Fulfillment
Refund
Voluntary return of funds to a customer. A healthy refund rate is 2-5%; above 8% signals product, shipping, or expectation problems you need to fix.
A refund is a voluntary return of funds to a customer, processed through Shopify or your payment processor. Unlike chargebacks and disputes, refunds don't trigger fees or penalty tracking — they're just a direct cost to contribution margin.
Refund rate benchmarks:
- Under 3%: Healthy. Product and expectations are aligned.
- 3-6%: Typical for dropshipping with honest ETAs.
- 6-10%: Yellow flag — usually product quality, shipping times, or overpromising in ads.
- 10%+: Fix the product or the ads or both.
A high refund rate kills unit economics more silently than ad spend, because refunds happen 30-60 days after the sale, long after you've celebrated the revenue day. Run refund rate on a trailing 30-day cohort, not by current-day.
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