True Costs of Online Returns

True Costs of Returns

The amount of waste produced by e-commerce and online food delivery services significantly exacerbated the landfill crisis. What can we do to address that? 

Without a doubt, returns are harmful to the planet - the logistic pendulum between the seller and the consumer releases carbon emissions and waste. To maintain brand image, many retailers incinerate and take other steps to get rid of rejected and returned merchandise. Every year, returned products account for around 5 billion pounds of landfill waste. Adding to the problem is the packing waste— overall, about 54% of packaging gets recycled

Related blog: Messy truth about Recycling

What is Feeding the Return Frenzy? 

Glossier return policy is a major factor contributing to increased returns. In a cutthroat industry where millions of brands compete to keep customers happy and loyal and gain market shares, the complexities of return possibilities have increased. For example, extended returning period, in-store return of online purchases, etc. 

Easy Return Policies = Happier Customers 

Consumer expectations are getting higher by the day. According to a survey, around 88% of Americans prefer a seamless return process. And 95% decide their loyalty to a brand depending on how lax the return process is. The survey also reveals the desire for expedited shipping— 48% of shoppers anticipate their purchases within two days. All of this sheds light on the fact that a simple return process is essential for retaining customers, resulting in brands competing to have the most relaxed return policies. 

The messy chain of return products is highest around the holiday season. UPS faces return shipping in terms of millions in the weeks preceding Christmas. Estimated around more than 60 million return packages in 2021, a five million increase from the previous year. According to a Newmine insight, around 75% of online orders go back to the retailer. Meanwhile, Optoro (reverse logistics technology company) reveals Americans return almost 3.5 billion products annually.

Given that customer happiness acts as the benchmark to analyze how well a business is excelling, the likes of lax return policies are spiraling. Simply put, no-question-asked returns dominate the retail industry.

The challenges— What do stores do with returned items?

Retailers face logistical and financial challenges as a result of returned products, regardless of a physical store or online purchase. All retailers, from big box stores to smaller constituents, are not immune from the skyrocketing returns. An inevitable counter effect of fueling e-outlets. 

So, what do stores do with returned items? The return items are assessed, repaired, processed, and repackaged for resale. The operational expenses are time-consuming and expensive, and unfortunately, only about 48% of returns get resold at full price. Eventually, facing the outcome of losing dissatisfied customers and billions of dollars (estimated at $761 billion revenue loss in 2021). 

return items challenges

However, the cost to the ecosystem may be greater beyond the burden of logistics and reselling. Some retailers would rather get rid of unwanted products than deal with the headache of returns. The unsellable waste accumulates into an avalanche of garbage. Disposing products is less expensive and complicated for businesses than waiting for the next customer to buy returned items. As a result, most returned products end up in landfills or incinerators. Discarding unsold inventory is de rigueur for retailers, from giants to luxury labels, and fast fashion brands. 

Speaking of giants, Amazon is one of the most known retailer names around the world. There is no denying Amazon's dominance in the United States, with about 98 million Americans accessing the shopping app. So, the million dollar question—  what does amazon do with returned items? Does amazon throw away returns or resell them? CBC Marketplace's investigation found a mountain of Amazon Canada returned products doesn't make it back for resale. Discovered perfectly decent products getting liquidated, burned, or dumped. A mountain of returned products doesn't make it back for resale. Another investigation of a French Amazon warehouse unearthed the discard of 300,000 items in just three months— based on the figure, destroying about 3.2 million items annually in France alone. Following a similar vein, Burberry, one of the hottest British high-end brandsburnt £28 million worth of inventory waste in 2018. Luxury labels often resort to this strategy to evacuate any resale or lower price points challenges that can damage their reputation. The practice of incineration, however, extends to streetwear fast fashion brands as well. In direct opposition to its sustainability initiative, H&M was accused of allegedly burning 60 tonnes of unsold merchandise between 2013 and 2017.  

Thrown-away textiles are a major issue for the environment because they destroy resources, contribute to pollution, and overwhelm landfills. EPA's 2018 calculation of 17 million tonnes of textile trash in America accounted for 5.8% of all municipal solid garbage produced that year.

Textile Waste Management: 1960-2018

Textile Waste Management: 1960-2018, Source: EPA

The cost of returns is trouble not just for businesses but the entire planet— leaving huge carbon footprints. Unfortunately, notwithstanding the environmental problems, the retail industry is still growing. The changing consumer behavior owing to the pandemic has consumers resorting to online shopping more than ever, digging the hole deeper for returns. So, at the end of the day, the key is for businesses to adopt environmentally responsible solutions that promote ethical decisions, given that consumers will only continue to shop. 

At Terra Thread, we encourage our customers to shop conscientiously no matter where or what they are purchasing. 

6 Approaches for Reducing Customer Returns
  • Provide accurate product description

An improper or inaccurate detail can leave the customer feeling deceived. Providing a proper product description that demonstrates the real product — correct size and material information and product images— helps customers make informed buying decisions and increase conversion rates. 

Description of Terra Thread Earth Backpack

  • Encourage customer reviews

Customer review is one of the most effective ways to influence the shopper's decision. It can help online businesses to build trust and confidence with their target audience. A research survey reveals that 88% of consumers trust online ratings and reviews just as much as first-hand recommendations. This illustrates how customer validation can help companies efficiently promote their items to the customers. 

  • Correct visuals 

Deceptive visuals may work for some businesses but not for online retailers. Excellent product imagery is crucial for persuading customers to purchase things, as 93% of shoppers believe that visual content is the most important aspect in making a shopping choice. Failure to provide high-resolution product photos that are true to life is a major reason for returns. For instance, if a consumer orders jeans that appear deep denim in the picture but arrive as light blue jeans, it is bound for a return. On the other hand, pictures that show precisely how the real product is can block the loop of misled-purchase-and-return from the get-go. 

canvas backpacks for school in blue color

  • Innovative size recommendation tool

Improper size and fitting costs retailers the burn of returns. Traditional size charts are insufficient for helping buyers in picking a size. Taking innovative steps like AI-powered size chart tools can counteract this unnecessary problem and, at the same time, eliminate a chunk of returns.  

  • Sturdy packaging 

Without a doubt, a sold item will come back to the retailer if the user receives it broken or damaged. Going cheap on packaging to save money will only harm the business. This is why proper packaging capable of withstanding the transportation procedure is vital. Making sure the packaging is strong enough to reach the customer safely can prevent returns owing to shipping mishaps. 

  • Move beyond bot assistance 

Offering live chat and real-time support can help the customers with questions and doubts about the product. There will be no pathway to get to the point of the return procedure. Even in return request situations, human support can prevent returns by communicating with the customers to consider fixing or replacing the item. Instead of fast dot assistance, retailers can offer their customers human assistance.  

In Conclusion

Since returns are part of e-commerce operations, it is best to find the process defects that trigger product returns. Businesses can decrease product returns, boost sales and client happiness, and prevent environmental damages by keeping in mind the approaches listed above and beyond. 

If you'd like not to feed this loop and end the clothing return cycle, take your time with your purchase as a consumer. Shopping while bored may lead to returns, so consider shopping when you know exactly what you need. 

 Related blog:

7 Ways to be a Conscious Consumer

What is Slow Fashion?

It's Time to Repair your Clothes

Is Black Friday Shopping Really Worth It? How to avoid the black Friday hype

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