In 2024, the apparel industry stands at a pivotal juncture, marked by the explosion of “instant fashion”1, which has been fueled by mobile and social media. Online shopping has evolved into a fast-paced and ever-changing landscape. According to a 2023 survey by McKinsey, the global online fashion market is projected to reach approximately $1 trillion by 2025, underscoring the immense growth in this sector2. This number is truly remarkable, considering that the transition to e-commerce was slow and the reselling platform eBay was the first company to handled apparel (re)sales online in 1998.
Notably, as recently as 2020, many fashion companies expressed concerns that online sales channels would cannibalize their brick-and-mortar stores3. However, the last ten years have seen huge direct-to-consumer brands launch and the COVID-19 pandemic. Now, most retailers offer e-commerce to compete and survive. This transformation presents a challenging yet exciting opportunity for the apparel industry: how can they leverage technology to empower a more circular and holistic approach to address the issues of online returns?
The Returns Dilemma in Apparel—Environmental Impact and Legislation
The rapid rise of e-commerce has led to a significant increase in an inevitable byproduct: returns. In the apparel sector, returns represent a large, complex, and growing issue. In some reports, return rates are upwards of 30% to 60%4. This huge volume of moving products increases the burden of logistics, inflates costs for retailers, and generates substantial environmental waste.
Undeniably, Amazon’s dominance in logistics and the creation of Prime services forever changed consumer expectations. For years, online shoppers have anticipated fast, easy, and free returns as integral components of their experience. This has steadily increased CO2 emissions, traffic congestion, and air pollution. For instance, in the United States alone, the return of online purchases in 2020 generated over 16 million metric tons of CO2 emissions, equivalent to the emissions from three million cars5. The demand for quick deliveries, often next-day or same-day, exacerbates this impact. E-commerce logistics are estimated to produce 200-300% more emissions than traditional retail, largely due to the multiple deliveries and returns involved6. In tandem, increased numbers of fulfillment centers have been built to accommodate this traffic, and these buildings occupy substantial land and consume considerable energy resources for heating, cooling, and operations.
When discussing the impact of apparel returns, it’s essential to include textile waste. While there is a large ecosystem of responsible liquidators and resellers, there is still a fair amount of apparel returns that are simply landfilled or incinerated. This is because of their condition or a lack of investment in processing by the brands to distribute the goods to the proper channels. More activists and the broader public have become aware of the volume of textile waste. For context, as of 2023, it was calculated by the World Economic Forum that 92 million tons of waste was created each year7. The huge volume of unwanted textiles has led to more policies and laws coming into effect to prevent and handle the problem. Countries like Italy8 and France led the way, and now the broader EU has followed suit with significant bans on the destruction of unsold textiles9. A little further behind, the United States has had local and state laws passed. Boston launched Zero Waste Boston in 2018, which bans textiles from commercial and residential garbage. In October 2024, a law SB707 was passed in California, which aims to put the burden of responsible textile waste disposal back on the brands and retailers10. All this legislation is an important acknowledgment that the issue is large and complex and that private and public collaboration is needed.
Highlighting a Key Issue: Sizing Discrepancies
It would be remiss to talk about apparel returns from online shopping and not address the issue of sizing discrepancies. Inconsistent sizing across different brands—and even within the same brand—exacerbates the need for e-commerce apparel returns and textile waste overall. In the absence of the international apparel community adopting a straightforward solution like a universal sizing chart, technology has stepped up. Sizing tools that leverage machine learning, customer data, and detailed product measurements are already being used. Brands like Levi’s are utilizing predictive algorithms to match shoppers with appropriate sizes based on their purchase history and body measurements. Such tools guide customers in making better-fitting choices and ultimately reduce returns.
Augmented Reality (AR) will be another game-changer in this space. Some AR technology empowers customers to virtually try on clothes and will help inform smarter online shopping decisions. By helping consumers know what size is most likely to fit and suit their bodies, brands and retailers can bolster more sustainable and efficient shopping online.
Embracing How Tech Can Power Circular Economy for Returns
With the increasing environmental impact and new legislation, apparel returns processes are evolving. What is needed are solutions that use the established systems and resources and add circularity initiatives which incorporate more repair and resale/reuse. Finally, there needs to be a larger investment in the technology that can recycle the most popular blends of fabric.
Reverse logistics software is essential and creates a framework to manage not just the volume of packages, but the action needed on a granular level for each return. In addition, by analyzing return data, companies can identify patterns in customer behavior, which helps them pinpoint which products are more likely to be returned and why. This information can inform inventory decisions, enhance product descriptions, and facilitate the redesign of items that consistently receive negative feedback.
As the volume of returns in the apparel industry continues to grow, advanced robotics and automation will continue to streamline the sorting, restocking, and reselling of returned items, reducing both labor costs and time to resale.
Several technology platforms facilitate the circular economy principles of repair and resale. Circulo, AlterNew, Trove, ThredUp, Arrive, and Archive are all helping hundreds of brands handle these services. In addition to reducing impact, there is real brand equity in building programs modeled after Patagonia’s WornWear or EILEEN FISHER’s Renew. Each brand and retailer is different, so there is no single solution, but all apparel brands and retailers need to look at their tools and consider their options.
Lastly, instead of the landfill, items that can’t be repaired or resold require closed-loop recycling systems that convert old garments into new materials. Thankfully, the technology is there—Ambercycle, Syre, Evrnu, Circ, and CIRCULOSE all have solutions, but the sector is still underfunded, and more commercial, federal, and regional money is needed. By investing in closed-loop recycling systems, the retail industry can significantly reduce its post-sales environmental footprint.
The Path Forward
As the apparel industry evolves, high return rates and a commitment to environmental sustainability present exciting opportunities for brands to lead in innovative solutions. By prioritizing strategies that tackle the complexities of returns and align with a circular economy, brands can position themselves for future success. Appointing a Chief Returns Officer as a key member of the C-Suite can be instrumental in driving necessary changes and streamlining processes.
Leveraging cutting-edge technologies such as predictive analytics, reverse logistics software, robotics, and resale-as-a-service will empower leaders to select the best tools for their teams. Retailers and brands that embrace this approach can enhance customer satisfaction while reducing waste.
Moving forward, collaboration across the entire supply chain—connecting manufacturers, retailers, and consumers—is essential for fostering a shared commitment to sustainability. With increasing consumer awareness and evolving regulations, now is the perfect time for the apparel industry to transform its return practices. This shift will not only promote responsible management of returns but also pave the way for a more sustainable and accountable future for all brands.
Lauren Fay, a dynamic business development expert based in Seattle, is known for her work in sustainability, circularity, and strategic partnerships. She is the Founder of BFG Lab, a consulting agency that supports circularity-focused clients in driving growth through innovation and change management. Lauren has worked with top brands like Gap, Carter’s, and EILEEN FISHER generating multi-million dollar pipelines and spearheading environmental initiatives. She is also a passionate advocate for sustainability education, having founded The New Fashion Initiative.