The Challenge

Our high-SKU, design-first ecom client faced a crippling 40%+ order return rate which kept eroding margins. This is a COD-heavy market, so high order return rates are deemed as “standard” – but we weren’t buying it.

Order returns pose a double threat to profitability because:

1. The client sells custom products, so the returned SKUs stay on the shelf for a long time, effectively “dead” for months or forever.
2. The client has to pay 2x the delivery cost from his pocket to get the order back.

Root Cause Analysis

To identify the root cause, we conducted a granular SKU-level audit analysing:

✅ Product-wise order return trends

✅ Order-wise patterns

✅ Gender-wise data

After analysing 1000+ products, the highest order return offenders were clustered in three categories:

1. Male-themed SKUs (Cars, Male Graphics, etc.)
2. Anime & Cartoon-themed SKUs
3. Motivation-themed SKUs (Quotes, Affirmations, etc.)

But we ran into a problem: These 3 categories were dominant among top-performing SKUs… which is why their effect on store-wide order returns was immense. Removing them meant our CPA would increase.

The solution revealed itself when we reverse-sorted the bestsellers by order return rate.

Female-themed SKUs had sub-20% order returns rates.

While phasing out top-performing SKUs seems counterintuitive (especially when they drive most of the orders), we hypothesised that:

1. Order return savings would offset CPA increases.
2. Higher-intent, low order return purchases would create a more predictable revenue stream.

Execution Plan

🔄 Gradually phase out high order return SKUs over 1 month to minimise CPA volatility.

🎯 Focus ad budgets on promoting Female-themed SKUs.

Immediate Impact: CPA went up, But Profits Followed

✅ CPA Increase: As expected, CPA rose by <10% as we reduced reliance on proven bestsellers.

✅ Order return Drop: Instant. Phasing out 25%+ order return SKUs led to a rapid order return drop from 40% to 20%.

✅ Profitability Boost: Absolutely. Lower order returns meant fewer failed deliveries, improving overall cash flow.

💡 Unexpected Bonus: Higher AOV. More on this below.

Once Order Returns was under control, we collaborated with the product team to introduce more female-themed designs.

Surprisingly, this maintained the lower order return rates while increasing AOV by ~10%. Why?

Higher-intent buyers(Females) are likelier to buy complementary products when most products are female-themed.

Results

Because of SKU-Level Changes, we now had a leaner, more profitable SKU mix.

📉 Order Returns Reduced: 35% in Month 1 → 17% Last Month

📈 AOV Increased: +12%

💸 Net Profitability Boost: Sustained improvement with predictable cash flow

Key Insight: For high-SKU stores, focusing purely on top-line revenue masks deeper inefficiencies. SKU-level Order Returns analysis exposes high-risk categories, allowing a phasing out of “revenue traps” and optimising for net profitability.

This wasn’t just SKU pruning, it was SKU profitability engineering.

If you plan to defer SKU-Level Analysis for later, here’s a pic for that extra motivation.