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Calculating Your Real Return Rate
The Old Retail Return Rate
Calculating return rates seems like straightforward math, but many commerce systems greatly oversimplify the formula as:
Pure Return Transactions ÷ Net Sales = Return Rate
The problem is, this formula often overlooks exchanges, and therefore understates the value and quantity of merchandise returning to the store from any channel. Items that get returned within exchange transactions are unexpectedly hidden, masking your opportunities to rescue sales, provide better consumer service, prevent loss, and more.
How to Calculate Return Rates in Retail Correctly
By correctly valuing their return and exchange rates, retailers can understand the impact returns have on profitability, and thereby improve their net sales, gross margins, and profits. Knowing their real return rate, they can pursue their optimal return rate. This
occurs when a retailer creates an environment that encourages consumers to purchase with confidence yet prevents problematic returns.
View example calculations based on old retail return rates vs. real retail return rates in the whitepaper and learn how to calculate yours accurately!
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