What: 24,4% of e-commerce purchases are returned in the US, translating into $38bn in returns and $25,1bn in processing costs.

Why it is important: E-commerce capabilities are a necessity for department stores as a part of their omnichannel capabilities and offerings to customers. However, the financial structure of this business, often loss-making due to logistical costs, often impacts the bottom line, pushing retailers to paradoxically limit the size of their e-commerce business.

The US online apparel and footwear market faces a high return rate of 24.4%, translating to $38 billion in returns and $25.1 billion in processing costs in 2023. Offline-based apparel companies experience even higher return rates, impacting their bottom line significantly.

The primary reasons for online apparel returns are size/fit, colour, and damage. To reduce returns, 85% of apparel brands and retailers are using or planning to implement virtual try-on tools, which can also boost sales. Among those already using size-recommender tools, 80% report increased conversion.

The growth of e-commerce has negatively affected return rates, as customers face challenges in visualizing products accurately. Technologies like 3D body scanning can help address sizing issues, and as these tools improve, they can provide personalized customer service both in-store and online, potentially changing the US apparel market landscape.

The true cost of apparel returns in the US