True cost of a return

The true cost of a return is the margin handed back plus everything the refund does not undo: the outbound shipping and pick and pack of a parcel that earned nothing, the payment fee the provider keeps, and the return label and handling. It is why a 5% return rate takes more than 5% out of margin.

A returned order costs you the margin you handed back, plus the return label and handling, plus the outbound shipping and pick and pack of a parcel that earned nothing, plus the payment fee the provider keeps.

That is why a 5 percent return rate can take considerably more than 5 percent out of CM2, and why two products with the same sales and different return rates can sit on opposite sides of profitable.

Recognise it on the day the refund was issued. Booking it back against the original order makes last month improve every time this month gets worse.

The four parts, and what each one came to on a real catalogue, are set out in what a return really costs.