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The one thing no one wants to talk about in the fashion industry and how the solutions work

February 11, 2021

There is one topic in particular that clothing manufacturers and retailers are happy to keep quiet about. The silence is caused by the fact that this problem leads to damage on a global scale. What are we referring to? Returns in fashion eCommerce. Enabling free returns was one of the most fatal decisions for the German fashion industry and the environment. It has never been easier to spend money on clothing while sitting at home in front of a desktop or smartphone. The goods are delivered stress-free to our front doors and we do not have to lift a finger. If for some reason we do not like the ordered clothes or they do not fit, we can simply return them free of charge. But the fashion industry is not the only one to blamed for this situation; consumers often take advantage of such offers to an extreme extent. 50% of fashion returns are based on a genuine error relating to purchasing the wrong size – but who has never deliberately ordered different colors and sizes of one fashion item with no intention of keeping them all?

The true cost of returns

Returns might be free of charge for the individual online shopper, but they are not free for the society, our planet and for fashion retailers. Currently, the rate of returns for fashion retailers amounts to roughly 40% depending on the source, the specific fashion branch and geography. Of this share, half is due to the wrong size. Less than 50% of these returned goods can be resold at full price. Many garments are simply destroyed or end up in large dumps. The additional transport, processing and lost sales of returns lead to high costs for the fashion industry. According to Supply & Demand Chain Executive the cost of returns for UK fashion retailers was £6.6 billion in 2018 alone. McKinsey states that the global growth of the fashion industry and rising living standards in emerging markets will further accelerate the problem of returns. Aside from the expenses for retailers, returns bring about huge environmental costs: on average one return generates 500g of CO2 emissions and a large proportion of returns harms the environment by ending up as landfill waste. Worldwide, around 17 billion items are being returned every year. This amounts to 4.7 million metric tons of CO2 emitted yearly – nearly as much as the amount of CO2 emissions emitted from the electricity consumption of 800,000 homes on an annual basis.

Returns in fashion eCommerce

What happens next?

For many years, most fashion retailers saw only the bright side of free and flexible return policies: they attract customers and generate higher conversion by building trust. Today however, the rising awareness on environmental problems of returns and the monetary damage for companies themselves is causing many retailers to rethink their approach. Customers are more often aware of the possibly harmful consequences of their shopping behavior on the environment and society. They are paying more attention to sustainable and fair fashion, avoiding returns and questioning the retailer’s supply chain. In the course of the next few years a radical change in the fashion industry is expected, resulting in winners and losers. The companies that become aware of their role in societal change and demands of their consumers will be the winners. But how can fashion companies meet their customer’s demands and adapt to today's e-commerce, sustainability and fair fashion trends? The answer: technology.

Problem solvers

To solve the most pressing problems of the fashion industry, many start-ups have developed innovative solutions. Especially in the area of sustainability and returns, many new business models are emerging. One of the most common reasons for returns are a bad fit/wrong size. Many FashionTech start-ups therefore aim to tackle the problem by finding the most accurate size for each individual online shopper. Most of these solutions rely on consumer questionnaires. Customers enter data such as their height, weight or body-shape data in the online shop and receive a size suggestion that fits better than their own self-assessment. Often machine learning algorithms are used for these suggestions, which can make increasingly accurate predictions over time. Sometimes computer vision is used to create a model of the customer to extract more accurate measurements. These applications also increase the conversion rate of online shops and customer loyalty. Regardless of which technology is used, all startups have one common goal: to drastically reduce returns in the fashion industry.

And as you might have guessed: Presize is the best sizing solution on the market. Our own opinion might be biased, but feel free to check the case studies on our website so the results and our customers can speak for themselves.

Learn more about our solution and how we can help you reduce returns
Katharina Menke
Marketing
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