Made for a comeback: building a circular fashion supply chain for returns, repair, and resale
In fashion, a returned garment starts a countdown, where every day it spends in transit, in a queue, or waiting to be graded is a day closer to the markdown that erases its margin – unless the supply chain is built to recover that value.
Fashion reverse logistic flows have become three challenges at once – a margin pressure, a brand-experience risk, and now a regulatory demand – which is why this supply chain topic has moved from back-office conversation to boardroom strategy. But while brands must face these circularity challenges head on, the strategic player will also see valuable opportunities – and seize them.
Returns have crossed a threshold
Two forces are converging on the same set of garments:
- Regulation: End-of-life responsibility is formally shifting onto the brand. The strongest regulation is the EU’s Ecodesign for Sustainable Products Regulation, which bans large enterprises from destroying unsold apparel and footwear, with the same rule reaching mid-sized brands in 2030. Starting in July 2026, destruction – long the quiet release valve for excess and returned stock – is being closed off by law. It's not a marginal measure: an estimated 4–9% of unsold textiles in Europe are destroyed before they are ever worn, and these rules bind any brand selling into the EU, wherever it is headquartered. California has also recently passed its Responsible Textile Recovery Act of 2024 (SB 707), and similar legislation is likely to appear elsewhere in the world.
- Opportunity: The unsold garments that used to be discarded are increasingly worth recovering. The global second-hand market is projected to reach roughly $393 billion by 2030, growing at about twice the pace of the wider apparel industry. Resale and repair are no longer fringe activities; they are becoming channels in their own right.
Put together, these forces change the strategic weight of reverse logistics. A returned full-price dress re-shelved in days holds its value. The same dress stranded in a cross-border backlog for three weeks becomes a markdown – or, after mid-2026, a compliance problem with no easy exit.
Put together, these forces change the strategic weight of reverse logistics. A returned full-price dress re-shelved in days holds its value. The same dress stranded in a cross-border backlog for three weeks becomes a markdown – or, after mid-2026, a compliance problem with no easy exit.
Recovering value – and fast
The most expensive part of a return is not moving the product; it’s slow processing and scrapping. Long return cycles prevent fast resale, and for a low-value item, processing can consume most of its retail value before it ever reaches a shelf again.
The volume behind this is both high and highly uneven. Fashion returns can run up to around 40% of products sold – but the spread by market is enormous, from roughly 2–5% in Japan to as much as 60% in Switzerland. A single, uniform returns process cannot serve that spread.
Layered on top are three pressures that make speed non-negotiable:
- Refunds are now an expectation, not a courtesy: Consumers expect their money back almost immediately and rate the brand on that experience. Slow grading delays the refund and the resale at the same time.
- Cross-border return legs waste cost and emissions: Shipping a return all the way back to origin – only to find it unsellable, or so in demand it could have been resold locally within a day – is pure loss.
- Brand integrity is at risk in reverse: Counterfeit or fraudulent returns slipping back into saleable stock is a live danger, especially for higher-value product.
Many brands are turning reverse flows into a selling point – resale channels, certified pre-owned programmes, in-store second-hand racks. The goal, then, is to recover that value – and fast.
Circularity is more than returns
However, recovery is only part of the story. As Ronald Poort, Head of DSV's Consumer vertical, frames it:
"Circularity is more than returns – it's also repair and reuse. It’s getting more value out of the entire lifecycle of the product, including end-of-life.”
That distinction has real operational consequences. A supply chain built only to process returns faster is solving perhaps a third of the problem.
The full picture spans three disciplines: a fast reverse flow, repair and refurbishment, and responsible end-of-life. Each has its own logic, and increasingly its own regulation – from extended producer responsibility, which makes brands finance collection and recycling, to the Digital Product Passport, which turns lifecycle data into an obligation.
Ronald Poort, Head of DSV's Consumer vertical, draws the parallel to consumer electronics, where the seller already carries responsibility for a product’s end of life.
“That’s where fashion is headed,” he explains. “The one selling the product is responsible for the product until the end of life – so it doesn’t get discarded or destroyed."
Speed of recovery is margin protection
The strategic answer is a single closed loop, in which forward, reverse, and value-added flows share one inventory, one system, and one footprint. Returns preserve margin only when they move fast and flow within the same live inventory as forward stock – which is why circular capability and integrated inventory are two sides of the same design.
Sara Gerdner Kalle, DSV Chief Commercial Officer for Contract Logistics, describes the commercial logic:
“If our pickup and transfer back to the site are swift, our quality control efficient, and the flow back into the market is smooth – that's circularity, and that will reduce the risk of lowering your margins on that product.”
Whoever shortens the time from returned to resaleable protects gross margin, sell-through and – increasingly – regulatory standing.
Underpinning all four is a warehousing network built to carry the emissions weight of these flows, not add to it: certified low-carbon multi-user campuses with on-site solar, geothermal, and battery storage that reduce a brand's Scope 3 rather than inflate it.
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The strategic takeaway
The instinct to treat returns as a cost to be minimised is the expensive mistake. The brands that will outperform are the ones that treat recovery speed as a margin lever to be maximised – building one closed loop, with forward and reverse under one roof and grading at the point of return, so product is back in sale before its value slips away.
Circular capability has become a condition of EU market access, not a sustainability programme a brand can defer. The companies that treat it as opportunity rather than obligation – resale as margin, repair as differentiation, the Digital Product Passport as a data asset – will pull ahead of those still looking for a way to make excess stock disappear.
One last reminder: circularity is more than returns. A supply chain designed solely to send garments back faster is solving only part of the problem. Repair and responsible end-of-life should be part of the strategy, too – and together they are what make a garment, and its margin, ready for a comeback.
FAQ
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Fashion reverse logistics refers to the movement, inspection, repair, refurbishment, resale or recycling of returned garments after they leave the customer.
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A circular fashion supply chain keeps products and materials in use through returns, repair, refurbishment, resale, recycling and responsible end-of-life management.
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Logistics enables product recovery, inventory visibility, repair operations, resale fulfilment and recycling flows that support circularity goals.
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Brands can build a circular supply chain by integrating reverse logistics, repair services, resale channels, product take-back programs and recycling pathways into a unified operating model.
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Repair and refurbishment extend product life cycles, increase resale value and reduce waste, helping brands improve sustainability and margin performance.
