eCommerce Return Rates UK (2026): Average, Costs & How to Calculate

The average UK ecommerce return rate is roughly 17.5% to 19.5% of online orders, rising to 23.6% in clothing and fashion (ZigZag, 2025/26). Each return typically costs £10 to £25 in reverse logistics, before the refunded item value is counted. To calculate your own rate, divide returned orders by total orders and multiply by 100, measured over a rolling 60 to 90 days.

Imagine a UK fashion brand receiving 100 orders in a month, and 20 of them come back over the following weeks. The brand has paid delivery twice on each of those 20 orders: once to send the parcel out, and again to get it back. Someone then has to open each parcel, check the item, repack it and return it to the shelf. Until that happens, the stock earns nothing, and a trending product can miss its best-selling window.

So a return costs more than the refund itself. You pay for postage, handling and waiting, and all of it comes out of your profit. This guide shows how to measure that cost and keep more of what you earn:

What you will learn:

• What a return rate is and how to calculate it
• Return rates by category, including what a good return rate looks like in 2026, so you know what to benchmark against
• What returns really cost your profit
• How returns flow through your accounts
• Why multi-channel sellers feel returns harder
• Your UK obligations on returns and refunds
• The return metrics worth tracking
• How to reduce returns without hurting sales
• How E2E Accounting helps you understand your returns

What Is an eCommerce Return Rate (and How to Calculate It)

An eCommerce return rate is the percentage of orders customers send back after buying. Calculate it by dividing returned orders by total orders, then multiplying by 100. For example, 40 returns from 250 orders gives a return rate of 16%, meaning about one in six orders came back.

How to calculate return rate:

Return rate = (number of returned orders ÷ total orders) × 100

For example, if you sold 500 orders last month and 90 came back, your return rate is 90 ÷ 500 × 100 = 18%.

There are 3 ways to calculate it:

• By orders: returned orders ÷ total orders. Simple method.
• By units: returned items ÷ items sold. More accurate if customers buy several items per order.
• By value: returned £ ÷ sales £. This shows how much revenue you lose.

Choose one method and use it consistently, so your numbers will stay comparable month to month. Measure over a rolling 60 or 90 days, because returns usually arrive days or weeks after the sale. If you compare this week’s returns to this week’s sales, your rate will look better than it really is.

What Is a Good Ecommerce Return Rate in the UK? Benchmarks by Category

The overall average rate hides a lot. A good return rate is one at or below the benchmark for your own category: roughly 17.5% to 19.5% across UK online non-food, and 23.6% in clothing. One 2026 benchmark treats anything above about 28% in apparel as a sign that something, usually sizing, is broken.

Only clothing has a published UK-specific, category-level rate. The other rows are industry proxies, so treat them as rough guides.

Category	Common return rate	Source
Clothing	23.6%	ZigZag (UK data)
All UK non-food online	About 19.5% (2025 forecast), down from about 21% in 2024	ZigZag and Retail Economics, via Eightx
Footwear	17% to 30%	RichPanel (industry proxy, not UK-specific)
Home and furniture	15% to 23%	RichPanel (industry proxy, not UK-specific)
Beauty	4% to 12%	RichPanel (industry proxy, not UK-specific)
Electronics	8% to 15%	RichPanel (industry proxy, not UK-specific)

Proxy ranges differ between sources. Other 2026 benchmarks put beauty nearer 6% and home and furniture nearer 9% (Eightx), so treat every non-clothing figure as a rough guide only.

How to use your benchmark:

• Compare your rate to your own category rather than the global average.
• Check your rate per product. One terrible product can pull the whole category rate up.
• Be cautious with an extremely low rate. It could suggest that buyers are having difficulty returning something, rather than that they are satisfied.

How Much Does an Ecommerce Return Cost UK Sellers?

The costs of returns in eCommerce are higher than the refunds themselves. A refund gives customers money back, but you need to cover the other costs.

So where does the money go?

