It is different from RTO: a refund follows a delivered order the customer sends back or complains about, while an RTO is an order that was never accepted. Both reduce net revenue and both carry extra logistics cost.
Watch refund rate by product. A product with a high refund rate is often a quality, sizing or expectation problem that advertising more will only make bigger.
Formula
Refund rate = Refunded revenue ÷ Delivered revenue
Example
₹45,000 refunded on ₹9,00,000 of delivered revenue is a 5% refund rate.
CM1, CM2, CM3 and EBITDA per order and per month, with RTO, COD, channel comparison and a board-ready report.
Related terms
- RTO (return to origin)RTO is an order that is shipped but not delivered and returns to the seller, most…
- Net revenueNet revenue is what you keep from sales after discounts, refunds, returns and…
- Product profitabilityProduct profitability is the contribution each product earns after its own cost…
Part of the growth marketing glossary by Shiva Sharma.