78% of UK Returns End in Refunds, Loyalty at Risk

As brands navigate macroeconomic volatility and growing consumer scrutiny, the report underlines that post-purchase excellence is now a core competitive differentiator and not just an operational necessity.

In 2025, ecommerce is no longer just about the first purchase. 

It’s about how brands manage the entire customer journey, especially what happens after checkout. Returns, once seen as an operational headache, have become a decisive factor in customer experience (CX), loyalty, and revenue retention. 

As economic pressures and consumer expectations rise, the way merchants handle returns can set them apart from competitors. Against this backdrop, Loop, the returns management and post-purchase platform for Shopify merchants, released its 2025 State of Ecommerce Returns Report. 

The findings reveal that while returns are a universal pain point, the challenge is particularly stark in the UK, where brands risk losing both revenue and loyalty by failing to prioritise exchanges in their returns strategies.

The study revealed the comprehensive global analysis of returns and exchanges, based on 13.8 million returns from 4,000+ Shopify merchants across the UK, US, Australia, New Zealand, and Europe.

“The numbers in this report show the incredible revenue opportunities for brands that invest in the `boring’ parts of their ecommerce businesses, which are really the parts that customers notice the most,” said John-David Klausner, GM International, Loop.

UK Returns: A Loyalty and Revenue Drain

With an almost 1 in 5 return rate (17.5%), the UK is nearly double that of the US (11%) and Australia (10.9%). UK merchants also see a refund ratio of 78.1%, meaning the vast majority of the returned value exists for the brand entirely. 

In fact, exchange adoption in the UK sits at just 5.8%, the lowest of any region, compared to 17.1% in the US and 13.2% in Australia. This results in revenue retention rates of only 21.9%, versus 23.9% in the US and 45% in Australia, underscoring how UK merchants are losing long-term customer loyalty.

The cost of returns in the UK also weighs heavily on margins, even though average returns costs are relatively low at £5.70 ($7.05), leaving brands to absorb the majority of costs. Around two-thirds (66.1%) of merchants now charge return fees, and rather than hurting customer loyalty, this move appears to be working.

“Ecommerce is changing quickly, and customers are gravitating towards the brands who ‘get them’,” said John-David. 

“These brands are gathering data and using it to operate in a smarter way. They’re proactively sharing recommendations to their customers, automating the return and exchange process, and making customer service more seamless.”

UK Returns Stats at a Glance (2025)

The report paints a stark picture of how the UK compares with global peers:

• Return rate: 17.5% — highest compared to the US (11%) and Australia (10.9%).
• Refund ratio: 78.1% — meaning most returned value leaves the brand (vs 76.1% US, 55% Australia)
• Exchange adoption: 5.8% — the lowest globally (vs 17.1% US, 13.2% Australia)
• Revenue retention rate: 21.9% — behind the US (23.9%) and Australia (45%)
• Merchants charging return fees: 66.1% of UK, 70.2% of US, and 73.1% of Australian merchants charge fees
• Average return fee: UK average return fee is £5.70 ($7.05), US average return fee is $9.41, and Australian average return fee is $7.77
• Processing times: 9.97 days from initiation to processing (3.96 days to in-transit + 6.31 days to final delivery)

Why Exchanges Matter More Than Ever

The report highlights the wider context for ecommerce in 2025, with tariff shocks, inflation, and rising customer expectations forcing brands to rethink every part of the post-purchase journey. 

In this environment, UK merchants face an urgent need to shift from refund-heavy policies to exchange-first strategies that retain customers and build loyalty.

Loop’s report estimates that brands can retain up to £100,000 annually by optimising returns strategies. In 2025 alone, Loop merchants collectively retained £381.7 million in revenue through smarter post-purchase improvements, such as:

• Shrinking return windows.
• Customising policies per product or customer segment.
• Encouraging exchanges over refunds.

Returns as a Growth Lever in 2025

The report positions returns management not as an operational burden but as a growth strategy. With tariff shocks, inflation, and rising consumer expectations reshaping the market, UK merchants risk losing competitiveness if they fail to prioritise retention through better post-purchase CX.

Globally, brands are already leveraging returns data to improve product design, inventory planning, and marketing strategies. What was once an afterthought is now a core competitive differentiator.

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