Average Zappos return rate: 35%. Best customer return rate: 50%

Interesting article about e-commerce return rates at Internet Retailer:

Customers on average return 35% of the items they order from Zappos.com Inc., a web-only retailer of footwear, apparel and other merchandise. But there’s a certain group that returns 50% of what they buy.

Zappos loves those customers.

That’s because those consumers tend to purchase from among Zappos’ most expensive lines of footwear, then happily take advantage of the e-retailer’s generous and well-publicized returns policy: Zappos not only will take back any item within 365 days of delivery, but also pays for the return shipping.

And since it costs the same to ship a $300 pair of pumps as it does to ship a $30 pair of sandals, the Zappos policy of winning over shoppers with its returns policy has helped to bring in high profit margins on many of its orders, says Craig Adkins, vice president of services and operations at Zappos, which was acquired last year by Amazon.com Inc.

“Our best customers have the highest return rates, but they are also the ones that spend the most money with us and are our most profitable customers,” Adkins says.

Read the original story at Lightspeed Venture Partners