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Mounting costs and waste involved in processing returns en masse has become a scourge on the e-commerce industry. After years of attention on the environmental consequences of fashion’s returns problem, why is it still so hard to manage returns sustainably?
Part of the issue is that answers depend on an individual brand’s returns policy and management practices, yet the underlying problem is systemic, attributable to the lack of adequate policies and infrastructure across the industry.
“There’s a real issue of what is the cost and the impact, and how do you manage that when supply chains are really designed for forward logistics as opposed to reverse logistics,” says Amena Ali, CEO of reverse logistics company Optoro.
In 2021, DTC label Everlane set out to assess and improve its own returns, partnering with Debrand on a two-year pilot project, it aimed to understand exactly what happened to every single returned item and how it could optimise its return process for sustainability from the start. Before the pilot the company had amassed over 100,000 damaged returned items and sought to fix and put as many of those items onto the market again. Using the US Environmental Protection Agency’s (EPA) “waste management hierarchy framework” as a guide — which says to prioritise reducing, followed by reuse and then recycling, and to treat waste-to-energy or landfill options as a last resort — the companies determined that by adding basic refurbishment capabilities, Everlane could slash the rate of products that end up as waste. Before the pilot, Everlane did not have a process for refurbishing their damaged returns as part of lowering their waste output.
Another key takeaway: the impact of a brand’s returns process is a reflection of how the brand operates its core business. Everlane says it’s always focused on longevity and versatility, the necessary starting points for sustainable fashion, but the pilot with Debrand reinforces the relationship between how a product is designed and made in the first place and what options exist for dealing with it if and when it becomes a returned product. If quality is low, it’s less likely to be viable for a resale market; but that’s also true if it’s designed to meet a short-lived trend or to last one season, and doesn’t have a shelf to be restocked on if a customer returns it a week or a month after buying it.
The fact that around 70 per cent of Everlane’s assortment is carried over from season to season makes it more likely to be able to process returns and get them back on the shelf, says director of sustainability Katina Boutis. “The first step in all of this is really avoiding the waste that happens in the first place,” she says. “How can we communicate about size and fit better to our customer and tighten our quality-control processes to avoid return and damages in the first place? And how can we educate our customers and also our internal teams about how to improve these impacts and our processes, and also purchasing and returns behaviours?”
In 2023, $743 billion worth of retail merchandise was returned, according to the National Retail Federation, with more than $240 billion stemming from online returns. Returns use up resources and energy, adding to brands’ carbon emissions while contributing heavily to fashion’s waste problem. To avoid the cost of sifting through usable items, warehousing them and preparing them for resale, some companies simply throw them away: a 2022 report from Optoro estimated that as much as 9.5 billion pounds of e-commerce returns ended up in landfills. Yet despite increased scrutiny on the unsustainability of returns, there’s little data to show whether the industry is getting better or worse at dealing with them.
What might move the needle is emerging regulations. Policymakers, particularly in Europe, are cracking down on textile waste, and their growing push for extended producer-responsibility frameworks is adding incentive for brands and retailers to confront their waste problem. The European Union banned the destruction of unsold footwear and textiles at the end of 2023, for example, and several US states including California and New York have also proposed regulations on textile waste.
Brands are coming up with ways to make their reverse logistics processes more efficient by refurbishing items for resale, partnering with companies that have quicker return ecosystems so that items make it back to the shelf while they’re still in season, shortening the window for returning items, and yes — even charging customers for returns, a policy that reduces the financial burden on brands while discouraging consumers from bracketing, or buying multiple products simultaneously when they never plan to keep them all. This is part of Everlane’s strategy, too. A spokesperson for the company said that the brand works with logistics firm Happy Returns for lower waste returns. Packages with 10 items or more are not accepted, and using the company’s shipping label to send back items costs customers $7.
It’s a complex problem that sheds light on one simple truth: fashion doesn’t have the supply chain in place to manage post-purchase logistics sustainably, and without solving that, key goals like circularity will remain out of reach.
Companies are developing return solutions for retailers
To help brands reduce returns that go to waste, Optoro says its machine learning technology can optimise products for resale or reuse by reducing the cost and time spent repurposing them — one of the key reasons that products end up in a landfill. The company, which works with well-known companies like Gap and Athleta parent company Gap Inc, says that it can reduce the cost of repurposing returns by about 50 per cent. It also helps companies donate or send items to outlets that can’t be resold at retail.
For Everlane, the need to provide minor repairs was the main hurdle. By incorporating light refurbishment capabilities into its returns process — a steamer to smooth out wrinkles, buffers to remove markings like deodorant stains or scuffs, or equipment to attach fresh hang tags, for example — the brand says it lowered its “damaged seconds” (items damaged upon return) by 49 per cent; it could now resell those items via refurbishing them, where they were previously downcycled and accumulated.
Before the collaboration, Everlane didn’t use resale as an option for some of the damaged returns, a spokesperson confirmed. The pilot with Debrand proved how crucial the ability to refurbish products is.
It also connects back to the brand’s slower fashion approach, says Boutis. “You’ll see a lot of our existing products living on our website or in our stores throughout the year,” she says. They also focus on details such as effective product descriptions and accurate fit predictions, for example, so that customers are less likely to return products in the first place. “We really try to sell through every single product.”
In cases where returns were too damaged to be refurbished and resold — less than 5 per cent of all returns, according to Boutis — Boutis says many of these items were “downcycled” for other uses, such as upholstery for car manufacturing. Recycling them into new textiles or other materials that could be transformed back into apparel or footwear products would be ideal, she adds, but those technologies are not available at scale just yet. “We are piloting this with some really very cool innovative textile recyclers, but the solutions are still very early on in most cases,” she said.
Everlane’s efforts are one example of what it takes to try to minimise return waste at brand level. Industry-wide shifts are still necessary. Partnering with external companies helps. Rachel Kibbe, CEO of public advisory advocacy firm Circular Services Group, explained that many brands are overcoming reselling pain points when they work with companies like Trove and Optoro that already have existing and improving software to track many individual items. Kibbe has about 15 years of sustainability in fashion experience, and once ran a business selling mystery boxes with excess inventory. She saw first hand that using technology to track items, along with the associated labour costs for managing warehouse inventory, was especially expensive.
“For any of those businesses who are working on solving any of those pain points, we’re going to need public policy support for those businesses to scale,” says Kibbe.
Correction: Prior to the pilot programme, Everlane downcycled and accumulated damaged returns, not discarded or donated them as originally reported. (9 February 2024)
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