Fashion has a notorious environmental footprint, accounting for 10 percent of global carbon emissions, a figure exacerbated by the fast fashion business model that encourages the frequent purchase of low-cost, non-durable goods. At the same time, nearly 20 percent of online purchases, including clothing, are returned later, with at least some going to landfills. In the year By 2020, 2.6 million tons of returns will be eliminated in this way in the US alone, thanks to Optoro’s all-in-one return platform. The issue has become so controversial that e-commerce retailer Bhu recently followed suit with a number of high street brands and started charging for the answer.
What drives such a high return rate and why aren’t many returned items resold? The pandemic has fundamentally changed the way consumers shop, with the temporary closure of physical stores representing a huge boon for online retailers. However, online retail’s increasing market share is in the long-standing fast fashion shopping experience. With a premium placed on innovation, low prices and both free delivery and returns, customers are encouraged to shop more options knowing they can return items freely – and easily.
Buy Now plans, such as Klarna’s, which allow customers to shop without upfront fees, have further fueled online consumption. Research shows that by offering such “payment solutions,” retailers see a 68 percent increase in average order value. Still, industry research indicates that cart abandonment rates have dropped by 40 percent since the introduction of payment solutions.
Fast fashion is synonymous with returns
Despite the appeal of low prices and discounts, cheaply-produced fashion items can typically feature poor quality and fit issues, thus prompting excessive returns. Impulsive spending driven by discounts also often leads to buyer’s remorse, increasing the likelihood of returns. It is against this backdrop that apparel orders see return rates of approximately 32 percent, compared to other e-commerce sectors, such as consumer electronics, where the return rate is only 7 percent.
For e-commerce retailers, processing returns is fraught with uncertainty and complexity. It is not known which items will be returned and in what condition. It is often impossible to do little to make things that need to be bought again after use. This is especially true in “wardrobing”, where a purchased item is worn once before being returned. Not only do retailers face financial losses from reprocessing, but they also risk a tarnished reputation if damaged or defective goods are passed on to consumers.
ASOS has already announced that it will stop “wardrobing” by closing accounts of fraudulent returns. However, the threat of a bad review often leaves the retailer with few options but a refund. Many retailers, instead, sell these funds to liquidators, turning obsolete goods into quick cash. A cursory look at eBay reveals dozens of “Amazon Customer Returns” pallets available to the highest bidder.
Problems faced by retailers
Both processing costs and their increasing volume represent a challenge for retailers. The high processing costs involved in product returns mean that fast fashion items often exceed resale revenue. The relatively high cost of paying domestic workers is widely thought to account for this in the labor-intensive return process. Therefore, avoiding returns is often the most cost-effective decision. An ITV investigation into Amazon’s Dunfermline warehouse accused the online retail giant of discarding tens of thousands of returned consumer goods every week. Amazon has contested such findings, stating that none of the materials are sent to landfills, and instead, are given to energy recovery, recycled or incinerated.
A 2020 report published by Nature Reviews Earth & Environment by Kirsi Nienimäki, Greg Peters, Helena Dahlbo, Patsy Perry, Timo Rissanen, and Alison Gwilt shows that the fashion industry collectively produces more than 92 million tons of textile waste annually. In the US alone, EcoEdge claims that returning clothing generates more annual carbon dioxide emissions than 3 million cars. (Carbon dioxide is first released by the reclaimed stock, before it is added as the reclaimed money is burned or stored in landfills. Because of the abundance of synthetic fibers in many fashion items, it can take up to 100 years for the reclaimed materials to fully decompose, producing carbon dioxide and methane in the process, as well as harmful leaching of nutrients into the local soil.).
How are retailers handling returns?
While the environmental implications of product returns are clear, fashion retailers also have a financial incentive to address the costly issue of returns management. Due to the complexities surrounding the return process, fashion retailers are increasingly handing over the responsibility to specialized companies like ReBound Returns that work with retailers to make the return process more sustainable. For example, ReBound encourages retailers to donate their returned consumer goods to charity through their ReBound Regift facility, an effort that has facilitated an estimated £190 million ($229 million) in charitable donations to date.
Elsewhere in the market, e-commerce company ASOS says 97 percent of returns are now resold, and no items are sent to landfills. And as recent moves by Boohoo and Zara to charge for returns show, several online retailers have tried to pass the cost of returns on to customers. While the reason for this is primarily financial, the impact of similar policies on improving the environmental consciousness of consumers is well known. Since 2015, plastic bag use has fallen by 97% in major UK supermarkets following the introduction of a minimum charge.
Despite calls for more sustainability in the fashion industry, fast fashion continues to thrive. If marketing practices that promote waste and fuel emissions continue, the fashion industry will retain its undesirable reputation as a major contributor to climate change. Therefore, retailers are encouraged to balance the importance of customer retention with environmental consciousness and reconsider the lenient effect of their return policies.
Patsy Perry He is a Reader in Fashion Marketing at Manchester Metropolitan University. (This article was originally published on The Conversation.)
