The true cost of returns in fashion e-commerce

Online product presentation is a balancing act between maximising sales and minimising returns. The problem? Most companies optimise for sales first – without fully considering the impact on returns.
 
Key insights from the research:
• E-retailers prioritise aesthetics over accuracy. Many product images and descriptions are designed to make items look as appealing as possible, rather than providing a fully accurate representation. This leads to mismatched expectations and increased returns.
 
• Customer-generated content is underutilised. Some brands encourage customer reviews and user-generated images, while others hesitate – fearing that honest feedback might hurt sales.
 
• Virtual fitting rooms have yet to succeed. The lack of global sizing standards and the complexity of body shapes make it difficult for current technology to provide accurate recommendations.
 
What retailers can do differently:
• Optimise product presentation for accuracy, not just conversion rates. Better images, honest descriptions, and clear sizing information are simple but powerful ways to lower return rates.
 
• Incorporate real customer feedback. Showing authentic reviews and images can help manage expectations and reduce unnecessary returns.

Across the fashion e-commerce industry, return policies are remarkably similar. Dr. Petisme’s research explains why:
 
• Legal requirements set a baseline but do not fully dictate how generous return policies should be.

• Industry norms and risk aversion prevent change. Retailers fear that stricter return policies will drive customers to competitors.
 
• Isomorphism drives uniformity. Companies copy each other’s return policies due to regulatory pressure, imitation of perceived “best practices,” or because decision-makers move between companies, bringing similar strategies with them.
 
What retailers can do differently:
• Return policies don’t have to be identical. Companies that segment their return policies based on customer behavior—rewarding low-return customers with better terms—could gain a competitive advantage.
 
• Instead of defaulting to industry norms, retailers should test new return strategies that balance customer experience with sustainability goals.

Fashion e-retailers frequently market themselves as sustainable – yet most fail to integrate returns into their sustainability strategies.

Dr. Petisme’s research reveals that:
 
• Sustainability teams focus on production, not post-purchase impact. Most efforts target materials and supply chain emissions, but returns, overproduction, and reverse logistics are rarely addressed.

• Returns are absent from sustainability reports. Despite their environmental impact, returns are not systematically included in corporate sustainability strategies.
 
• Overproduction is a hidden consequence of high return rates. Many retailers manufacture extra stock to compensate for the fact that a significant portion of their inventory is always in transit between customers and warehouses.
 
What retailers can do differently:
• Returns must be part of a company’s sustainability strategy. A truly sustainable business cannot ignore the waste and emissions generated by returns.
 
• Overproduction should be tackled as a return management issue. Producing more than necessary to offset high return rates is neither efficient nor sustainable.
 
• Additionally, upcoming CSRD (Corporate Sustainability Reporting Directive) requirements will force companies to take sustainability reporting more seriously. This could push the industry to finally address returns in their ESG strategies.

• The twin-transition i.e. an emerging concept that acknowledges the intricate dependencies between green- and digital transformation. Use the collection of data and digitalisation to get smarter in operations and your decisions long and short term.

A key takeaway from this research is that returns are not just a logistics issue – they are a core business challenge. Yet, in most companies, returns remain an operational afterthought, with no one truly taking ownership.
 
To move forward, fashion e-commerce must shift its approach:
 
✔ Stop treating returns as an external problem.
Retailers cannot blame customers, the EU, or industry norms. Returns are a direct result of how products are marketed, sold, and serviced.
 
✔ Make returns a cross-functional issue.
Marketing, logistics, customer service, and sustainability must align on return strategies instead of working in silos.
 
✔ Assign a dedicated return strategy leader.
Returns are too important to be passed between departments. Companies should appoint a cross-functional manager with the power to create and implement smarter return policies.
 
✔ Rethink success—beyond just sales.
The industry still operates with a traditional retail mindset where more sales = success. But in e-commerce, high sales mean little if half the products come back as returns.
 
Forward-thinking companies should track:
• Reduction in unnecessary returns.
• Customer trust through accurate product representation.
• Sustainability impact of lower return rates.
• Use tour data in order to take more informed decisions for the entire business.

Returns have long been treated as an unavoidable cost of doing business, but Dr. Petisme’s research shows that they are actually a symptom of deeper strategic issues in fashion e-commerce.
 
Returns are not just a logistics problem – they are an indicator of how a company designs its products, interacts with customers, and integrates sustainability into its operations.
 
To build a more profitable and sustainable future, companies must:
 
• Rethink product presentation to set realistic customer expectations.
• Reevaluate return policies instead of blindly copying competitors.
• Integrate returns into sustainability efforts rather than ignoring them in ESG reports.
 
The biggest question now is: who will take the first step?