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Comment by nieksand | Hacker News Reader

It seems like this policy would lead to shortages in less common sizes of clothing.

Yes, this will likely exacerbate that further in the short-term: if retailers simply stop producing outlier sizes to reduce disposal of those sizes, then various niches will open up. In US women’s flats, very few go up to size 12+ (it’s already higher-cost to make products in outlier sizes and most don’t!) and so the one retailer (agaik) that offers that size has 100% market share, and keeps an inventory warehouse of unsold product that is listed until it sells at up to 80% discounts after a year-plus on the shelf. Another handful of retailers specialize exclusively in women’s clothing for people XL and above, which allows them to profit equally as well from less-common sizes.

My hope, however, is that this reduces overseas manufacturing in favor of domestic, which would allow retailers to dramatically reduce the shipping costs for small production batches, so that they’re able to simply produce more small batches of less-common sizes in response to demand. Sure, they might see a few percent lower profits per item, but they’ll be able to sell considerably more of their product simply by raising their supply to meet demand with finer granularity than the cheaper ‘produce an entire season one-time only and store it in a cargo container’ model offers today.

It can be made available online with a longer lead time if the manufacturers care enough about it. I guess it depends on whether the complexity is worth it, because if you're just selling cheap fast fashion then discounting/donating might still be worth it even if you produce excess, but more high-end brands probably won't stock uncommon sizes.

If they do not need to get rid of last months colors as fast, because the economic sweet spot has slightly moved towards longer production runs per design, they might as well also have longer intervals during which all sizes in production are in stock simultaneously.

The invisible hand of the market will rectify this of course. Nothing to see here.

The invisible hand of the market has been handcuffed a bit here though. Though I imagine this will simply show up as higher cost rather than blanket inavailability.

If a charity sets up a ‘returned product classification’ flow and issues tax credits to companies donating their return flow to the charity, then companies can simply shunt returns to charity and lower their costs in triplicate: 1) changeover of return provider replaces expense with deduction; 2) compliance with EU regulations costs shipping to charity; 3) charity provides itemized receipts for compliance and further tax credits. Of course, companies won’t actually lower their prices to reflect the net reduction in costs, but it will certainly strip away the excuse that they must raise costs.

Couldn't they already do this today, without an additional regulation?

Why is a charity supposed to be able to magically conjure sales the original seller was unable to find?

I just think if it was as easy to doing this, there's already be nothing for regulators to be complaining about.

Possibly? I’m not sure anyone’s ever considered it before, since prior to this EU regulation there was nothing directing innovation in this space. I might well be the first to come up with the idea :)

Corporations regularly price goods higher than demand in order to delay lowering prices or create artificial scarcity — see gas stations, rental collusion companies, and Prada bags, for example. Charities don’t have to sell clothes received at all to ‘pay’ the donator in tax credits. This law is about forcing corporations to one way or another deliver 100% of their finished goods to end users rather than diverting a massive fraction of that to waste streams, and charities can use clothes up to a point.

The invisible hand of the market is already disabled by regulation, in this case trademark protection.

For example: if Nike is willing to destroy 100$ shoes, instead of selling them at 40$ discount, for brand protection, another shoemaker could try make identical shoes and sell them at discount. But the alternative shoemaker is not allowed to make identical shoes, this would infringe Nike trademark.

What do you mean? This is a case of a regulation distorting the markets ability to price and distribute goods.

How do you figure?

If your minimum run is 1000 of a size, and you can only really sell 500 because it's an uncommon size, and you would prefer to sell at full price or not at all, seems like making that size no longer fits your plans.

Wouldn't it be cheaper to only produce 500 items, instead of producing 1k, and throwing half of it away?

1k in this example would be the minimum needed to make it worth the static cost of setting up and tearing down the production run.

Many years ago I worked in the printing industry. F.ex. a client wants 100 products of something (e.g. posters or flyers), usually it was more cost effective to produce a 1000 (or more) and then throw away 900 the client didn't need. Obviously a huge waste of material.

