The rule of thumb has long been that 50% of your product is sold at regular price, 30% of your product is sold on sale, and 20% of your product goes to the discount stores. So: your Spring/Summer collection will be full price from March through April and if you're lucky, half of it will go. Then you're going to knock 50% off of it and hope that it goes from May through July. If you're lucky you'll have unloaded more than half of what's left. In September whatever's left goes to Ross for 10% of the retail value and you bring in a new load.
Inject Amazon. They're going to give you 30 days of free returns. You buy at the tail end of April; by the time you return that coat it's already in the bargain bin. Burberry doesn't get paid until it gets sold so Amazon gives no fucks. Burberry, meanwhile, probably spent $20 on a coat they're selling for $200. You paid $200 for it and it came back; now Burberry won't get more than $100 for it. It's been out already so Amazon is going to call it "refurbished" so now it's an $80 coat. But here's the real issue.
For a long time, companies faced with the question of what to do with all that returned stuff had a simple answer: Throw it away. This work was largely done by an informal market of trash-hauling and salvaging enterprises, especially in and around major cities. It was a cash-only business built largely on relationships, and it had a reputation as a magnet for organized crime. "Remember on The Sopranos they had a trash-hauling business? Same deal," says Rogers, the Arizona State professor, who has written extensively about the secondary-goods market.
Buddy of mine dated a girl from China. She lived in an apartment in Alhambra and shopped for a living. She'd go buy stuff, post it on RED and ship it off to a distributor in China. And she was hardly the only one.
The gray market has evolved to the point where the white market barely has time to make their money back. And China will happily fuck you over. So it's gotten to the point where if you can't get full price you're better off destroying the product.
People want to believe that their used clothing goes to the homeless or some shit but it doesn't, it becomes rags at best, landfill at worst. What online retailing has done is taken the chance of it ending up going to Ross down to zero.