Europe’s Fashion Returns: The Cost No One Sees

TL;DR

European online fashion spends ~€2.1 billion every year just handling return parcels (transport + processing). Counting markdowns, write-downs/liquidation and customer care, the total cost rises to ~€6.3 billion. These figures are built from EU spending data, EU return rates, and a peer-documented upper-bound cost per online return, so leaders can benchmark with confidence [1][2][3][4][5][6].

The Monday-morning metric most teams don’t see

On the dashboard, last week looked solid; orders up, AOV steady. Then the return wave hits. In apparel, that wave is built-in: around 1 in 5 online clothing purchases in Europe comes back; for footwear it’s closer to 1 in 3 [1]. Those rates are structurally higher than other categories, which is why “free returns” can look like a CX win but act like a margin leak.

Now put real money on it. Our EU-wide calculation shows two numbers worth pinning to your board deck: ~€2.1 billion in direct handling and ~€6.3 billion all-in for online fashion returns each year. The first is what operations feels. The second is what the P&L feels [1][2][3][4][5][6].

Why handling alone is already painful

Handling isn’t just postage. A return parcel triggers inbound carriage, receiving, identification, QC, steaming/repacks, re-shelving (or routing to liquidation). Even in efficient markets like Germany, those motions add up. Benchmarks put per-return shipment costs around the high-single-digit euro mark once you factor transport and processing together, ~€8 per returned parcel sits within the documented EU range [4][5]. For many mass-market garments, that’s the entire contribution gone before you touch price.

Where the rest of the money goes

The bigger drain is value loss. Fashion is seasonal, sizes are specific, and timing is everything. By the time items boomerang back, a portion won’t clear at full price. The Institute of Positive Fashion (British Fashion Council) documents that the total economic cost per online return can reach 55–75% of retail price once labour, logistics, customer care and markdowns/liquidation/write-downs are included [6]. When we apply that upper bound to the actual value of goods returned in EU online fashion, we land at ~€6.3 billion a year [1][6].

What this means for CFOs and operations leaders

Treat returns as a financial product you price, steer, and hedge:

• Put “cost per return” next to contribution on your weekly deck. If you only track postage, you’re under-reporting your leak [4][5].
• Slice return rate and value loss by SKU cluster (fit-sensitive vs. style-sensitive). This is where prevention (size guidance, fit visualization) pays back fastest [1][6].
• Stress-test policy incentives. Defaults that encourage bracketing (multi-size orders) can look customer-friendly and still erase millions in value.

UTRY’s role is simple: give shoppers data-driven size recommendations and visual fit (3D avatars) on the SKUs that drive the most returns, then measure the shift in cost per return and markdown rate. If the numbers move, scale.

The two numbers to remember (EU-27, online fashion, 2022)

• Direct handling spend: ~€2.1 billion (≈ 269 million return parcels × €8 handling per parcel) [1][2][3][4][5].
• Total return cost (all-in): ~€6.3 billion (returned GMV × 75% of retail price per online return) [1][6].

Method & Assumptions (for your notes)

• Scope & year: EU-27, 2022 chosen because all required inputs align on EU sources for that year [1].
• Online GMV base: EU household spend €282bn (clothing) + €68bn (footwear). Online share referenced at 11% (textiles/clothing), carried forward to 2022 to avoid overstating the market [1].
• Orders → parcels: AOV proxied by Europe’s largest online fashion platform; we use the lower of the two reported values (€57.3) to avoid understating parcel volumes [2].
• Returned parcels: Shipment-level fashion return rates in Europe are frequently reported in the 26–50% range; we use 40% to anchor the calculation [3].
• Handling cost per returned parcel: Benchmarks from University of Bamberg/EHI and bevh show costs in the mid-single-digits per item and around €7 per shipment; we set €8 per parcel to reflect EU variation while staying within published ranges [4][5].
• All-in total: Apply 75% of retail price (upper bound) to returned GMV (online clothing & footwear value × return rates) to capture labour, logistics, customer care and value loss [1][6].

Sources

1. European Environment Agency — The destruction of returned and unsold textiles in Europe’s circular economy (EU spend; online share reference; apparel return rates). 04 Mar 2024. https://www.eea.europa.eu/publications/the-destruction-of-returned-and
2. Reuters — Zalando AOV rose to €60.4 from €57.3 (AOV proxy for EU orders → parcels). 07 May 2024. https://www.reuters.com/business/retail-consumer/zalando-returns-gmv-growth-q1-2024-05-07/
3. EHI Retail Institute — Versand- und Retourenmanagement 2023 (Leseprobe) (shipment-level fashion return-rate ranges). 2023. https://www.ehi.org/wp-content/uploads/Downloads/Leseproben/Studie_Versand-und_Retourenmanagement_2023_Leseprobe.pdf
4. ecommercenews.eu (quoting Univ. Bamberg’s Asdecker) — Average return shipment cost €6.95 in Germany. 09 Sep 2022. https://ecommercenews.eu/around-530-million-parcels-were-returned-in-germany/
5. bevh — Retourenkompendium (fashion return cost benchmarks; per-item perspective). 2023. https://bevh.org/fileadmin/content/04_politik/Nachhaltigkeit/Retourenkompendium/bevh-Retourenkompendium_Webseite.pdf
6. Institute of Positive Fashion (British Fashion Council) — Solving Fashion’s Product Returns (total cost per online return 55–75% of retail price). 14 Mar 2023. https://instituteofpositivefashion.com/uploads/files/1/Report---Solving-fashion%27s-product-returns-March-2023.pdf