Isn't that law exactly trying to avoid that kind of waste?

Yes. But in some cases the waste will be avoided by not doing a production run at all if the minimum production quantity is too high and the law prohibits destroying the unwanted product.

I just don't get how it is cheaper in total to produce more units and throw them away.

If you make more units, it's cheaper per unit. But doesn't it mean that waste is always a loss?

F.ex. in the case of flyers or other smaller print products: You will not print one product for one customer at once, but many at once (e.g. from different customers), that will share a sheet. So, e.g., you print 1000 of everything, aka 1000 sheets. If a customer needs 2000 they get two spots on the sheet. If a customer wants 4000, they get 4 spots. Now, if a customer needs less than 1000, they still need one spot for the 1000. For that customer this still will be way cheaper than doing a separate small series print.

The direct cost of manufacturing the units is only a small percentage of the total costs of the retail product. Logistics is often a bigger cost. You can create substantial economic efficiencies elsewhere in the supply chain by allowing some manufacturing waste.

Production processes that require more production and supply chain customization for each order have significantly higher costs that need to be amortized. It is cheaper to pack and ship identical boxes at the factory than to customize the contents and logistics of each box for every retailer or customer. The more variation and complexity you allow into the supply chain, the more capital infrastructure, equipment, and people you need, all of which must be amortized into the retail unit cost.

The costs of increased supply chain variability and customizability can easily exceed the cost of wasting a few units. You may have wasted hundreds of t-shirts but you also didn't have to invest the millions of dollars in systems and equipment that would have prevented that waste. These are low-margin businesses, everyone is carefully tracking and attributing these costs.

Supply chains in most industries continuously and ruthlessly optimize to squeeze out waste while trying to increase flexibility. The number of items that are produced on demand -- and therefore produce little waste -- has grown dramatically over the last couple decades. However, many goods intrinsically have long, slow supply chains which makes waste all but unavoidable.

For printers, the cost is pretty much all in the setup. Printing 1000 copies costs about the same as printing 20.

> prefer to sell at full price or not at all

That really only applies to luxury designer brands where selling at a discount can dilute the brand prestige, is Gucci, Versace, etc. really destroying unsold inventory at large volumes vs. standard retailers?

Yes. The law was motivated by reports of luxury retailers destroying their entire stock every year. Usual stores just discount stuff until it sells.

But clothes aren't perishable, so why would you only be able to sell 500, rather than it just taking twice as long to sell all 1000?

Fashionable clothes are perishable. "Nobody" wants to buy clothes from last season or last year.

Storing the clothes until they come back in fashion is expensive... and some materials really won't be useful after sitting for 10 years anyway. (Elastic bands really are perishable)

> Fashionable clothes are perishable.

False. Not all apparel demand is for street cred, and non-‘season’ clothes can still be fashionable. ‘Last season’ is about wealth signaling and FOMO, and while I do love fashion as an entertainment and my hobby in design of it, the level of flux we have now in everyday clothing shapes and fabrics is openly hostile to the non-wealthy being clothed well. I don’t know if the EU’s regulations will work in full or at all, but I’m cheering them for trying.

A while back someone on Tumblr noted that they would buy and wear a full 360° hue spectrum of 360 t-shirts in spectrum order from 0..359, just to fuck with people’s minds as their shirt is the same color day after day until suddenly “wait, I thought your shirt was green” makes the people around them feel like they’re hallucinating en masse. This joke — well, it’s not a joke, this product with great fit would sell out even at 30° intervals! — T-shirts are shaped the same year after year, and fast fashion has had to resort to mining old brand imagery to try and convince people to buy them. Meanwhile, it’s impossible to find unprinted t-shirts at outlier sizes, because that’s slightly less profitable than waves of shapeless L-XL junk. Yes, I’m fine with Hot Topic collaborations, but they need to stop being the market majority.

Because it won't take twice as long, but 10x as long. There's typically a large rush on a new design, followed by a slow tick in sales. Meanwhile you have to pay to warehouse it, pay tax on the inventory, etc.

