A Comparison of Return Rate Calculation Methods: Evidence from 16 Retailers

The product return rate (RR) is an important metric for retailers; even small RR changes can significantly impact retailers’ profit. Companies and researchers typically favor and employ one of three methods to calculate the RR: based on the number of returned items, these items’ revenue, or their profit contribution. Interviews with 24 managers and industry experts reveal that two methods, item-based and revenue-based, are often used. However,...