What is the returned stock cost on your highest-return lines?
The short answer
For each product line, multiply units returned and not yet resold by unit cost to find the cost of goods tied up in returned stock. Add return freight, handling and the markdowns or write-offs needed to clear the rest, and you have the returned stock cost. Rank lines by that total, and check which customers drive the returns.
Returns cost in retail, line by line
Why it matters
Returned stock sits in a warehouse earning nothing, often damaged or out of season by the time it is processed. Knowing the cost tied up by line tells customer service and merchandising where to fix products, pages or policies first.
The question to ask
Copy this into Lexi as written.
How to work it out
1. Rank lines by return rate. Divide units returned by units sold for each line over the year.
2. Value the stock. Multiply returned units awaiting resale by unit cost.
3. Add processing costs. Add return freight, handling per unit and the markdown or write-off on units that cannot be sold as new.
What the answer looks like
Illustrative output on sample data
Illustrative example: how Lexi answers this for a furniture retailer. It adds up returned stock awaiting resale, freight and handling, and markdowns or write-offs for two lines.
- Upholstered armchair: 16% returned. Total returned stock cost $104,688.
- Glass coffee table: 9% returned. Total $12,440.
What the data shows
The armchair costs more than eight times as much in returns as the table, mostly from freight and markdowns on bulky stock.
What it means
Most armchair returns cite color, from online buyers who never saw the fabric.
What to do
Offer free fabric swatches on the armchair page and improve color accuracy in photos.
Would you like every line ranked by returned stock cost?
Frequently asked questions
What makes up the cost of returns?
Return shipping, handling and inspection, any refurbishment, the markdown or write-off on items that cannot be sold as new, and the cost of goods tied up while stock awaits resale. For bulky items, freight usually dominates, while for fashion, resale markdowns often matter more.
Why does return rate alone understate the problem?
Return rate counts how often items come back. A bulky line with a modest rate can cost far more than a small item returned often, once freight, handling and resale markdowns are added. Ranking by returned stock cost shows where fixes pay most.
How fast should returned stock be processed?
As fast as possible, especially for seasonal or fashion items whose value falls each week. Set a target time from receipt to relisting, track it by warehouse, and prioritize high-value and in-season items so less of the returned stock needs a markdown.