Returns have become a massive headache for the fashion industry. But some of our retail partners have discovered a path to reducing return rates.

E-commerce led to the rise of returns

As free returns and free shipping have come to dominate e-commerce, customers feel inclined to increasingly buy and try online purchases before sending them back. As a result, retailers lose more than $600 billion worldwide due to returns each year, according to the IHL Group. Americans returned $369 billion worth of merchandise in 2018. 

In some fashion sectors, return rates can be as high as 50%. 

“The fact that most companies won’t talk about how much they are struggling with online returns tells you how big of a problem it is,” Richard Kestenbaum, an analyst with Triangle Capital, a private investment banking firm, told Business of Fashion. “The best way to avoid a cost like returns is to not have it in the first place. But with the adoption of e-commerce, the problem is growing, not shrinking.”

Some fashion brands see a ‘game-changer’

Retailers have shown that offering Affirm monthly payments can stem the tide of rising returns.

“We see high-quality customers come through Affirm, resulting in significantly lower return rates,” said Adriana Kwicinski, Digital Marketing Manager at Birdies. The stylish footwear retailer saw a 15% decrease in return rate with customers who bought with Affirm. 

Another Affirm partner, Tamara Mellon, discovered that its Affirm customers were returning items 13% less often. The company called the decrease a “game changer” for its business, citing the burdensome costs of handling returns.

Affirm’s 3+ million customers are shoppers with high intent to buy, as they plan to pay over a multi-month period. The return rates on their purchases come in lower than industry averages, our data show. Return rates for Affirm purchases in apparel and accessories are at 13% and 15%, respectively. 

As brands look for new, innovative ways to deal with the painful costs of returns, partnering with Affirm can help. We’ve given new meaning to “diminishing returns” for Birdies, Tamara Mellon, and many of our other partners.