• Return postage: the label, whether you pay it or the customer does and you refund it.
• Handling: returned products need to be opened, inspected, repacked and restocked by staff.
• Outbound delivery: the cost of sending the order in the first place. You usually cannot recover it from your courier, and you usually have to refund the standard delivery charge to the customer on a change-of-mind return.
• Lost selling time: while stock waits to be processed it cannot be sold, and a trending product can miss its best-selling window.
• Damaged or unsellable stock: items that come back worn or without tags may sell at a discount, or not at all.

Quick example:

Say you sell a £40 item that cost you £20, so your profit is £20. The customer returns it for a full refund, and the return costs you £15 to process. Your result on that order is now a £15 loss, before counting the delivery you paid to send it.

How Do Returns Affect Your Accounts and VAT?

Returns affect more than just sales. They also change your stock, costs and sometimes your VAT. If you only look at profit before returns, you will think you are making more money than you actually are.

What is reflected in your accounts when products are returned:

• Sales: refunds reduce revenue. Net sales become sales minus refunds.
• Stock: resellable items go back into stock at their original cost (stock is valued at the lower of cost and net realisable value). Damaged or unsellable items count as a loss.
• VAT: the credit note reduces your output VAT in the period it is issued. For VAT purposes, the credit note must be issued within 14 days of the refund being paid and must carry the details set out in HMRC VAT Notice 700.
• Costs: return postage, handling and any discounting go in as expenses.

Example: profit margin after returns

You sell 100 orders at £100 each, with a product cost of £50 per order.

	Before returns	After returns
Sales	£10,000	£10,000
Refunds (20 returns)	n/a	-£2,000
Net sales	£10,000	£8,000
Cost of goods sold	£5,000	£4,000
Write-off (3 unsellable items)	n/a	£150
Return postage and handling (20 × £13)	n/a	£260
Profit	£5,000	£3,590
Profit margin	50%	44.9%

Before returns you might think you made a profit of 50%. In reality, the scenario is different: the profit margin after returns is about 45%. The £13 return postage and handling cost is an illustrative assumption within the £10 to £25 range for UK returns. Your actual cost may be different. The more returns you get, especially items you can’t resell, the more money you lose.

What to do next:

• Record refunds against sales, so net sales is clear.
• Issue a credit note for each refund rather than editing or deleting the original invoice.
• Track return costs and write-offs on their own lines of your P&L.
• Report your margin on net sales after returns, not on gross sales.
• Confirm the VAT treatment for your VAT scheme and sales channels.

Returns by Channel: Why Multi-Channel Sellers Feel Returns Harder

If you are selling on your website, Amazon and eBay too, then you are not dealing with one return but several. Because each channel has its different rules, fees and customer choices. Return rates can therefore vary a lot from one channel to another.

Return fees differ by channel

On Amazon UK, a refund does not give the whole money back. You receive the referral fee back minus a refund administration fee, which is 20% of the referral fee capped at £5.00 per refunded item. The FBA fulfilment fee is not refunded. On your own website, there’s no marketplace fee, but you pay for payment processing and postage yourself. Payment processors such as Stripe and PayPal often do not return their fees in full when you refund, so check your provider’s terms. On eBay and other marketplaces, check how fees are treated on refunded orders, because this differs by platform and changes over time.

Different channels, different return rates

Customers do not return items in an equal manner everywhere. In its portfolio of 35 companies, one benchmark identified 23.7% social commerce, 19.1% marketplaces, and 14.8% direct-to-consumer (DTC). That’s a small sample from one business, so use it as a rough guide, but it highlights why a single overall return rate might be misleading.

Marketplaces control the rules

On your website, you can define your own return policy. But in a marketplace, you need to follow their policy. And a high return rate can harm your seller account. When eCommerce return rates rise, Amazon seller accounts may suffer in terms of performance indicators and possibly be suspended.

Your data is in a different place

eCommerce returns data is available in Shopify, Amazon Seller Central, eBay and your courier portal. Each platform provides its own reports and refunds in its own way. Without a single view, it’s hard to see which channel is really losing you money.

