What should I check about an online store’s return and refund rate?

Start with how returns are recorded. Some stores net refunds against sales, some book them later and some leave them out of monthly reports. Ask to see the raw refund list from the sales platform and the payment processor, and check that both tell the same story. A mismatch needs an explanation.

Next, look for patterns. A few products with high returns may point to sizing problems, poor descriptions, damage in shipping or a weak supplier. Read the reason notes and customer messages. Ask what the seller has changed in response and whether those changes worked. Ask who pays for return shipping and what happens to returned goods, since resale or write-off changes the cost.

Last, test the profit picture. Take the seller’s margin and subtract refunds, return shipping, processing fees that were not refunded, and lost stock. Ask your accountant how the financial statements treat each of these. Also ask about disputes raised through card payments, because unresolved ones can still be pending when you take over. Also compare the return policy on the site with how staff apply it in practice. A generous policy that is quietly bent for some customers can raise refunds, and a new owner will have to decide whether to keep it.

Key takeaways

• Compare refund records from the sales platform, processor and books.
• Find products with unusually high returns and read the reasons.
• Include return shipping and lost stock in your margin check.
• Ask about any payment disputes still open.