Retailers refunded close to $850 billion in merchandise last year, and 7 in 10 now charge you for it — in Egypt, a refund isn't finished until the tax authority has a credit note
A return isn't a customer-service ticket with a refund button at the end of it — it's an inventory event, a reverse cash flow, and in Egypt a compliance document, and treating it like the first one when it's actually the second and third is exactly what makes returns bleed worse every year.
Last year, US retailers expected to refund close to $850 billion in merchandise — 15.8% of everything they sold — and more than two-thirds of them now charge a fee just to accept an item back. That's the version of this story most owners already half-know: returns are expensive, getting more actively priced, and treated as a cost center to be managed down. It's also only half the story for anyone selling into Egypt or the wider MENA region.
In Egypt, a refund triggers a second obligation most small sellers never built for. The tax authority doesn't just want to know what you sold — it wants a credit note for every item that came back, filed through the same e-invoicing pipeline that cleared the original sale, referencing that sale's own unique ID. Skip that step and the refund still leaves your bank account; it just never leaves a trail the government's system recognizes, which is its own kind of liability sitting quietly until an audit finds it.
This piece covers what a return actually costs once shipping, inspection, restocking, and resale markdown are counted — not just the sticker price of the refund — and what "done" actually requires once you're issuing e-invoices, which almost every registered business in Egypt now is.
Start with the scale. US retailers projected returning 15.8% of everything they sold in 2025 — about $849.9 billion — down slightly from 2024's $890 billion and 16.9% [1]. That headline number easing back a notch understates what's actually happening underneath it: Loop Returns' 2025 analysis of more than 13 million returns across roughly 4,000 Shopify merchants found 70% of them now charge a return fee, up from 65% the year before, while the average return rate held near 11.5% [2]. The dollar total didn't drop because returns got rarer. It dropped partly because merchants started pricing them.
A single return rarely costs what the refunded price suggests. Cost models built on data from logistics provider Radial put the all-in cost of processing one returned item at $27 to $41 — a return shipping label, inspection and handling labor, restocking, and a markdown if the item has to resell at a discount rather than at full price, which happens to just over half of returned inventory [3]. Reverse logistics itself — moving a product backward through the supply chain — typically runs two to three times the cost per parcel of shipping it out in the first place, because almost nothing in a forward-shipping system was built to run efficiently in reverse [4].
Most of what gets returned isn't buyer's remorse, and most of it is fixable upstream of the refund. A 2025 industry survey found sizing was the single most common reason shoppers sent something back, cited by 58% of them, and 43% said the product didn't match the information on the page that sold it to them — the wrong color, the wrong material, a spec that turned out to be off [5]. Both of those are product-page and sizing-guide problems before they're ever refund problems. By the time a return request exists, the cheaper fix already missed its window.
None of that changes if you sell in Egypt — it adds a second requirement on top of it. Every e-invoice the Egyptian Tax Authority clears gets a unique ID, and a return isn't closed in that system by a refund alone. It needs its own electronic credit note, referencing that same ID, filed through the same clearance pipeline before the transaction counts as adjusted on the government's side [6]. Since January 2022, a paper or PDF record doesn't settle VAT either way — a business can't reclaim the VAT on a sale or offset it on a return without the item existing as an e-invoice or e-credit-note in the government's system first [7]. A refund processed by hand, outside that pipeline, still moves the money. It just opens a gap between what your own books say and what the tax authority's system says — and that gap is the kind of thing that surfaces at an audit, not at checkout.
The part that's easy to miss on both sides of this is inventory. A return that isn't logged back into stock the moment it's received keeps showing as unavailable — or worse, available before anyone has actually inspected it — until someone manually reconciles the count. In a business running more than one sales channel off a single inventory number, that reconciliation is exactly the kind of manual step that falls behind during the week returns spike, which is usually the week right after your biggest sale.
