Marketing Teams Ignore £30 Million Problem: E-commerce Returns

While shoppers return 5-10% of store purchases, online returns hit 15-40% of total sales. In fashion, that figure sits around 25% across most major markets.

Here’s why this matters for your marketing budget: You spend $10 per customer acquisition and celebrate 100,000 orders at $100 each. Your dashboard shows $10 million in revenue from $1 million in ad spend. But if 25% gets returned, your actual revenue is $7.5 million – not $10 million.

Marketing Tools Miss the Big Picture

Google Analytics, Facebook Ads Manager, and other marketing platforms don’t ask about returns. They just tell you what they’re taking credit for in terms of sales and performance.

These tools operate within a limited scope. They show cost per click, conversion rates, and return on ad spend. But they ignore what happens after the sale – when customers send products back.

Buy Now, Pay Later Makes It Worse

Buy Now, Pay Later schemes are expected to account for 10% of all UK e-commerce sales. But these often become “Buy Now, Return Later, Never Pay” scenarios.

Companies absorb marketing costs, delivery costs, and return costs for customers who never intended to keep the products. It’s like paying for window shopping.

In Latin America, cash on delivery and postpay options make up over 13% of e-commerce payments. The trend is spreading globally.

Real Business Impact

A well-known fashion brand (now bankrupt) discovered this problem the hard way. They switched marketing platforms and found a massive gap between platform reporting and Google Analytics.

The difference? About £30 million for the quarter. Platform reports showed strong growth, but Google Analytics revealed the reality after returns were factored in.

Their online return rate hit 40% overall – much higher for first-time buyers who didn’t understand sizing, compared to 15% for loyal customers shopping through stores and mobile apps.

Source: the-future-of-commerce.com

The Measurement Problem

Marketing reports often come from insights teams or finance departments, not from marketing tools. Why? This is because marketing analytics are not equipped to manage the complexities associated with modern  omnichannel sales.

Many tools actively avoid solving this problem because it would make their performance metrics look worse. It’s easier to report vanity metrics than face the truth about actual business impact.

Industry-Wide Crisis

As global e-commerce continues growing, returns are expected to cost retailers more than a trillion dollars annually. Yet marketing teams – who drive demand – often have no visibility into this problem.

Fashion sees the highest rates: footwear returns exceed men’s wear, which exceeds women’s wear and massively exceeds home furnishings. Electronics like laptops and phones rarely get returned.

Time for Change

Customers don’t like returns either. They want products that work with minimal hassle. But marketing teams can’t optimise for this if they don’t see the data.

The disconnect between marketing metrics and business reality is expensive. Teams optimise for conversions that don’t stick, celebrate revenue that disappears, and allocate budgets based on incomplete information.

E-commerce returns represent one of the biggest problems facing CEOs and operations directors.  It’s time for marketing tools to evolve beyond vanity metrics and start also measuring what matters: profitable, sustainable growth.

Based on analysis from The-future-of-commerce.com