The New Reality of Cross-Border Fashion E-Commerce

The fashion industry continues to lead the charge in global cross-border e-commerce, offering consumers unprecedented choice, competitive pricing, and elevated service standards. As online platforms compete for our attention in the pursuit of style, the success of each transaction often hinges on the strength of the logistics network behind the glossy websites and curated photo shoots. This becomes especially critical when purchases are returned, whether due to a change of heart or unmet expectations – both of which bringing reverse logistics into sharp focus.

A company’s true character is often revealed not when everything goes right, but when a customer is dissatisfied. In e-commerce, return rates can reach 40–50% for certain brands, a figure that reflects more than just customer dissatisfaction. While some returns stem from unmet expectations, the majority are now a behavioural norm, shaped by the convenience of having products delivered to the doorstep rather than requiring consumers to visit physical stores. Managing these returns is already a complex task within domestic markets; when international logistics and cross-border regulations enter the equation, the challenge intensifies significantly.

This year’s infamous trade tariff increases and volatility have made the minimisation and cost-effective management of international returns even more important than before. It is therefore critical that the relevant business units of e-commerce companies selling internationally are joined-up operationally, and across-the-detail of customs and international trade compliance.

In a commercial sector where timely delivery, and the prompt ‘recycling’ of returned items back into stock is so important, investing in the capacity to confidently trade and move goods efficiently across borders can pay dividends in the contribution it can make to problem free customer experiences, enhanced company reputation, and the generation of repeat orders.

Challenges in Maintaining Service Quality Across Borders

However, the challenges of extended distances and cross-border market access formalities often erode a company’s ability to maintain consistent service quality in both delivery and returns. When compounded by the cost of import duties, which in some markets can exceed 40% of the sales value, poorly managed returns can do more than jeopardize customer loyalty; they can significantly undermine profitability.

Efficiently managing international return imports, which are often high in volume, low in value, and logistically complex to coordinate, can significantly impact business performance. The challenge therefore lies in executing this process in a way that is administratively seamless, easy for both the customer and the retailer, cost-effective for the business, and fully compliant with customs regulations, all while minimising duty and tax liabilities. It’s a solution that’s far easier said than done.

Key Strategies for Handling International Returns

While the most effective approach to managing international returns is to reduce the likelihood of returns in the first place, processing them remains an unavoidable reality of online retail. As such, any robust strategy for handling returns should incorporate several key elements:

• Returned Goods Relief – import duties will have likely been paid in the country in which the customer is based when the sale was made. However, unless a suitable customs procedure is used on the return leg, retailers are at risk of paying import duty again in the country of re-import. In many cases, utilising procedures such as Returned Goods Relief is essential for mitigating these undue costs.
• Drawback Schemes – in some territories, duty drawback schemes allow businesses to apply for a refund on import duties paid against goods that were subsequently re-exported (i.e. returned). In sales locations where both the cost of sales and percentage of returned goods are high, utilising drawback schemes can be essential to maintaining profitability in that region. However, be mindful that eligibility to apply for a drawback refund is often strictly defined and requires a clear returns strategy that allows returned orders to be considered as eligible.
• Resource – accessing and managing relief procedures can require additional expertise and administrative resources. In instances where the ‘cost of returns’ is high, consider outsourcing suitable aspects to ensure internal constraints aren’t at fault for leaving avoidable duty payments on the table.
• Compliance – on the flip side, it is not uncommon to see goods declared incorrectly under duty relief procedures where the importer does not have the appropriate evidence to support the claims to relief. Work with responsible logistics parties to ensure there are clear instructions and expectations set around the business’s returns policy and procedures.
• Policy & Process – have a clear, straightforward returns policy in place which is easy both for the customer to understand and for your company to administer. Where possible, provide your customers with return options that are convenient and practical, such as prepaid labels or local consolidation points. To ensure return orders are processed effectively and import duties are recovered, both outbound and return movements need to be controlled. Allowing customers to return goods freely without instruction or oversight will significantly increase the likelihood of mis-declaration and limit eligibility to recover import duties within both the country of export and country of re-import.
• Traceability - duty relief options available for returned goods all place the burden of proof on the applicant to prove that the goods in question met the criteria for a duty relief claim and usually require the applicant to provide a full audit trail to prove as such. Where possible, utilise technology to ensure individual consignments are fully traceable throughout each cross-border movement.

Customs and Trade Considerations for International Returns

Of course, whether sending goods to another country or bringing them back, it is important to be mindful of the customs and trade facilitation arrangements that may be used for goods entering / leaving markets that might help reduce costs and improve profit.

For example, de minimis provisions mean that goods consignments below a certain value threshold are not liable for duty / tax. However, these thresholds vary from country to country and as witnessed earlier this year in the US, they are not guaranteed to be available indefinitely.

Every order that results in a partial or full return carries additional costs, often borne by the retailer. With import duties in some markets now surpassing shipping costs, the focus of return management is shifting from supply chain logistics to customs treatment. Geopolitical developments such as Brexit and the recent “Trump Tariffs” have underscored both the complexity and strategic importance of handling returned goods effectively. In an environment of rising sales costs, these return-related expenses are no longer peripheral strategic decisions but are now essential to maintaining commercially viable pricing for international consumers.

Get in Touch

If your company is experiencing challenges with its international returns, or indeed in other areas of international trade management, BKR is ready to support your business in helping you to develop agile and pro-active strategies to improve arrangements and to better manage associated risks and costs and enhance efficiency. Get in touch to find out how we can support your business in this area.

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‍‍This article was written by Christopher Starns, Customs & Trade Advisor (BKR Consultants Limited).