EU bans the destruction of unsold apparel, clothing, accessories and footwear

Overproducing is often cheaper than losing sales because of the fixed costs of producing a batch and the externalities of destroying your inventory not being priced in. Some brands also find it more interesting to destroy stocks than reduce prices because it protects their brand values. Well, now, that's illegal.

What developing country do you think has a clothing shortage?

In my experience in other physical goods industries (not textiles specifically) there is a big difference between products that are good but aren’t ever sold for some reason and products that are deemed not sellable for some reason.

For example, if a custom returns a product that was opened but they claim was never used (worn in this case) you can’t sell it to someone else as a new item. With physical products these go through refurbishing channels if there are enough units to warrant it.

What if a batch of products is determined to have some QA problems? You can’t sell it as new, so it has to go somewhere. One challenge we discovered the hard way is that there are a lot of companies who will claim to recycle your products or donate them to good causes in other countries, but actually they’ll just end up on eBay or even in some cases being injected back in to retail channels through some process we could never figure out. At least with hardware products we could track serial numbers to discover when this was happening.

It gets weirder when you have a warranty policy. You start getting warranty requests for serial numbers that were marked as destroyed or that never made it to the retail system. Returned serial numbers are somehow re-appearing as units sold as new. This is less of a problem now that Amazon has mechanisms to avoid inventory co-mingling (if you use them) but for a while we found ourselves honoring warranty claims for items that, ironically enough, had already been warrantied once and then “recycled” by our recycling service.

So whenever I see “unsold” I think the situation is probably more complicated than this overview suggests. It’s generally a good thing to avoid destroying perfectly good inventory for no good reason, but inventory that gets disposed isn’t always perfectly good either. I assume companies will be doing something obvious to mark the units as not for normal sale like punching holes in tags or marking them somewhere]

> They would rather destroy it than sell it at $300.

This is exactly it. The actual landed cost is 1/10th of the sales price, and most of the rest of the margin pads the marketing and exclusivity machine. If for instance LV starts selling their $200-landed Neverfull bags at $500 or even $1,000, all the infrastructure sustaining the image becomes unsustainable.

That’s excellent news. I always find it strange that companies would go as far as to destroy unsold items instead of just donating or recycling them.