What to do:

• Calculate return rate and cost per return for each platform.
• Include channel fees that are not refunded, such as FBA and refund admin fees.
• Compare your profit margin after returns by channel, before you decide where to spend the profit.
• Bring all channels into one set of accounts so refunds, fees and VAT are coded the same way.

Your UK Obligations on Returns and Refunds

If you sell to UK customers online, you must follow UK consumer law. It sets minimum rules on returns and refunds that affect both your costs and your accounts. The main rules below come from the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and the Consumer Rights Act 2015.

1. Customer’s change of mind: according to the Consumer Contracts Regulations 2013, online buyers can cancel the order anytime from the moment the order is placed, up to 14 days after the day they receive the goods, without giving a reason. They then have a further 14 days after telling you they are cancelling to send the goods back.
2. Refund within 14 days: once a customer cancels, you must refund them within 14 days of whichever of these happens first: you receive the goods back, or the customer gives you proof they have sent them (for example, a proof-of-postage receipt). If you offered to collect the goods yourself, the 14 days run from the date the customer told you they were cancelling instead. You can hold the refund back until one of these happens, but not beyond that point.

Deductions for used goods. Customers may open and inspect an item as they would in a shop. If the item has lost value because they handled it more than that (worn, used or marked), you can deduct a fair amount from the refund. Record any deduction in your accounts, because it affects the credit note and your VAT adjustment. Some goods are exempt, such as personalised items, and the rules don’t cover sales to businesses.

3. Refund includes delivery: you must refund the consumer for the initial delivery costs. If they choose premium delivery, you only need to refund the basic amount.
4. Who pays for return postage? The seller may charge the buyer for change-of-mind returns, but not for faulty goods. Make this clear in your returns policy before the buyer purchases, otherwise you may have to cover the expense yourself.
   The rules above are the legal minimum. Longer return windows are a commercial choice: just 16% of the UK’s top 100 fashion brands offer a 14-day return window in 2026, so most offer longer

5. Faulty goods have stronger rights: under the Consumer Rights Act 2015, customers have the right to reject faulty items within 30 days of delivery and receive a full refund. After that, within six months, the seller normally receives one chance to fix or replace before the customer can demand a refund.
6. VAT on refunds in eCommerce: when you refund a customer, the refund includes the VAT they paid, which you must reverse in your accounting. Issue a credit note and account for the VAT adjustment in the period in which you issue it. The credit note must be issued within 14 days of the refund being paid and carry the details HMRC requires (HMRC VATREC13040; GOV.UK Revenue and Customs Brief 6/2019). The delivery refund includes VAT. Match the VAT treatment of the refund to the original transaction. Keep your credit notes dated and numbered.

Legal check (2026): the DMCC Act 2024’s new subscription regime is now expected from spring 2027 and applies to subscription contracts. The rules above for one-off goods purchases are unchanged.

Which Return Metrics Should You Track?

You do not need a complicated dashboard to track returns. A few figures, tracked monthly and divided by product and channel, demonstrate how returns affect your earnings. They also make accounting for eCommerce returns practical, as they convert refunds into actionable data.

Metric	How to calculate it	What it tells you
Return rate	Returned orders ÷ total orders × 100	How many sales did not work
Cost per return	(Postage + handling + write-offs) ÷ number of returns	The true cost of returns, per parcel
Total cost of returns	Cost per return × number of returns	What returns take from your profit each month (the refunded sales value is tracked separately in net sales)
Profit margin after returns	(Net sales − cost of goods − return costs) ÷ net sales × 100	What you really keep
Return rate by SKU	Returns of one product ÷ units sold of that product	Which products cause the problem
Return rate by channel	Returns per channel ÷ orders per channel	Where returns cost you most
Time to restock	Days from return request to item ready to sell	How long stock sits idle
Exchange rate	Exchanges ÷ total returns	How many returns you keep as a sale

How to Reduce Ecommerce Returns Without Hurting Sales

The goal is not to make returning difficult. Its purpose is to prevent unnecessary returns before the order arrives and to keep the sale if a return occurs. Here are some ways to reduce return rates and the cost of each return.

