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What a higher return rate does to an online fashion retailer
The prompt
An illustrative online fashion retailer in Germany has an average order value of EUR 80 and a gross margin of 50 percent on items that are kept. Every order costs EUR 5 to ship. Each returned order costs EUR 12 to collect, check, and restock, and earns nothing. The return rate is 30 percent of orders. What is the contribution per order, and what happens if returns rise to 40 percent?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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