Healthy refund rates vary dramatically by category. Apparel runs 15–30% (sizing-driven), electronics 5–10% (often DOA returns), consumables under 2%. A refund rate well outside category norms points to a specific cause: wrong size charts, misleading product photos, fulfilment errors, or quality issues.
Track refund rate by product, by source channel, and by customer segment. A high refund rate concentrated on one product is a product issue; a high refund rate concentrated on one channel often points to misleading ads or wrong audience targeting.
Refunds also damage payment-processor standing. Sustained chargeback rates over 1% trigger penalties and can ultimately get a merchant account terminated. Refund rate is the leading indicator that prevents chargeback rate from becoming a problem.