E-commerce returns are one of the most under-appreciated costs in online retail — especially in a market like Canada where customer expectations are rising and competition is fierce. Unlike brick-and-mortar purchases, online shoppers can’t touch or try products before buying, which drives higher return rates and growing reverse logistics expenses. Understanding both the direct and hidden costs of returns is essential for Canadian brands looking to protect margins and deliver excellent customer experiences.
How Big Are E-commerce Returns in Canada?
Canadian e-commerce return rates are notably high compared with traditional retail. Studies show that around 20% of online purchases in Canada are returned, and for some categories like apparel, return rates can be even higher. This means roughly one out of every five online orders comes back, forcing retailers to absorb more costs in restocking, shipping, and customer service.
At the same time, nearly half (48%) of online shoppers in Canada reported returning a purchase over the past year, a significant increase from pre-pandemic levels as e-commerce penetration grows.
Why Returns Are So Costly
Across the retail ecosystem, returns involve multiple cost layers that add up quickly:
1. Transportation and Logistics Costs
Shipping a returned item back to a warehouse — often in the opposite direction of its original route — adds fuel, labor, and carrier fees. It’s especially costly when returns travel long distances back to fulfillment centers.
2. Inspection and Handling Fees
Once a return arrives, staff must inspect the product, determine resale eligibility, repackage it, and update inventory systems — all of which take time and money.
3. Restocking and Depreciation
Even if a returned item is resold, it can lose value due to handling or changes in demand. Some products can’t be resold at full price, leading to markdowns or liquidation.
4. Customer Service and Refund Processing
Refunds, customer queries, and administrative work around returns further eat into margins — especially when returns spike unexpectedly.
A recent industry compilation for North America estimates that the average cost per return — including logistics and processing — falls between roughly $10–$20 USD in many cases, and in some product categories the overall return value is one of the biggest financial drains for e-commerce businesses.
Direct and Hidden Costs — At a Glance
Here’s a simple breakdown of return cost components:
Customer Expectations in Canada
Return policies are a major factor in purchase decisions. According to e-commerce insights, 79% of Canadian online shoppers expect free return shipping, yet only about half of retailers offer it — creating a mismatch between expectations and reality.
Importantly, 92% of shoppers say the ease of the returns process influences whether they’ll shop again, meaning returns aren’t just a cost center — they’re part of customer experience and loyalty strategy.
Additional insights show that over two-thirds of Canadian shoppers have abandoned a cart due to lack of preferred return options, underscoring how returns policies affect both sales and loyalty.
The Reverse Logistics Challenge
Reverse logistics — the process of managing returned goods — is increasingly seen as a distinct operational discipline. In Canada, managing returns requires dedicated workflows, real-time inventory updates, and often coordination with third-party logistics (3PL) partners to handle inspection and restocking efficiently.
Experts project that as the e-commerce sector grows, the cost of reverse logistics could represent a significant share of total logistics expenditure, particularly without focused strategies for efficiency.
Strategies to Reduce Return Costs
Reducing returns — and the costs that come with them — doesn’t mean limiting customer friendliness. Retailers use several proven approaches:
- Improved product descriptions and visuals: Clearer product info helps customers make better purchase decisions, lowering the chance of returns.
- Sizing tools and AR experiences: Especially in apparel and furniture, tools that help customers choose correctly can reduce returns.
- Streamlined reverse logistics: Partners like Koorier can help automate return tracking, consolidation, and routing to reduce labor and transportation waste.
- Incentives for exchanges over refunds: Encouraging customers to exchange rather than return can retain revenue and reduce cost.
Take Action: Make Returns Manageable and Profitable
Returns don’t have to drain your margins. With Koorier’s reverse logistics and automation tools, Canadian e-commerce brands can streamline returns handling, reduce costly manual processing, and improve customer satisfaction — turning a traditionally painful cost center into a competitive advantage.
Learn more or request a demo with Koorier to transform your returns strategy in 2026 and beyond.
Author & Authority
By Giovanna Freitas
Marketing specialist at Koorier
About Koorier
Koorier is a Canadian logistics technology company specializing in regional last-mile delivery networks and real-time delivery visibility for retailers and enterprises.
Frequently Asked Questions (FAQ)
Q1: How common are e-commerce returns in Canada?
A: Canadian online retailers see around a 20% return rate on e-commerce purchases, with higher rates in categories like apparel.
Q2: What drives most returns?
A: The biggest factors include wrong size/product, damaged/defective items, and products that don’t match customer expectations.
Q3: Do free returns hurt profitability?
A: Free returns can boost customer trust and sales but increase costs; balancing today’s customer expectations with efficient reverse logistics is key.
