Fashion's returns problem is getting worse. The industry's answer is a $5 fee.

There's a moment every merchandiser knows. It's the Monday trade meeting, the sales report looks healthy, and everyone feels good about the new jacket. Then three weeks later the returns start landing, and the style that "sold out" is suddenly back in the warehouse. Two hundred units of it. Mostly in size small.

I lived inside that moment for years, and I've been watching the industry numbers ever since. They are not getting better. They're getting worse, and the way most of retail is responding worries me.

The scale of it

Start with the headline figure. US retail returns were expected to reach around $850 billion in 2025, and NBC has called it an $890 billion problem. For context, that's roughly the GDP of Poland, sent backwards through the supply chain every year.

Fashion sits right at the centre of it. Clothing and shoes are the most returned categories online, full stop. A recent US study put average clothing returns at about 26%, and online fashion runs at 30 to 40%, against 8 to 10% in store. Womenswear and footwear sit at the top of the table almost every time someone measures it.

And each one of those parcels costs real money to deal with. Estimates for processing a single return range from $10 to $65 once you count the postage, the labour, the inspection, the re-bagging and the restocking. On a $40 dress, the maths stops working very quickly.

Why it keeps happening

The boring answer is the right one: sizing. Somewhere around 77% of fashion returns come back because the fit was wrong. Not because the customer was difficult. Because the product ran small, or the size guide was written for a different block, or the grading drifted somewhere between the first sample and the production run.

The behaviour that grew out of this is bracketing, and it has become completely normal. About 63% of shoppers admit to buying multiple sizes of the same item with every intention of sending some back. Among Gen Z it's 69%, versus 16% of Boomers. The fitting room didn't disappear. It moved into the customer's bedroom, and the brand now pays the rent on it twice, once in shipping and once in reverse logistics.

I don't blame shoppers for this, by the way. If I couldn't trust a brand's size guide, I'd order two sizes too.

The industry's answer: a fee

Retail's main response so far has been to make returning things slightly more annoying. As of this season, 72% of retailers charge a fee for at least some returns, up from 66% the year before. Zara charges $4.95 for a mail return, J.Crew $7.50, Marshalls $11.99. Even Macy's and Kohl's quietly added fees over the holidays.

I understand the instinct. The postage is real, the processing is real, and somebody has to pay for it. But look at what happened to the retailers who went down this road. Among merchants that introduced return fees, 47% saw complaints rise, 37% lost customers, and 34% watched their average order value fall.

That's because a fee punishes the customer for a problem the brand created. The jacket still runs small. The photo still shows a colour the fabric doesn't have. Charging $5 at the end of that chain doesn't fix anything upstream. It just taxes your most engaged shoppers and quietly tells them to buy elsewhere next time.

There's an environmental bill too, which the industry talks about less than it should. Returns generated an estimated 8.4 billion pounds of landfill waste in a single year, because a meaningful share of returned fashion is never resold. It gets liquidated, shredded or binned. A fee doesn't fix that either.

The part nobody measures

Here's the thing I keep coming back to, after years of sitting in those Monday meetings.

Returns are a data problem before they're a logistics problem. A return doesn't arrive when the sale happens. It arrives two, three, sometimes six weeks later, inside a return window that's still open long after the sales report has been filed and forgotten. So a style can look like a bestseller for a month while it's quietly on its way to a 45% return rate, and most teams find out at exactly the moment they're signing the reorder.

Multiply that across channels and it gets worse. The same jacket might return at 18% through a department store and 31% through your own site, because the customers, the expectations and the buying behaviour are different. If you only ever see a blended number, you'll make the wrong call on both channels at once.

This is why I think the fee conversation misses the point. The brands that get returns under control won't be the ones that made returning expensive. They'll be the ones that saw the return coming before the window closed, traced it to a size, a reason and a channel, and changed the next purchase order before the damage compounded. Catch a size issue in week two and you fix the size guide, rebalance the buy and save the season. Catch it in month three and you've already reordered the problem.

That conviction is most of the reason Reportly exists. But whether you use our software or a spreadsheet and sheer stubbornness, the principle holds. Stop treating returns as an unavoidable cost line and start treating them as the most honest feedback your products will ever give you. The sales report tells you what people hoped your product was. The returns data tells you what it actually is.

The industry's $890 billion problem isn't really about parcels moving in the wrong direction. It's about information arriving too late. That, at least, is fixable.

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