1. Find why products are returned: begin with the reasons for returns, as fixes vary depending on the cause. Use a predetermined list of reasons for returns (wrong size, not as described, damaged, changed mind) so you can count them. Then, arrange your products based on returns and address the most serious issues first. In fashion, more than 70% of returns stem from fit uncertainty (Ingrid, Return Economics 2026), so sizing information is usually the first fix to test.
2. Fix the product page: clear, accurate sizing charts and high-quality images can help prevent returns due to wrong sizing or a product that does not look like what the customer expected. In practice:

• Put real measurements on size charts (chest, waist, length in cm), not just S, M and L.
• Say which way a product runs, such as “runs small, size up”.
• Show the product in more than one colour light, and on a model with the model’s height and size stated.
• Update descriptions when returns show a pattern, such as “looks different from the photos”.

3. Consider charging for returns, carefully: paid returns are now common among large UK fashion brands, but the figure depends on how it is measured. ZigZag and Retail Economics found in October 2025 that 76% of the UK’s 100 largest clothing and footwear retailers had introduced return fees or withheld delivery refunds, and most charge under £3, typically £2.50 to £2.95. The same research found serial returners fell from 12% to 8% of UK consumers over the year. Return Economics 2026 counts explicit return fees only and finds that 35% of the UK’s top 100 fashion brands now charge for returns, up from 23% in 2023 (Ingrid). Examples include Next at £2.50 and Zara at £1.95 (Retail Gazette). Fees help recover costs but do not reduce return volumes. For statutory 14-day cancellations you must still refund standard delivery, as set out in the UK returns law section above.

Returns fraud and abuse are estimated to cost UK retailers £1.3 billion a year (Retail Economics, via NetSuite). Watch for repeat returners, wardrobing (wearing an item and returning it) and bracketing (ordering several sizes and returning most), and state the condition you expect returned goods to be in so you can apply the fair deduction for used goods.

4. Reduce damage and “not as described” returns: check your packing if damaged items appear in your return reasons, and review your images and copy if “not as described” appears. These are fixable at the source, but they also cost the most because damaged products are generally unsellable.
5. Make your policy clear before checkout: add a link to your returns policy on product pages and during checkout. Transparency will build trust and can reduce customer service inquiries related to returns. It also saves you legally, because you can only charge return postage if the customer is informed beforehand.

How E2E Accounting Helps eCommerce Sellers Understand Returns

Most sellers are aware of their return rate but don’t know how much returns cost them. We close that gap by documenting refunds against sales, sending credit notes to ensure VAT is adjusted in the correct period, and separating return postage, handling, and write-offs. For marketplace sellers, we reconcile non-refundable fees, such as Amazon UK’s FBA fulfilment fee, and consolidate all channels into a single set of accounts.

If you think eCommerce return rates are eating your profits, and you need a solution for it, then reach out to E2E Accounting. Our eCommerce accountants will assist you in the best possible way.

FAQs: Frequently Asked Questions

Conclusion

Returns are a normal part of selling online in the UK, but they should not be eating your profit margin. The refund is only the start. Postage, handling, write-offs and the time stock sits idle all add up, and a margin that looks healthy before returns can drop after it.

The fix starts with measurement. Calculate your return rate over a rolling 60-90 days, compare it with your own category rather than a global average. After that work on your cost per return and your profit margin after returns, by product and by channel. Then find the reasons why customers send items back, and make sure your returns policy, refunds and VAT credit notes follow UK rules.

If you sell across your own website, Amazon and eBay, getting all of this into one set of accounts is what shows your returns are really costing you money.

Need help seeing the true cost of your returns? E2E Accounting’s eCommerce accountants record refunds against sales, handle credit notes and VAT, separate return costs and write-offs, and reconcile marketplace fees across your channels. Get in touch to find out what returns are costing your business.