How can we improve this calculator? Click here to share your feedback.
First, let’s understand the variables.
Shipped Orders: This is the total number of shipped orders during a particular period, let’s say a week, a month, or a year. For example, the total number of orders shipped in July is 2500.
Note, there’s a difference between placed orders and shipped orders. If, for example, you received 2550 orders in July and 50 of them got cancelled, then 2550 is the number of placed orders and 2500 is the number of shipped orders.
Using shipped orders, not placed orders, to calculate the order return rate is advised.
Returned Orders: This is the total number of the aforesaid shipped orders that were returned. Let’s say 2500 orders were shipped during July. 87 orders out of those 2500 orders were returned before the return window closed. Here, the number of returned orders is 87.
To accurately count the returned orders, ideally, you would like to wait until the return window closes. For example, let’s say you’ve a return window of 30 days. So, for orders shipped on 31st July, the return window closes on 31st August, right? So, the best time to count the number of returned orders is in the first week of September. This is also the best time to accurately calculate the order return rate for those 2500 shipped orders.
Note: we’re calculating an order return rate for 2500 orders shipped during July. So, we need to consider only the orders returned out of these 2500 orders. For example, orders shipped in June and returned now should not be considered.
Order Return Rate: The percentage of orders that were returned out of the total orders shipped. Let’s understand how to calculate this.
IMPORTANT: We’ve mentioned July in this example just for better understanding. Order return rate doesn’t have to be tied to a particular period like a week or month. Ideally, it’s calculated for a defined set of orders. Here it’s 2500. So, when we say we’re calculating the order return rate, what we actually mean is we’re calculating the order return rate of these 2500 orders and not for any month, like July.
Order Return Rate = (Number of returned orders / Number of shipped orders) x 100
Order Return Rate = (187 / 2500) x 100 = 7.48%.
What this means is: approximately, on average, 7 out of every 100 shipped orders are being returned.