If you are running an eCommerce business, you know product returns are inevitable. However, most online businesses view returns as an afterthought which ultimately leads to lost customers and lost revenue. According to a report, in the US alone, returns were estimated to cost $550 billion in 2020. This huge loss in retail revenue from returns clearly indicates the impact product returns can have on an eCommerce business’s bottom line.  

To reduce the number of returns and to improve customer retention for an online store, one of the most important metrics the seller must include in his business strategy is return analytics. Analytics on product returns can equip an online store manager with actionable insights. The right data related to your eCommerce returns can help you improve product quality, understand your customer’s point of view and streamline your operations. 

Setting up returns software for your eCommerce store that can help you understand your customer’s pain points is extremely crucial to growing your business.  

How Can eCommerce Sellers Analyze Returns? 

The first and foremost thing omnichannel brands need to do to analyze returns focuses on returns key performance indicators (KPIs). Here are a few returns KPIs that eTailers must have in order to gain insights about online store returns: 

Return Reasons – When eCommerce managers have data about reasons leading to the greatest number of returns for their eCommerce store, they will be able to track the most repeated return reasons and work to prevent them.  

Cost of Returns – Knowing the cost of returns to your online business will allow you to know exactly how much the returns have impacted your eCommerce store’s bottom line. 

Returned Items – It’s important to know exactly how many returns your store receives per month to monitor returns performance on an ongoing basis.   

Revenue Lost to Returns – With each refund, online retailers are losing to product returns. Returns and refunds data will help you calculate how large the return burden is for your store, and help online stores in strategizing how to reduce returns. 

Returns by Region – Returns can vary by region domestically and internationally. If your online store ships internationally, categorizing returns by region is especially helpful. International returns tend to be more expensive for the retailer, and having a high number of international return requests could justify changing the store’s return policy. 


Now that we have talked about the key parameters eCommerce businesses must track related to product returns, let us take a look at what online stores can do with returns data. 

Reduce Return Rates 

Collecting return reasons and analyzing them is a great way to reduce the return rate for your eCommerce store. Understanding why customers are returning purchases can help you address return issues, and reduce return rate. For instance, if a lot of customers are returning their product because it didn’t fit, then you know you need to provide better sizing and fit information on your product pages. Or if ‘received damaged product’ has appeared multiple times as a return reason, you might need to change your logistics partner.

Improve Operational Workflows 

Once store owners have eCommerce returns data, they can improve and evaluate operational workflows to improve return rates. Returns data not only helps you to make improvements on your returns policy, but it also gives a bird’s eye view of your eCommerce business performance as a whole. 

Data-Driven eCommerce Business Decisions 

Use return analytics to make informed decisions about return policies, product mix decisions, and drive the bottom line of your eCommerce business. With data such as returns by region, revenue lost to returns, and return rate you will be able to address the direct causes of returns and strategize policies that will be beneficial for your business in the long run.  

How to Calculate Online Store Returns Analytics 

Returns analysis is a laborious task that takes time. Once you have the details of the return, you will have to enter each data in a table to create a graph. Then, you will have to look for patterns that help you see the flaws that may be in your e-commerce store strategy or returns policy.  

Between managing your inventory, providing quality customer service, and keeping your online store up to date and talking with carriers, you will not have much time to analyze the data you will be collecting. 

Automating Returns Data 

Therefore, automating the return of items is one of the best decisions you can make for your online business. A system to manage and automate eCommerce returns can help save time and cost. With specialized intelligent returns management software like Saara’s EcoReturnsyou get all your returns analytics in a centralized dashboard updated real-time. You can also manage your return policy and adjust it to the needs of your store. By using returns software to manage eCommerce returns, you can analyze the different reasons why customers return products and offer better service.  

Understanding Return Reasons 

For example, if the return reason is that the customer received the wrong product, you can offer to replace it with the correct item in a jiffy within the online returns portal. Alternatively, if the cause of the return is because the customer changed their mind, you can offer an incentive to keep the product or store credit instead of a refund.   

Creating a Returns Strategy 

As an ecommerce business owner, simply handling returns is not a returns strategy. In order to understand and treat the root cause of product returns, online store owners need to assess multiple types of returns data to protect the bottom line and provide a better customer experience. When viewed through the right lens, returns can become a powerful competitive advantage for your ecommerce store.