Return Rate Formula
How apparel brands calculate return rate — the DTC-specific drag that consumes 10–25% of gross sales and distorts every other metric.
What Return Rate measures
Return rate is the percentage of gross sales units returned. In DTC apparel it is the largest drag between gross and net — often 15–25%.
Return Rate % = Return Units ÷ Gross Sales Units × 100Worked apparel example
1,400 return units against 8,600 gross sales units.
Return Rate % = 1,400 ÷ 8,600 = 16.3%
Typical for women's apparel DTC. Denim and bottoms run higher (20–30%); outerwear runs lower (8–12%). The raw rate is less important than the category-level read and the post-return unit outcome — what happens to the returned unit matters for net AUR.
16.3% return rate — normal for DTC women's apparel online.
Benchmark ranges
Failure modes we see
Return rate reported as a single number. A brand sees 18% return rate and calls it normal. Size-level data would show 35% returns on size M of one style (fit problem) and 8% on size M of another. The single-number view hides the fit problem until customer complaints escalate.
How RetailNorthstar handles return rate
Return rate runs at style × size × color level with return-reason attribution. Fit problems, quality issues, and "changed mind" returns separate clearly — each pointing at a different fix in the next season's line plan.
Related formulas
- Gross-to-Net Sales — returns are the primary gross-to-net gap
- Average Unit Retail — net AUR is often materially lower
- Sell-Through Rate — return rate distorts sell-through signals
See return rate decomposed by size, style, and reason — so next season's fit problems stay out of the line plan.
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