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Fashion has a known environmental footprint, accounting for up to 10 percent of global carbon dioxide emissions. This is exacerbated by the fast fashion business model which encourages the frequent purchase of cheap and non-durable goods.
About 30 percent of online purchases are returned later, with most going into the trash. In the year In 2020, an estimated 2.6 million tons of recyclables were disposed of in this way in the US. The problem has become so popular that online retailer Boohoo recently followed a number of high street brands and started charging for returns to discourage them.
But what are the reasons for high returns and why are many returned items not resold?
The pandemic has fundamentally changed the way we shop, with the temporary closure of physical stores representing a huge advantage for online retailers. However, online retail’s increasing market share is rooted in long-standing fast fashion shopping practices. A premium placed on novelty, low prices, and free delivery and returns all encourage customers to shop more options, knowing they can return items freely (known as “bracketing”).
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Buy Now plans, such as Klarna’s, which allow customers to shop without upfront fees, have fueled online consumption. Research shows that by offering such “payment solutions,” retailers see a 68 percent increase in average order value.
Industry research shows that cart abandonment rates decrease by 40 percent after payment solutions are introduced. Discount events like “Black Friday” also drive sales, with fashion accounting for about a third of Black Friday spending.
Fast fashion is synonymous with returns
Although low prices and discounts are attractive, cheaply produced fast fashion items can feature quality and fit issues, so they are synonymous with returns. Impulsive spending driven by discounts, which also often leads to regret, increases relapse rates. The 32 percent return rate for clothing orders is lower than other e-commerce sectors, with only 7 percent in consumer electronics.
Operating returns for retailers are also fraught with uncertainty and complexity. It is not known which items will be returned and under what conditions. Often, little can be done to make them want to buy again after use.
This is especially true in the case of “wardobbing” when a purchased item is worn once before it is returned. Not only do retailers face financial losses from reprocessing, but they can also lose reputation if damaged or defective goods are re-distributed.
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 little choice but to issue a refund.
Many retailers instead sell these funds to liquidators, who turn 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 associated with product returns for fast fashion items often exceed resale revenue. It is widely thought that domestic workers’ wages, which are relatively expensive in the labor-intensive return process, are responsible for this.
So avoiding returns is a very cost-effective decision. An ITV investigation into Amazon’s Dunfermline warehouse has revealed the online retailer disposes of tens of thousands of returned consumer goods every week. Amazon says none of the material goes to landfill, but is instead given to energy recovery, recycled or incinerated.
The fashion industry collectively produces over 92 million tons of textile waste annually. In the US alone, clothing recycling generates more annual carbon dioxide emissions than 3 million cars.
Carbon dioxide is released through the collection of returns, when the returns are burned or placed in landfills before being added. Due to the proliferation of fast-fashion synthetic fibers, returns can take up to 100 years to fully decompose, releasing carbon dioxide and methane in the process, as well as leaching harmful substances into local soils.
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.
ReBound encourages retailers to donate their returned consumer goods to charity through their ReBound Regift facility. This has facilitated an estimated £190 million in charitable donations to date. According to ASOS, 97 percent of returns are now resold, and no items are sent to landfill.
As Boohoo’s latest move shows, many 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. Retailers must balance the desire to retain customers with environmental consciousness and reconsider the unintended consequences of laxity in their return policies.
This article is reprinted from the discussion.
Patsy Perry He is a Reader in Fashion Marketing at the Manchester Fashion Institute, Manchester Metropolitan University.
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