During last year's Double 11 shopping festival in China, Patagonia's store on the Tmall e-commerce platform shipped 16,179 packages. Of these, 11,277 were returned, representing a return rate of 69.7 percent. According to the brand, this resulted in nearly 200 tons of carbon emissions from shipping, as well as an additional 40 tons from the return handling itself.
To manage the volumes, Patagonia introduced a shipping fee in April, which they refer to as an "earth usage fee." The fee is 15 yuan (approximately $2) for the first item, and 5 yuan for each additional item. This is reported by South China Morning Post.
The model is structured so that the fee functions as a deposit. If the customer keeps their order, the shipping cost is refunded. However, for a return not related to product quality, the fee is retained, and the customer also pays for the return shipping. All revenue from the fee is donated to the organization 1% for the Planet.
In a written statement, the company justifies its decision:
Every carton used to be a tree. Every delivery emits carbon dioxide.
Patagonia also emphasizes that the fee is "not a punishment, but an invitation to jointly reduce the environmental impact of e-commerce."
High Return Rates In The Market
According to the technology-focused media platform 36Kr, return rates of 50 to 60 percent are common in Chinese online retail for clothing, especially women's fashion. One reason for the high figure is the national policy that gives consumers a seven-day unconditional right of return. It happens that customers wear clothes temporarily before returning them, which has led some merchants to introduce visible labels that void the right of return if broken.
A brand abandoning free shipping, which is otherwise standard in the Chinese market, has sparked discussions on social media. Several consumers are criticizing the company's approach.
Instead of shifting the responsibility to consumers, the brand should reflect on why the return rate is so high. People would return fewer items if the model pictures showed the clothes correctly, comments one user.
Another user writes:
If they really care about the earth, they should shut down their business altogether.
Customer service for Patagonia's store on Tmall states in a comment that the name of the fee may seem unreasonable to some, but that it is part of a declared policy change regarding free shipping.
Even though many brands offer free shipping, we choose to be transparent with ourselves and our customers; every delivery involves actual carbon emissions, says a representative from customer service.
Turnover Increases In Sweden
While the brand is making changes in the Asian market, the Swedish branch, Patagonia Sweden AB, recently released its annual report for the broken financial year 2024/2025.
The documents show that Swedish net sales increased to SEK 29.6 million, compared to SEK 26.7 million in the previous year. According to the company's management report, the growth is driven by a strong development in Swedish wholesale business, while their store in Stockholm is developing at a more stable pace.
Despite increased sales, however, profitability is declining. Operating profit landed at just under SEK 360,000, a decrease from the previous year's SEK 2.5 million.
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