Here is a number that stops most fashion founders mid-sentence.
A brand shipping two hundred orders a month, at a twenty-five per cent return rate, can spend more on returns than on the picking and packing that sent the orders out in the first place.
That is not a warning about a badly run warehouse. It is ordinary arithmetic for the category, and it is the single most common thing left out of a fulfilment budget.
Why apparel is different
Apparel return rates run at roughly twenty to forty per cent, against an ecommerce average well below that. No other mainstream category comes close.
The cause is not quality and it is not service. Fit and sizing drive about half of all apparel returns — a customer ordering two sizes intending to keep one, or ordering one and discovering it does not sit the way the photograph suggested.
That matters for how you respond. A return caused by a damaged item is a supplier problem. A return caused by fit is a product and merchandising problem that happens to arrive at a warehouse. No amount of logistics optimisation fixes it; better measurements, honest photography and clearer sizing guidance do.
What one returned garment actually costs
The per-item processing fee is the part everyone quotes and the smallest part of the total.
Take a brand at two hundred orders a month and a twenty-five per cent return rate — fifty garments coming back monthly.
| Per item | 50 items | |
|---|---|---|
| Returns processing | A$3.00 – A$8.00 | A$150 – A$400 |
| Return postage, if you pay it | A$8 – A$15 | A$400 – A$750 |
| Replacement dispatch on an exchange | A$2.00 – A$3.50 | up to A$175 |
Set that against the pick and pack bill for the same month: two hundred orders at roughly A$2.75 is about A$550.
The returns side lands somewhere between A$550 and A$1,300 depending on who pays the postage and how many are exchanges rather than refunds. On the same volume. That is the whole point.
⚠️ Those are published Australian market ranges rather than Parcelo's rates, and postage varies with parcel size. Put your own return rate against them before treating any fulfilment quote as complete.
The cost that never appears on an invoice
Three things cost real money and show up nowhere.
The unit that comes back unsellable. Worn, marked, missing a tag, out of season. It is not a processing cost, it is the whole margin on that item plus the cost of shipping it twice.
The stock that is in transit rather than on a shelf. A garment travelling back to the warehouse is a garment that cannot be sold. For a slow line that is irrelevant; for the size that everybody wants, a week in transit during a launch is lost revenue.
The exchange that waits. If a replacement only goes out once the original comes back and is inspected, your customer waits two transit legs plus your processing time. Picking the replacement from live stock immediately removes that delay entirely, and it is worth asking a provider which of the two they do.
Grading is the decision that matters
Every returned garment gets one of three outcomes: back into sellable stock, held aside, or written off.
Who makes that call, and against what standard, is more consequential than the per-item rate. A garment quietly returned to shelf when it should have been set aside produces a second return, a worse review and a customer who does not order again. It costs several times what careful grading costs.
So the question to ask is not "how much do you charge for returns". It is:
- Who decides whether an item is resellable, and against what written standard?
- Do I get told, per item, what happened to it?
- What happens to items graded unsellable — held, returned to me, or disposed of, and who pays for the space meanwhile?
- How quickly is a returned item back in sellable stock?
How returns are processed and graded covers the mechanics we work to.
The January wave
Returns are not evenly spread across the year, and in Australia the concentration is severe.
Everything sold in the Black Friday and Christmas run comes back, if it is coming back, in the first three weeks of January. A brand that processed fifty returns a month through the year can see three or four times that in a fortnight.
It is entirely predictable and almost never planned for. If you are forecasting peak, the returns forecast belongs in the same spreadsheet as the stock order — along with everything else that has to be decided before the season rather than during it.
What to measure
Four numbers, and most brands track none of them.
Return rate by SKU, not overall. An overall figure hides the problem. Usually a small number of styles generate a disproportionate share, and those are fixable individually with a sizing note or a remeasure.
Reason codes. Fit, colour, quality, changed mind, wrong item. If half your returns are fit and you do not know which styles, you are paying for information you are not collecting.
Resellable percentage. What share of returns go back into stock at full value. This is the number that turns returns from a cost line into a recoverable one.
Days from receipt to resellable. A return that takes two weeks to process is stock you own and cannot sell.
Once you have those, the conversation with a fulfilment provider changes shape. You stop negotiating a per-item rate and start working out which of your returns should not have happened.
Working out what returns will cost you? The calculator includes returns processing at published Australian market ranges, so you can put your own rate against it, and fashion fulfilment covers how SKU depth and size grids change everything upstream of that.