Score (NPS)
A measure of customer loyalty and satisfaction based on user feedback.
Average Order Value (AOV)
The average value of orders placed on the platform.
Supplier Lifetime Value (SLV)
The projected revenue generated by a supplier over their tenure on the platform.
Repeat Purchase Ratio
The proportion of customers who make repeat purchases over a given period.
Customer Lifetime Value (CLV)
The projected revenue a customer will generate during their relationship with the business.