Cost of returns refers to the total expenses incurred by a business when customers return products, including shipping fees, restocking costs, and any potential loss of revenue. This term is crucial in understanding the overall financial impact of returns on e-commerce operations, as it directly affects profitability and inventory management strategies. Companies must effectively manage these costs to maintain a sustainable business model while also ensuring customer satisfaction.
congrats on reading the definition of Cost of returns. now let's actually learn it.