Returns in apparel retail are approaching a regulatory cliff edge. Returned items, long a source of wastage and burned profits, are about to get more difficult, now they are under European regulators’ spotlight.
The Ecodesign for Sustainable Products Regulation (ESPR) will make it illegal to destroy returned items of clothing or footwear. Every single returned item, no matter how tatty, will need to be resold or recycled into something else. Large businesses with EU operations must comply from July 2026. Medium-sized firms will follow by 2030.
On the surface, UK-based retailers might feel insulated from developments outside the country. This may be a dangerous assumption. The “Brussels effect” means these rules may well influence standards elsewhere, including here.
The implication is clear: embracing product circularity is no longer a choice but part of a retailer’s license to operate. The starting point to achieve this is with a well-designed eCommerce returns strategy.
The cost of the status quo
Getting returns right doesn’t only help brands comply with regulations like ESPR. It also helps address a long-standing and expensive headache for retailers.
In 2024, UK shoppers made returns worth an estimated £27 billion, a large proportion of which will be clothing and footwear. Research suggests that up to 43% of returned items are destroyed. Under the new EU rules, that figure will need to go down to zero.
Yet for customers, returns are a must. Simple returns processes encourage people to buy with confidence. Needlessly tricky ones might mean they shop elsewhere. 75% of online shoppers polled by nShift agreed that an easy returns process would make them more likely to shop again from the same retailer.
Supporting an end-to-end process
Many retailers believe that including a pre-printed slip inside the package is sufficient to their needs. This is wrong. Paper-based processes give retailers no visibility into what’s coming back, which makes it harder to get items back onto shelves. What’s more, tasks like arranging refunds or exchanges, must done by hand, where they could be automated. All of this adds to the cost of returns.
Moreover, as we’ve seen, sending items to landfill in bulk is no longer an option under ESPR. That means every single return must be tracked, graded and either resold or re-used.
For example, a dress that is returned unused after a few days can probably be returned to shelves. On the other hand, items that have seen some wear and tear, or which are defective, may need to be recycled. The returns flow in each case could be different – potentially involving different carriers delivering to different processing sites.
Managing this demands integrated, end-to-end reverse logistics processes, which join customer touchpoints, carriers, processing centres, and eCommerce systems. Without this integration, items may end up in “logistical limbo” where it is neither on sale nor pending recycling. This could be where retailers’ risks under ESPR are greatest.
Swift handling can minimise waste. If a returned dress can be inspected and relisted quickly, it remains saleable. If it takes weeks, its value will be less. The data from returns systems allows retailers to see exactly what is coming back. They can then prepare for its arrival.
Shaping your returns strategy
The right returns strategy can help address the concerns of ESPR, the needs of customers, and the demands of the business.
To do this, retailers should concentrate on three specific areas.
First, they must understand the reason for every return. Capturing structured data – such as “too small” or “wrong colour” – is vital. These insights should be used to refine product descriptions and specifications. Changing the description may help more people buy right first time, meaning fewer returns.
Second, retailers must tailor their returns policies to minimise the hit to the bottom line. Not every product or customer should be treated the same. High-value customers might be given free returns. “Serial returners” might be asked to pay a handling fee. They should all be offered the opportunity to exchange for an alternative, instead of being refunded automatically.
Third, they can look to embrace “recommerce” – that is, selling used or recycled items alongside new inventory. Recommerce swiftly gives returned items a fresh chance to be sold. An eCommerce returns platform can ensure that stock is tracked and verified at every stage. This prevents items from being written off prematurely.
Preparing for the inevitable
Retailers with operations inside the EU will need to move swiftly to comply with ESPR. Those based in the UK have some breathing space, but should aim to act fast to lock in the advantages of an effective returns channel.
Being able to fully track a product’s lifecycle depends on a “truth layer” spanning the moment of purchase to initial delivery, and back again, to the point of resale. This truth layer already exists in modern delivery management platforms.
All that remains is for eCommerce retailers to shape the best returns approach for their business.
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