(Yicai) Nov. 15 -- Soaring return rates for women’s clothing on Chinese e-commerce platforms are threatening the profitability and very survival of industry players.

Women’s garments are now being returned to online retailers at an average rate of 80 percent, even 90 percent for some, the founder of one outlet on Alibaba Group Holding’s e-marketplace Taobao told Yicai. 

“I used to have a return rate of around 20 percent, but since 2022 this started to climb and is now about 70 percent,” she said. “This has led to a substantial increase in packaging and transport costs.”

The manager of Seventh Uncle's Women Garment Supply Chain, which mainly caters to livestream vendors on Douyin, China’s version of TikTok, said returns from wholesale customers have jumped to between 75 percent and 80 percent this year from 60 percent last year. 

“One of my wholesale clients sold clothing worth around CNY100 million (USD13.8 million) one year, but since a huge number of garments were eventually returned, his net gross merchandise volume has sunk to just CNY20 million (USD2.8 million),” the person said. 

According to industry insiders, the flood of returns stems from problems with product quality such as ill-fitting clothes, products that do not match their website photos, the convenience of no-charge returns, cut-throat pricing, and other factors.

And because many platforms offer shipping fee insurance to encourage purchases, customers do not need to pay extra to return goods, which leads to impulsive buying.

One woman told Yicai that she buys liberally on e-commerce platforms and usually returns most of it, knowing she does not need to pay to send the items back. 

High return rates also have something to do with the price comparison systems that e-retailers offer, Seventh Uncle's manager said. After buyers place orders, the system automatically lists similar products often at lower prices, prompting many customers to change their minds and to return the goods they have already received.  

When the return rate increases, merchants have to lower their costs and this leads to an inevitable drop in product quality, which in turn generates more customer dissatisfaction and more returns.

Rising return rates push up operating costs for merchants and give consumers a poor shopping experience, said Mo Daqing, head of the online retail department and senior analyst at e-commerce think tank 100ec.

Supply already outstrips demand in this sector, and some industry players will be driven out, Seventh Uncle's manager warned.

Editors: Tang Shihua, Kim Taylor