Loop Returns, the returns management and post-purchase platform for Shopify merchants, today released its 2025 State of E-commerce Returns report, which includes a global analysis of returns and exchanges.
The analysis found that the UK’s returns rate was notably higher, and exchange rate lower, than other countries.
Data from 13.8 million returns made by over 4,000 current merchants across 10 verticals was used. It was collected from January 2025 to August 2025.
The UK’s one-in-five return rate (17.5%) was nearly double that of the US (11%) and Australia (10.9%). UK merchants also see a 78.1% refund ratio, meaning most of the returned value leaves the business entirely.
The UK’s exchange adoption was 5.8%, the lowest of any region, compared with 17.1% in the US and 13.2% in Australia.
By not prioritizing exchange in their returns strategies, UK businesses are losing revenue and long-term customer loyalty, Loop says.
The cost of returns in the UK also weighs heavily on margins, although average returns costs are relatively low, at £5.70 (US$7.66), leaving businesses to absorb most of the costs. Around two-thirds of merchants (66.1%) now charge return fees, and rather than hurting customer loyalty, Loop says this move appears to be working.
John-David Klausner, general manager of international at Loop, said, “E-commerce is changing quickly, and customers are gravitating toward the brands who ‘get them’. 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.”
“The numbers in this report show the incredible revenue opportunities for brands that invest in the ‘boring’ parts of their e-commerce businesses, which are really the parts that customers notice the most,” he added.
Brands risk falling behind without return strategies that prioritize retention
The report highlights the wider context for e-commerce in 2025, with tariffs, inflation and rising customer expectations forcing brands to rethink their post-purchase strategies.
In this environment, Loop says that UK merchants in particular face an urgent need to shift from refund to exchange-first strategies that retain customers and build loyalty.
The report shows that merchants that have improved their returns management by using returns data to inform product development and marketing strategies are reaping the rewards. On average, brands can retain up to £100,000 (US$134,000) in revenue each year by optimizing their returns operations.
According to Loop, in 2025 its merchants collectively retained £381.7m (US$512.8m) in revenue through post-purchase improvements, including shrinking return windows, customizing returns policies and encouraging exchanges.