Ecommerce growth metrics often tell a misleading story. Revenue is up, conversion rates are strong, but profit is flat or declining. The gap usually lives in two places: returns and BNPL.
The Returns Reality
Reported conversion rates and revenue do not account for what comes back. A 3% conversion rate with a 35% return rate is really a 1.95% net conversion rate. But dashboards show the 3%.
This creates a systematic overstatement of performance. Marketing teams optimise against metrics that do not reflect commercial outcomes. The gap compounds over time.
In fashion particularly, return rates have normalised at levels that would have been considered failures a decade ago. Bracketing—ordering multiple sizes with intent to return—is standard consumer behaviour. Brands have accepted this as the cost of doing business without fully accounting for it in marketing metrics.
The BNPL Layer
Buy Now Pay Later adds another layer of complexity. BNPL adoption is highest in categories with high return rates. Fashion, beauty, homewares.
BNPL providers charge merchants 3-7% of transaction value. Unlike payment processing fees, these are not fixed. They scale with AOV and with adoption rate.
When a consumer uses BNPL to bracket—ordering three sizes at £80 each—the brand pays fees on £240 of transactions to generate one £80 sale. The return handling, restocking, and processing costs are additional.
This is before considering that BNPL usage often increases during periods of consumer stress. Rising adoption may signal constrained household budgets, not growing demand.
The Illusion of Growth
Brands tracking gross revenue and gross conversion rate often believe they are growing when they are actually treading water or declining.
A brand that grew gross revenue 20% while return rates increased from 25% to 35% and BNPL adoption rose from 30% to 45% may have grown net profit 5% or not at all. The growth is real in the dashboard but illusory in the bank account.
What to Track Instead
The metrics that matter are harder to calculate but more honest:
- Net revenue after returns
- Contribution margin after returns, BNPL fees, and fulfilment
- Paid media ROAS on net revenue, not gross
- Customer profitability by acquisition source
A thorough audit will surface these numbers. A feed strategy can then be built around what actually drives profit, not what drives dashboard metrics.
Fashion brands that solve this problem gain a structural advantage. Those that do not often scale their way into margin compression without understanding why.