Free and easy returns have become a part of our shopping experience. We are so used to this business model that 30% of shoppers deliberately over-purchase only to subsequently return unwanted items![1] No-hassle returns are expected, therefore, if a retailer wants to play in the major leagues, a competitive return policy is a must.
What is not so often thought about is that the impact these returns have on the environment is enormous and create needless greenhouse gas emissions. On average, 20% of all online purchases are returned, a significantly higher percentage if we compare it to the 9% of its sister, the “real” stores’ returns.[2] While returns are problematic for all shopping categories, in the apparel industry, where fit is paramount, these figures are even more worrisome. The average return rate at online fashion giant Zalando is about 50%![3]
Why are returns bad for the environment?
Companies that focus on giving more favorable return policies are not making us any favors. Instead of focusing on helping customers find the right products, they are encouraging returns.
According to Optoro’s 2021 Impact Report[4], last year’s returns grew hand in hand with e-commerce. As a result, the U.S. returns inventory grew from $428 billion in 2020 to $761 billion in 2021. We are talking about the emission of 27 million metric tons of CO2 (equivalent to nearly 6 million cars driven during a year) and 9.6 billion pounds of returns ending up in landfills (equivalent to 10,500 fully loaded Boening 747S).[5] I don’t know about you, but these figures leave me speechless, to say the least!
What about packaging? Unfortunately, it doesn’t get any better… Most brands rely on single-use plastic materials, which are quite difficult – if not impossible – to recycle. According to the United States Environmental Protection Agency, less than 60% of all generated packaging and containers get recycled.[6] So “with rampant returns, you’re adding to the impact of clothing manufacturing.”[7]
Hold on, let’s talk about restocking…
Although shoppers’ environmental awareness is on the rise, they haven’t fully made the connection to how returns play a larger role in it. Did you know that 90% of shoppers believe returns are immediately restocked? Let me tell you the ugly truth: 25% of returns arrive back to retailers unsuitable for restocking (yes, they end up being liquidated, destroyed, or sent to a landfill) and the other 75% isn’t simply restocked, it must pass a screening process: Is the item in good condition? Is that condition good enough to be restocked? Where should the brand restock it?[8]
To top it off, many retailers end up burning, shredding, and otherwise destroying returned items not just to preserve the brand’s value (as we are always taught), but because throwing away the goods has a lower cost than finding another sales or recycling channel!
Returns: from inconvenience to asset
Customers are prioritizing shopping with retailers who pledge to employ more responsible, socially conscious business practices as social and environmental issues are coming to the forefront of our collective consciousness. That said, many businesses are now becoming more mindful of the impact of their growing returns and coming up with innovative ways to reduce them. Even Zalando, who has pledged them as part of their business model is aiming “to reduce the number of unnecessary returns.”[9]
The crux of the matter here is to figure out the way in which returns are no longer an inconvenience but rather a brand’s asset. Let’s face it, the world in which there are no returns is wonderful, but it is not the world we live in. So, what is the smartest move to maintain a middle ground between keeping returns and a non-abused environment? In other words: how can retailers make returns a more sustainable practice?
Resale
It’s no news that when it comes to making a business a more sustainable one, Patagonia is always ahead of the curb. This time, the retailer is turning its returns into a profit center by not disposing of any of its returned products. It also actively buys used Patagonia apparel and resells it on its Worn Wear marketplace. Can you see it? The resale and secondhand market are only growing so the retailer has found a way to transform the inconvenience into an asset! Well done Patagonia!
Prompt returns
Reselling returns quicklier is another way to sustainably source them. Think about this, if we add the days it takes for a shopper to return an item (usually about 30 days after the purchase is made) and the approximately 30 days it takes the retailer to sort out what was returned, we have almost two months in which those items are out of the market.
Also, consider this, the average apparel season usually lasts three to four months. Inevitably many of those returned clothes will need to be sold at a discount or won’t be able to be re stocked by the time they are returned. According to Forbes, “retailers can lose 20% of the expected sale value of their inventory with slow processing times.”[10] Not to mention the number of clothes that end up in landfills just because they were not sold during the season. Giving buyers less time to make a return and reducing restocking times keeps the business running and reduces the amount of apparel that ends up in landfills. A win-win!
New Technologies
Can you imagine trying on a shirt in a virtual fitting room from the comfort of your home? That is exactly what augmented reality (AR) is aiming for. AR is a tool that lets customers virtually try an item before they buy it. By doing so, the number of returns can be seriously cut down. A pioneer in this technology is Gap, who acquired Drapr, a platform that provides virtual fitting-room technology.[11]
Artificial intelligence (AI) brings another innovative solution to the table. In case you’re not familiar with the process of online returns, as part of it, brands generally ask you to fill out a short questionnaire on why you’re returning a particular item. If all the information retailers have is sorted with AI, in a couple of seconds they can identify the most often returned items and the reasons behind that. Consequently, retailers could act accordingly to reduce returns. Brands such as Asos and Zalando are focusing on this by hiring data analysts to study the reverse supply chain. AI could also help give shoppers personalized recommendations, and help them pick the right materials, sizes, and fits.
Better product descriptions
Retailers should focus on helping shoppers find the right products. How? Simply by giving better product descriptions and pictures. I bet it has happened to you that you bought something online that looked a certain way but when it arrived it was… just not it. This mismatch can easily be fixed by readjusting the way retailers present products online. Good quality pictures and videos, accurate measurements and sizes, variety of models with a variety of body shapes are some examples of it.
Final thoughts: Not free nor easy!
E-commerce is here to stay, there’s no way around it. But just as we cannot deny it, we cannot deny the fact that it desperately needs to evolve to match the environment’s needs! Returns are a necessary evil, and for this very reason, we must focus on making it as environmentally friendly as possible.
Free and easy returns for shoppers are no longer the answer and shouldn’t be seen as a part of doing business in the apparel industry. It’s time for retailers to focus on minimizing returns online and making the original purchases stick; and for shoppers to do so consciously.
By reducing returns, retailers can better bank on completed sales and shoppers don’t need to go through the trouble of returning a product. Oh, and I almost forgot: the world breathes a sigh of relief!
What do you think about returns? Should they be expected by shoppers? Should they be free and easy? Let us know in the comments below!
