UK brands could be leaving revenue and loyalty on the table by prioritising refunds over exchanges in their returns processes, the latest data from returns management platform for Shopify merchants, Loop, reveals.

Analysis of over 13.8million returns from 4,000+ Shopify merchants across the UK, U.S., ANZ and Europe in Loop’s 2025 State of Ecommerce Returns Report, showed that UK return rates now sit at just under 1 in 5, with 18% of online orders sent back.

However, 78% of all returned items in the UK are refunds, meaning the value of the returned items exits the business entirely. This not only means UK retailers lose the value of the sale, but they could risk lost loyalty too.

In contrast, just 6% of UK retailers are actively encouraging exchanges, rather than refunds, in their returns operations, meaning they could be missing out on keeping both revenue and customers. This, the report suggests, highlights the opportunity for UK merchants to shift from refund-heavy policies to exchange-first strategies that retain customers and build loyalty.

“Ecommerce is changing quickly, and customers are gravitating towards 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,” said John-David Klausner, GM International at Loop.

The cost of returns in the UK is also weighing heavily on brands’ margins – and, even though average returns costs are relatively low at £5.70, retailers usually absorb the majority of costs – from reverse logistics, to processing and remerchandising items ready for resale.

“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,” Klausner continued.