Returns feel free because nobody invoices you for them. Fill in your order volume, return rate, how long a return takes to handle and how much of it goes back on the shelf, and you see what returns cost you per parcel and per year.
Outbound shipments over a year. Use last year's total rather than a projection if you have it.
Share of orders that come back. Around 5 to 10 per cent for general goods, 20 to 40 for fashion, 1 to 3 for industrial supply.
Unpacking, checking, deciding, repacking, putting away and processing the refund. Time five real returns; it is almost always longer than people expect.
Wage plus employer costs for whoever handles returns, including any customer service time spent on them.
What can be sold again as new. The rest is discounted, refurbished or scrapped, and that difference is a real loss.
Sales value of a typical returned order. Use the value, not the margin: unsellable stock costs you what it would have sold for.
What the carrier charges to bring it back. Enter zero if the customer pays return shipping.
23.20
Cost per return
Handling, freight and lost value together.
Parcels coming back through your door.
The part you can shorten with better process.
Goods that cannot be sold again at full price.
The number that rarely appears on anyone's report.
A one-page summary with your figures, the method and what the answer means.
Getting a return inspected and back on the shelf the same day is a process question, and it recovers value nobody was tracking.
See how returns handling worksIn plain terms: a return costs you three things. Someone's time to receive, inspect, repack and put it away; the carrier cost to get it back; and the value of whatever cannot be sold again at full price. Add those and multiply by how many returns you get.
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Every day a returned item sits in a crate is a day it cannot be sold, and in seasonal ranges that is where the write-down comes from. Same-day inspection and put-away usually pays for itself in recovered sales value alone.
A large share of returns is wrong item, wrong size or damaged in transit. Recording the reason per return line and feeding it back to the listing, the pack bench and the supplier reduces the volume, which beats handling returns faster.
That is a commercial call, not a warehouse one. Work out the cost per return first, then weigh it against the sales you would lose. Many sellers find that faster refunds and better product information beat charging.
Usually per returned parcel, sometimes with a separate inspection charge for graded goods. Compare their rate with the handling and freight figure here, not with the total.
Loading metres, floor area, volume and trailers needed, from your own pallet sizes and stacking height.
Volumetric weight calculatorDimensional weight, real weight and the chargeable weight your carrier actually bills.
Warehouse space calculatorSquare metres for a given number of pallet positions, including aisles and support space.
Loading metres, stock levels and order points are only as good as the stock data behind them. That is what a warehouse management system keeps accurate, every movement, without anyone maintaining a spreadsheet.