As a business operating in the D2C space, expansion of business is our goal, and to work towards that requires proven strategies instead of assumptions.
These proven strategies generally arrive from daily customer insights on what is working and what is not. One such data required to be monitored by D2C brands is Key Performance Indicators or KPIs. And in terms of D2C brands, we call this as E-commerce Return KPIs.
Let’s understand ecommerce metrics and kpis.
What are eCommerce Return KPIs?
Key Performance Indicators (KPIs) are data points that quantify various aspects and activities within a business. The primary purpose of KPIs is to make a significant impact and offer opportunities for improvement in a company's operational and logistical processes.
Within E-commerce, one critical area that significantly influences a business's profitability is E-commerce returns. Below, we have compiled a list of KPIs related to E-commerce returns that you should ideally keep under monitoring.
With those being the basics, let’s now understand the most important kpis for ecommerce below.
5 Must Know Return KPIs for Every Modern E-commerce Businesss
Understanding your Conversion Rate
Conversion rate is a fundamental e-commerce return KPI that measures the percentage of customers who complete a desired action, such as making a purchase, relative to the total number of visitors.
Conversion rates are a clear indicator that your business and marketing strategies are working.
It's a key metric because a low conversion rate may indicate issues with product descriptions, user experience, or pricing, which can lead to returns.
Your Product Return Rate
The product return rate signifies the percentage of products sold that are subsequently returned.
This KPI is important for businesses especially in D2C as it gives an idea about customer satisfaction and identifies problematic products, and quality issues, helping businesses make necessary improvements.
With businesses in the D2C space losing due to COD orders, Pragma helped Emami reduce losses for its COD payment method, where COD accounted for 85% of all their purchases.
Product Exchange Ratio for your delivered items
The product exchange ratio measures the proportion of returned items that customers choose to exchange for a different product instead of seeking a refund.
A high exchange ratio indicates that customers value the brand but may face issues such as incorrect sizing or product attributes.
Monitoring this KPI helps e-commerce businesses build their offerings while addressing specific product-related challenges.
Decoding Cost Per Return
The cost per return is a financial e-commerce return KPI that calculates the expenses associated with processing each returned item.
This metric is crucial for understanding the impact of returns on a company's bottom line.
By optimising processes and reducing the cost per return, your business can minimise financial losses and improve operational efficiency while maintaining customer satisfaction.
Identifying Highest Returned SKU
Identifying the SKU (Stock Keeping Unit) with the highest return rate is essential for D2C brands as it allows them to pinpoint specific products that may have quality, fit, or usability issues.
This data-driven approach helps in inventory management, enabling businesses to make informed decisions about restocking, product improvements, or even discontinuation to reduce return rates and enhance customer experiences.
Understanding Common Reasons for Return
Analysing the reasons behind returns in an e-commerce business provides insights into why customers are returning products, whether due to defects, sizing issues, or other factors.
By understanding these reasons, businesses can build their marketing strategies, improve product descriptions, and implement proactive measures to reduce return rates by addressing the root causes of dissatisfaction.
The Importance of Tracking eCommerce Return KPIs
We’re sure that by now you will understand what are the main KPIs your team should monitor and why you need to keep an analytical check.
It gives a clear understanding of various aspects like:
- Customer satisfaction
- Cost management
- Insight into product performance
- Operational efficiency
- Optimizing return policies
- Competitive advantage
- Risk management
Helping you choose a Return Management Software
Undoubtedly, Pragma stands out as the most advanced Return Management System (RMS) in India, particularly due to its high level of customisable brand functionality. It facilitates integration with over 50 Indian multi-carrier and logistics partners.
With a dedicated and branded return request page, brands can ensure that the return process appears tailored to each customer.
Furthermore, with return requests rising in number, you can put Return restrictions on select products that help the customer be aware of the no-return policy well in advance like; innerware, electronics above Rs. 2,500, etc.
Moreover, as the number of return requests continues to increase, you have the option to impose return restrictions on specific products, such as innerwear or electronics above Rs. 2,500, thereby informing customers about the no-return policy well in advance.
While most of the RMS in the market provide a customisable dashboard, it becomes important to have a dashboard that has everything in one place.
With Pragma, the brand gets access to:
- Perform QC, Generate payment links, Store credit and initiate shipments all in one place
- Leave comments to customers against their request - Add more details or reasons for rejection.
With that being said, let’s also see what benefits these features have on customers:
- The user feels personalised - Brand logo and colour customisations.
- One-click return/exchange request for users provides a seamless user experience.
- Get support for different kinds of refunds - Source, Coupons, Bank transfers and Store credit.
- Seamless browsing and selection during the exchange
- Accept exchange difference via COD or Prepaid
- Exchange with same or different product category
What truly sets Pragma apart is its deep analytical insights into customer behavior.
These insights are invaluable when setting up an RMS for several reasons:
- Detailed analytics on product
- Pincode performance
- Access to real-time data for agile strategy development
- The availability of multi-level nested reasons for better customer understanding.
Brands can assign different return reasons for various product types and identify potentially risky users during order placement or return requests.
It is important to understand that as you work towards enhancing the user experience, it is equally important to safeguard against fraudulent buyers exploiting the convenient return process for malicious purposes.
Consequently, by utilising data gathered from over 400 brands, Pragma can assist you in addressing these deceptive individuals.
Talk to our experts for a customised solution that can maximise your sales funnel
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