Whoever answers the refund email isn't the one who has to make the inventory count true again, reconcile the reversed payment against the original order, or — in Egypt — issue the credit note that keeps the books and the tax authority in agreement. A refund is the visible, five-minute part of a return. The invisible part is longer and belongs to systems, not a support queue.
Loop's own data shows fee-charging merchants grew from 65% to 70% of their sample while the average return rate barely moved. A fee shifts who absorbs the cost stack; it doesn't shrink the stack itself, and pushed too far it buys the exact checkout hesitation this site has already covered elsewhere — a shopper who won't commit to a sale they're not sure they can undo cheaply.
The Egyptian Tax Authority's e-invoicing mandate doesn't ask how the original sale was paid for. A VAT-registered seller owes the same credit note, referencing the same invoice UUID, whether the customer paid by card at checkout or handed cash to a courier at the door. "We mostly do COD" describes the payment method, not an exemption from the obligation.
Build the return into the same system that runs the sale: inventory adjusts the moment the item is logged back in, the refund reconciles against the original order rather than floating as a standalone transaction, and — in Egypt — the credit note generates against the invoice's own UUID and clears through the e-invoicing pipeline without someone remembering to do it by hand. A refund answered from an inbox is the easy 20% of a return. The other 80% is exactly what a system is for.
- 1Does your return process update inventory the moment an item is logged back in, or does the "available to sell" count stay wrong until someone notices and fixes it?
- 2If you're a VAT-registered business in Egypt, does every refund generate a credit note referencing the original invoice's UUID, or does the money leave without that document existing anywhere?
- 3Do you know your actual return rate and cost-per-return by product line, or only the total refund amount your books show at the end of the month?
- 4Would a return fee cost you more in hesitant, abandoned checkouts than it saves in reverse-logistics cost — have you measured both sides, or only the side that saves you money?
- 5Who in your business would know, right now, how many of this month's "in stock" units are actually sitting in a return that hasn't been inspected yet?
- [1]National Retail Federation — press release, "Consumers Expected To Return Nearly $850 Billion In Merchandise In 2025": NRF's own projection that US retailers will see 15.8% of 2025 sales returned, totaling $849.9 billion, down from 16.9% and $890 billion in 2024.
- [2]Chain Store Age — "Report: 70% of merchants now charge return fees": reporting on Loop Returns' 2025 State of Ecommerce Returns Report, based on more than 13 million returns across roughly 4,000 Shopify merchants — 70% now charge a return fee (up from 65%), an 11.5% average return rate, and 19% of returns converted into exchanges.
- [3]Synctrack — "The Cost of Returns": cost modeling citing Radial and industry analysis putting the all-in cost of a standard ecommerce return at $27–$41 per item, and noting only around 48% of returned items resell at full price.
- [4]QuiqUp — "The Cost of Returns: Making Reverse Logistics Work for Retailers": on reverse logistics typically costing two to three times more per parcel than outbound shipping.
- [5]Just Style — "Returns surge driven by poor product information": reporting on a 2025 Akeneo survey finding sizing cited by 58% of consumers and inaccurate pre-purchase product information cited by 43% as reasons for returning an online purchase.
- [6]noon Partners Support — "Issuing Tax Invoices and Credit Notes to Customers in Egypt": seller guidance confirming that electronic credit notes for returns must be issued through Egypt's e-invoicing system and reference the original invoice's unique ID (UUID).
- [7]Avalara — "E-invoicing in Egypt": on the Egyptian Tax Authority's pre-clearance e-invoicing model, and the rule effective January 2022 that paper or PDF invoices can no longer be used to support VAT deduction or refund claims.
We build returns into the system — inventory, refunds, and Egypt's credit-note trail — instead of leaving it to an inbox.
Felukaa wires returns into the systems that already run your sales: inventory adjusts the moment a return is logged, refunds reconcile against the original order, and in Egypt every credit note references the original invoice's UUID and clears through the e-invoicing pipeline on its own. If your return process still lives in an inbox or a spreadsheet, we'll help you find out what that's actually costing you.
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