The Numbers You Need to Accept
E-commerce returns are not a problem you solve. They're a cost of doing business that you manage.
Average return rates by category tell the story:
- Apparel and shoes: 25-30% (sizing is a guessing game online)
- Electronics: 15-20% (buyer's remorse and compatibility issues)
- Home and furniture: 10-15% (color looks different in person)
- Beauty and personal care: 5-10% (allergic reactions, wrong shade)
- General merchandise: 15-20% average across the board
If you're selling clothing online and your return rate is 25%, that's not a crisis — that's normal. The sellers who panic and try to make returns difficult end up losing customers permanently. The ones who build a clean, efficient returns process actually see higher lifetime customer value.
Research from Narvar shows that 96% of customers who have an easy return experience will buy from that store again. Returns done right aren't a cost center — they're a retention strategy.
What a Single Return Actually Costs You
Most sellers underestimate the true cost of a return. Here's the full breakdown for a typical $40 item:
- Return shipping label: $5-8 (if you're paying for it)
- Processing labor (receiving, inspecting, restocking): $3-5
- Customer service time (handling the request, answering questions): $2-4
- Payment processing fees you don't get back: $1.20 (Stripe/PayPal typically keep their cut)
- Packaging materials wasted: $1-2
- Product depreciation (can you resell at full price?): varies, often 20-50% markdown
- Potential lost sale if inventory was allocated
Add it up and a single return on a $40 item costs you $12-20 in hard expenses, plus whatever markdown you take reselling the returned product. That's why your returns process needs to minimize these costs at every step.
Building a Returns Policy That Works
Your returns policy needs to accomplish two things: give customers confidence to buy, and protect you from abuse. Here's what to include:
Return window: 30 days is the standard. Going shorter makes customers nervous and actually increases returns (people panic-return when the deadline is tight). Some brands have gone to 60 or 90 days and seen return rates drop because the urgency disappears.
Condition requirements: Be specific. "Items must be unworn, unwashed, with original tags attached" is clear. "Items must be in original condition" is vague and leads to disputes.
Who pays for shipping: This is the big decision. More on this below.
Refund method: Store credit vs. original payment method. Offering both options — with store credit processing faster — can shift 20-30% of returns to credit, which keeps money in your ecosystem.
Exceptions: Final sale items, intimate apparel, personalized products. List them clearly. Don't hide them.
Processing time: Set expectations. "Refunds processed within 5-7 business days of receiving your return" prevents a flood of "where's my refund?" emails.
Self-Service Returns: Stop Wasting Time on Emails
If customers have to email you to initiate a return, you're spending $3-5 per return on customer service alone. A self-service portal pays for itself almost immediately.
AfterShip Returns is one of the most popular options. It creates a branded returns page where customers select their order, pick the items and reason for return, and get a prepaid label or drop-off instructions automatically. Plans start around $19/month, and it integrates with Shopify, WooCommerce, and BigCommerce.
Loop Returns takes a different approach by encouraging exchanges over refunds. When a customer starts a return, Loop shows them alternative products (different size, different color) and makes exchanging easier than returning. Some brands report converting 30-40% of returns into exchanges, which saves the sale entirely.
Returnly offers instant credit — customers get store credit before shipping back the return, so they can immediately reorder. This speeds up the whole cycle and keeps more revenue captured.
For sellers using ShipStation, you can generate return labels directly and set up automated return tracking. Ordoro also handles returns within its order management system, which is useful if you need to track returned inventory across multiple channels.
Prepaid Labels vs. Customer-Paid Returns
The debate comes down to category and competition:
Pay for return shipping when:
- You sell apparel (sizing issues are your fault, not the customer's)
- Your competitors offer free returns (you'll lose customers otherwise)
- Your average order value is high enough to absorb it (AOV above $60-75)
- The return is due to your error (wrong item, defective, damaged)
Ask the customer to pay when:
- You sell low-margin items where absorbing shipping kills profitability
- The return is clearly preference-based ("I just changed my mind")
- You sell on a marketplace where return shipping policies are standardized
A middle ground that works well: offer free returns for exchanges and defective items, but charge a flat return shipping fee (often $5-7, deducted from the refund) for "changed my mind" returns. This reduces frivolous returns while still being reasonable.
Restocking Fees: When They Make Sense
Restocking fees get a bad reputation, but they're appropriate in certain situations:
- Electronics that have been opened and can no longer be sold as new (15-20% fee is standard)
- Large or heavy items where return shipping is expensive
- Custom or personalized products that can't be resold
If you charge a restocking fee, make it extremely visible before purchase. Surprising customers with a fee after they've already bought is a guaranteed way to earn a 1-star review and a chargeback.
Reducing Returns Before They Happen
The cheapest return is the one that never happens. Here's where to focus:
Better product photos. Show every angle, include a size reference object, show the product on different body types if it's apparel. A study by Shopify found that products with video content had 25% fewer returns than those with photos only.
Detailed sizing guides. Don't just list S/M/L — include actual measurements in inches and centimeters. If your brand runs small or large, say so. "This item runs one size small. If you're between sizes, order up." That one sentence can prevent thousands of returns per year.
Accurate descriptions. If the fabric is thin, say it. If the color is more teal than blue, say it. Customers who know exactly what they're getting don't return items. Customers who feel misled return items and leave bad reviews.
Quality control. If 5% of your returns are for defective products, that's a sourcing or QC problem, not a returns problem. Track your return reasons religiously.
Marketplace Return Rules You Can't Ignore
If you sell on Amazon, your returns policy is largely Amazon's returns policy:
Amazon: 30-day return window is mandatory for most categories. Amazon often refunds customers before you even receive the item back. FBA returns are handled entirely by Amazon. FBM sellers must accept returns and provide prepaid labels for most categories. Amazon can charge you for "returnless refunds" — where they refund the customer and tell them to keep the item because it's cheaper than processing the return.
eBay: Their Money Back Guarantee gives buyers 30 days. If the item is "not as described," you pay return shipping regardless of your policy. For buyer's remorse returns, the buyer typically pays shipping.
Walmart Marketplace: Requires a minimum 30-day return window. Free return shipping is expected for most categories.
Fighting these marketplace policies is pointless. Factor them into your pricing and margins from the start.
Tracking Return Reasons: The Goldmine Nobody Uses
Every return is data. Most sellers throw it away.
Set up return reason categories in your returns portal: wrong size, defective product, doesn't match description, arrived damaged, changed mind, found it cheaper elsewhere, arrived too late.
Review these monthly. When you spot patterns — say 40% of returns for a specific shirt are "too small" — you can update the listing, adjust the sizing chart, or even modify the product itself. One apparel brand I worked with reduced returns by 18% just by adding "this style runs one full size small" to their five most-returned products.
Returns aren't just a logistics problem. They're your most honest source of product feedback. Your customers are telling you exactly what's wrong. Listen.