eCommerce Returns: The Fashion Industry’s $218 Billion Problem

eCommerce returns are a costly, persistent issue for merchants, but no industry suffers more than fashion. We recently crunched the numbers on AfterShip customers and found that 75% of returns in 2023 were for clothing and accessories. And here’s another staggering number: for apparel brands, returns represent a $218 billion per year problem. 

In the early days of eCommerce, merchants offered free returns to compete with brick-and-mortar retailers—and it worked! Shoppers embraced this perk with open arms and still expect it today. Though large retailers like Zara, H&M, and even Amazon have started to charge for some returns, free returns (and the headaches that come with them for merchants) remain the industry standard. 

The current rate of eCommerce returns for apparel brands is unsustainable. Merchants must carefully navigate the complexities of meeting buyer expectations while lessening the impact of returned merchandise. Let’s take a look at why shoppers return so many products, and what fashion retailers can do to turn returns into new opportunities.

Learn more about the state of eCommerce returns in our latest data report.

Why returns in the fashion industry are so high

The reason for the high number of returns for clothing and accessories brands may seem obvious: shoppers can’t try on items before they buy them. But if you look a little deeper, there are a whole host of contributing factors.

Size and fit issues

According to a survey from McKinsey & Company, 70 percent of returns are caused by poor fit or style. Why is that number so high? Because sizes aren’t standard across the industry, and many merchants don’t provide the information customers need to get it right on the first purchase. 

There are several ways apparel brands can help guide shoppers to the right product:

• Product reviews:  Asking the right questions when soliciting reviews—like height, weight, and size bought—can help shoppers gain insight into size and fit issues. Further, reviews with photos can help customers see how a product looks on a similar body type.
• Product photos: Showing photos of models with different body types can help customers better understand how something will look on them. 
• Size guides: Sizing charts, interactive try-on features, or even simply listing a featured model’s measurements can help guide buyers to the right size. 

Coresight research found that pants are the most frequently returned apparel items, representing 65% of all apparel returns. And premium branded fashion retailer Tessuti found that 23% of men’s clothing is returned for being too small, while only 13% of women’s clothing is. 22% of womenswear is returned for being too large, compared to just 15% of menswear. And in children’s clothing, 31% are too small and 16% too big. While these numbers are interesting from a data point of view, they also highlight the need to get to know your customers.

The key to combating fit issues that lead to returns is looking at your returns data, and understanding what gets returned frequently and why. If an item runs small or large, simply noting that on the product page near the size selection can lead to informed purchases that are more likely to fit—and less likely to be sent back.

Bracketing and wardrobing

The ubiquity of free returns has given rise to two consumer practices that are an ongoing problem for the fashion industry: bracketing and wardrobing.

Bracketing is when a customer buys the same item in multiple sizes or styles, intending to keep one and return the rest. (Given how many returns happen because of sizing issues, this behavior is understandable, but it can be costly for merchants.) 

Wardrobing is when a customer buys an item with the intent to wear it once and then return it. This is often done for special occasion clothing—items that are typically more expensive and are likely to be worn infrequently.

To combat these harmful practices, merchants can set up returns rules. For example, only allowing one free return per order or only accepting items with their original tags. 

Customer education can also help discourage bracketing. Triggered pop-up messages when a shopper adds multiple variants of the same product to their cart highlighting your return or exchange policy and pointing them to your sizing information can guide them toward an informed purchase.

Product damage

Coresight also found that 10% of apparel returns are due to damaged goods. Having the right quality controls in place can help to ensure that the items delivered match the customer’s expectations. 

Unmet expectations

A  study about returns in online fashion retail published in the Journal of Business Economics found that 45.9% of returns were due to the customer disliking the item purchased, while 21% were returned because the item was “not as described.” 

Educating shoppers about the product they are purchasing can go a long way toward delivering a product that meets expectations—so does ensuring that product information is honest and accurate. That means showcasing photos that match what the customer will receive, providing specifics about materials, and ensuring that bad reviews that would help a shopper make an informed purchase aren’t hidden.

The environmental costs of apparel returns

The cost of returns is steep for fashion and accessory brands, but it’s also a massive environmental problem. Not only does merchandise that can’t be resold end up in landfills, but shipping products back and forth increases emissions—not to mention all the wasted packaging. 

For the 10% of apparel returns due to product damage, why process a return at all? It’s just wasted resources for an item that will likely be destroyed. Offering Green Returns can help merchants both shrink their carbon footprints and improve their bottom line. 

Alternatives to traditional returns

While no eCommerce brand (fashion or otherwise) is going to eliminate returns completely, there are some effective ways to lessen their impact.

Flexible exchange policies

Offering customers the ability to exchange an item rather than return it means not having to process refunds and lose revenue. You can offer exchanges for variants of the same item in a different size, color, or style—or, you can give customers the ability to exchange for anything in the store, and then recommend products they’re most likely to buy. 

Our data shows that fashion brands that enabled exchanges for any item saw an average of nearly 11% in increased upsell revenue.

Shoe brand Marc Nolan transformed returns from a costly, resource-intensive process into retained revenue. AfterShip Returns gave them the flexibility to offer more exchanges instead of refunds. Before the implementation, 75% of their returns were refunded, with only 25% turning into an exchange. Now, 49% are exchanged for other items.

Refund to store credit

Newsflash: you don’t have to offer refunds to the customer’s original payment method. You can recapture revenue by only offering store credit on all or some returns. The key is to clearly communicate this in your returns policy, and make exceptions for damaged or missing products. 

Free returns for your most loyal members

Your repeat customers are less likely to abuse your returns policies, as they are familiar with attributes like your products’ fit and quality. Offer free returns as a benefit for your loyalty program members—if you have a tiered structure to your program, offer it only to your higher tiers to discourage shoppers from signing up just to get the perk.

Turn apparel returns into new opportunities

Fashion and accessories brands who want to lessen the number and impact of returns need to look at the entire customer journey—education before they buy to ensure they find the right product the first time, and flexible returns options when they get it wrong.

Learn how AfterShip Returns helps merchants build a better customer returns experience, reduce operational costs, and recapture more revenue.