E-commerce in ready-to-wear is taking off, but the return rate is exploding profitability

Just ten years ago, selling clothing online was an experiment. Today, e-commerce is a given: it represents 21% of ready-to-wear sales in France *, a figure that continues to grow. But behind the euphoria of online sales, a crucial question remains: is this growth truly sustainable?

Because while digital has allowed some companies to reinvent themselves, it has also created new flaws, the most worrying of which remains the explosion in returns. With rates reaching up to 30% in fashion , the sector is suffering a silent hemorrhage that threatens its profitability .

The illusion of a winning model

The numbers are impressive. In 2024, online clothing sales in France exceeded €10.5 billion ***, but who is really benefiting from this windfall?

First, the e-commerce giants. Amazon, Shein, and Temu , with their ultra-aggressive pricing strategies and logistical power, are capturing an ever-increasing share of the market. Historic brands like Zara and H&M , for their part, have been able to pivot, transforming their stores into physical showcases serving an omnichannel distribution model. These major brands alone capture nearly 60% of fashion sales in France ****.

But for others, the equation is much more complex . Ready-to-wear SMEs , in search of visibility and market share, must invest significant sums in digital: online advertising, logistics, returns management, etc. A headlong rush that dangerously eats into their margins. As for independent physical retailers , already weakened by the drop in footfall, they are bearing the brunt of this change: the number of clothing stores in France fell by 17.9% between 2014 and 2021 ***** .

The scourge of returns: the blind spot of e-commerce

While physical commerce is suffering, e-commerce is hiding a gaping hole: massive returns , a real financial and ecological drain.

The lack of fitting has transformed purchasing behavior:

• Customers order multiple sizes of the same product , keeping only the one that suits them.
• Misleading photos fuel disappointment , as materials and cuts are sometimes very different in reality.
• Online shopping encourages impulsiveness , leading to orders that are later regretted.

As a result, a quarter of items purchased online are returned ** , a rate that exceeds 30% in the fashion industry . However, these returns cost brands a fortune : logistics costs, product refurbishment, or even outright destruction. Nearly 20% of returned items are not even put back on sale , an economic and environmental nonsense.

Yet few players dare to challenge this system. Offering free returns has become a compelling sales pitch. The trap is closing: brands must choose between profitability and attractiveness.

Rethink the model before it collapses

While e-commerce represents an irreversible shift, its economic model must be fundamentally rethought. Several avenues are worth exploring:

1. Better information to reduce errors
• Ultra-precise descriptions, product videos, a focus on the texture and fit of the clothes.
• A universal size guide , more reliable and less subject to interpretation.
2. Limit abusive behavior
• Introduce dissuasive return fees , as some brands already do (Zara, Uniqlo).
• Reward customers who return infrequently , through discounts or responsible loyalty programs.
3. Focus on phygital
• Encourage trying on in-store before buying online , via dedicated corners without stock.
• Using artificial intelligence and augmented reality to offer more accurate virtual fittings.
4. Shorten the supply chain
• Relocate part of the production to reduce the costs associated with returns.
• Promote the immediate resale of returns via short circuits , instead of storing or destroying them.

E-commerce in fashion isn't going away. But in its current state, it's neither economically viable nor sustainably desirable . Those who can adapt their model to these new constraints will come out on top . For the others, the bill could be steep.

Sources

* FashionNetwork – "Online ready-to-wear sales will reach 21% in France by 2023"

** Shopify – “Returns in fashion e-commerce: a huge cost for brands”

*** Statista – "Key figures for the ready-to-wear market in France 2024"

**** Propulse by CA – “Fashion giants dominate e-commerce in France”

****** INSEE – "Evolution of clothing stores in France between 2014 and 2021"