The Return Dilemma: Environmental and Financial Costs of Returns in the Fashion Industry

With online shopping and fast fashion both increasing, a significant challenge facing the industry is the surging rates of returned goods. Free returns have become the norm for many fast fashion brands, encouraging consumers to buy more without carefully considering their purchases. While convenient, this has led to a growing volume of unsaleable textiles that brands must manage. The environmental and financial impacts of this issue are becoming more apparent, prompting brands to rethink their return policies and explore sustainable solutions.

The Impact of High Return Rates

Accelerating returns rates have been spurred by online shopping, which peaked over the COVID-19 pandemic. Online shopping and return rates have remained high, with clothing purchases having the highest return rates of any consumer category, ranging from 20% to 30% (Wallis, 2021), followed by shoes at 14%, then other categories like electronics, food and beverages, and cosmetics (Bashir, 2024). Several behaviours contribute to this problem, including "bracketing," where customers buy multiple sizes or styles intending to return most, and "wardrobing," where shoppers wear an item once and then return it. 

These practices are made easier by the anonymity and simplicity of online returns. Without in-person scrutiny, there is less deterrent against returns. The fast fashion model exacerbates this issue by promoting frequent, low-cost purchases and fleeting trends. Returned goods can be difficult to resell due to the time and costs associated with reprocessing, the style being out of season or fashion once it’s restocked, or the product being damaged or showing signs of wear. The environmental impact of extra packaging and transportation further compounds the sustainability concerns associated with returns.

Innovative Strategies to Address Returns

Recognising the environmental and financial costs of high return rates, some brands have implemented strategies to manage this issue. For example, predictive models are being developed to better understand consumer behaviour around returns. Some companies are offering incentives for customers to keep their purchases, while others are enforcing more stringent return policies. 

Brands are reducing return rates by shortening return windows, introducing tools like "fit technology," and using tactics such as Amazon's "frequently returned" labels or encouraging in-store returns to lower costs and emissions (Owen, 2023). Digital strategies like advanced sizing technologies, AI-powered shopping experiences, and customer reviews also help customers make more accurate purchases, reducing the likelihood of returns (Murphey, 2024).

We advocate for widespread adoption of Circular Economy principles, aiming to design out waste and keep products in use in their highest form. For fashion brands, this means reconsidering return policies to reduce waste or finding ways to repurpose and repair returned goods. Learn more about textile recycling and how it promotes circularity here.

After’s Role

At After, we strive to address textile waste by promoting circular solutions. By turning damaged or otherwise unusable textiles into new resources, we provide a viable solution for managing certain returns that can’t otherwise be sold. However, we recognise recycling is just one part of the solution. Consumer choices and brand return policies play an essential role preventing excessive returns.

We recognise returns will persist and we advocate for a broader approach to minimising the associated waste. This includes the donation of gently used returns, up-cycling, raising consumer awareness about the environmental impact of returns, and promoting repair options to extend the life of faulty or damaged returns. By integrating these strategies, fashion brands can reduce the waste associated with returns and move towards sustainable operations. Learn more about our services here.

Sources

Bashir, Umair. “Most returned online purchases by category in Australia 2024” https://www.statista.com/forecasts/1187931/most-returned-online-purchases-by-category-in-australia, Statistica, Jul 2024.

Fibre2Fashion News Desk (KD). “E-Commerce Faces Financial & Environmental Strain From Surging Returns”, https://www.fibre2fashion.com/news/e-commerce-industry/e-commerce-faces-financial-environmental-strain-from-surging-returns-297535-newsdetails.htm, Fibre2Fashion, Aug 2024

Murphey, Dakota. “Reshaping e-Commerce To Minimise Returns” https://www.theinterline.com/2024/08/13/reshaping-e-commerce-to-minimise-returns/, Interline, Aug 2024.

Owen, David. “What Happens to all the Stuff we Return?” https://www.newyorker.com/magazine/2023/08/21/the-hidden-cost-of-free-returns, The New Yorker, Aug 2023.

Perry, Patsy. “Fast fashion: why your online returns may end up in landfill – and what can be done about it”, https://theconversation.com/fast-fashion-why-your-online-returns-may-end-up-in-landfill-and-what-can-be-done-about-it-188090, The Conversation, Aug 2022.

Wallis, Jasmine. “Online shopping returns in Australia can’t be put into inventory, so where do they go?” https://fashionjournal.com.au/fashion/where-do-online-returns-go/,  Fashion Journal, May 2021