It seems plausible. Less common sizes have a lower chance of being sold out, so if they can no longer be destroyed at the end and need to be further managed at lower quantities, it can become more cost effective to simply not make them. Whether it is true or not, I don't know.

Hmm... say you estimate that you will sell 1000 items of "normal size", you stock 1000 items, and hope that you sell all of them. You end up selling 900, you have a remaining 10%.

No say you estimate that you will sell 10 items of "less common size", you stock 10 items, and hope that you sell all of them. You end up selling 9, you have a remaining 10%.

How does that make a difference?

There is no global definition of "less common size". It varies greatly from one locale to another. At the same time, production has relatively high fixed costs and is centralized.

It would be very expensive for the global factory to customize the distribution of sizes manufactured for a retail store in Des Moines, Iowa. The order is tiny and it would require customized logistics, all of which greatly increases cost and complexity.

It's more like if you find one mushroom in the forest, it doesn't make sense to bring it home, get the knife, clean it, get the pan, oil the pan, fry the mushroom, eat it, clean the knife, clean the pan, put things away. It's not worth the effort for just one mushroom. If there are many, a lot of these actions only need to be taken once.

Right. So what you're saying is that instead you should be allowed to go in the forest to get another 99 mushrooms, give them the same treatment, and then throw them away? And suddenly it's worth it for one mushroom if you threw away 99 other mushrooms in the process?

> Right. So what you're saying

If you start a sentence with "so what you are saying", and then say something obviously silly ...

The argument would be that it's a large burden to have to write a report if you forage 10 mushrooms and toss one away.

Low volumes, higher fixed costs.

Wait. I say "how does wasting 10% have more impact if you waste 10% of 10 or 10% of 1000?", and they answer "it's just not worth doing it for 1".

I just don't see how this is related to waste. Of course if it's not profitable when you sell 100% of what you produce, then it is not profitable (that's a tautology). My question is: why is it more profitable to sell the same amount but to waste more?

Turns out someone explained in another comment [1], and the "it's just not worth it for one mushroom" just does not explain it.

[1]: https://news.ycombinator.com/item?id=48962668

But that's about the cost of making them. That doesn't change between the destroy and not-destroy scenarios.

Companies should have extensive data on how many of what size they can expect to sell.

The missing factor in cheap-fast fashion here is warehousing costs. Companies are shredding shoes and landfilling clothing — and underproducing relative to what they could sell — rather than paying money to store products in a warehouse. One possible outcome the EU sellers can choose is to reinvest in product storage, so that they can raise their production targets to meet demand rather than to minimize product storage — at which point there is a vast demand for outlier sizes that is, today, unmet due to the unwillingness to store anything.

It's really different depending on if the manufacturer has Brand reputation or is just a replaceable good. For no name jeans, they probably just keep making them and donate the leftovers.

For a high-end designer dress, may be better to not manufacture large or small sizes that don't sell frequently.

Normally you can overproduce clothing and make three of every size or something, knowing that it only costs a couple bucks to make another shirt, for instance. And you can throw out if you make too many. If it's illegal to throw it out, maybe that raises the price from $2 to $4 because now you have to pay for storage for a long time. So you'll buy less inventory at the start, which usually means cutting less common sizes first

> because now you have to pay for storage for a long time

Or you sell the extras off at a discount and it's fine.

Currently, unpopular sizes are over-produced because they are subsidized by popular sizes. If the unpopular sizes have to be paid for, the logistics and production processes would push producers to under-produce popular sizes.

A key insight is that what constitutes an "unpopular size" is a very local phenomenon. Every point of retail sells a different, semi-predictable distribution of sizes. It is much cheaper to ship sizes no one will buy than to manage the logistics of exactly matching local demand for a specific distribution of sizes.

I asked the same question to someone who works in this business and got an eye-opening detailed explanation that made it obvious in hindsight why things the work the way the do. The difference in product cost and logistics infrastructure was not small.

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