Welcome, eco-warriors and savvy shoppers, to an in-depth look at the often-overlooked and staggering loss realities of the retail world—the world of product returns. While the ease of returning that impulse buy might feel like a feel-good, modern-day "Returns Accepted" convenience, the ecological and economic consequences are far from actually convenient and practical…everything comes at a price. Here, we'll unmask the staggering statistics that unveil the true cost and environmental impact of the retail return phenomenon.
What is Feeding the Return Frenzy?
The easy, free retail returns policies probably began gaining popularity with shoe retailer Zappos and gained momentum with Amazon acquiring Zappos in 2009, adopting its free return policy across Amazon. By the mid-2000s, free returns had become a standard feature of Amazon's customer service, contributing to the company's reputation for customer-centric policies, and competitive nature in the retail market. As other companies sought to compete with Amazon for retail market share, the free returns policies rapidly spread, becoming the new normal for retail returns. Of course, now consumers, especially those purchasing online, have come to not only expect free returns but also only give their purchasing loyalty to retailers that offer it.
Easy 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.
Given that customers' 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 Soaring Numbers
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. 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 of 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 brands, burnt £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.
Next, let's look at the staggering scale of returns. In the United States alone, online returns hit a jaw-dropping $743 billion in 2023, according to the National Retail Federation (NRF) and Appriss Retail. As a percentage of sales, the total return rate for 2023 was 14.5%. The financial burden of returns is at shockingly high numbers that retailers and consumers alike are well-acquainted with. The reverse logistics process, which involves handling, transporting, and restocking returned items, costs retailers a pretty penny.
Textile Waste Management: 1960-2018, Source: EPA
Now, let's talk about the carbon footprint of these returns. Each returned package adds to the environmental toll, from the emissions of delivery trucks shuttling products back and forth to the excessive packaging used for return shipments. The Environmental Protection Agency (EPA) estimates that the transportation sector, which includes shipping, contributes to about 29% of total U.S. greenhouse gas emissions. And that's just the transportation aspect. 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.
Related blog: Messy truth about Recycling
The E-Waste Factor
The returns challenge isn't limited to fashion or homeware, although they are the largest contributors. Electronics also contribute their own chapter to the environmental impact. The United Nations World Health Organization (WHO) estimates that around 53 million metric tons of electronic waste (e-waste) were generated globally in 2019, of which only 17.4% was documented as formally collected and recycled. Many returned electronic items end up in this growing mountain of e-waste, with potential environmental hazards due to the improper disposal of toxic components.
Related blog: Understanding E-Waste
Where do we go from here?
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.
As the curtains draw on our exploration of the high cost and environmental impact of retail returns, there's a resounding call for conscious consumption. While the convenience of easy returns is undoubtedly appealing, consumers and retailers alike need to reconsider the implications of this modern shopping habit. Thoughtful purchasing decisions, better-sizing guidance, and improved product descriptions, combined with new technology, like AI-driven size chart tools, can all contribute to minimizing the return dance.
The statistics reveal a narrative of excess and waste, both financially and environmentally. It's time for consumers, retailers, and policymakers to collaborate on strategies that promote sustainable consumption patterns and reduce the detrimental impact of the return culture. The stage is set for a new era of mindful shopping, where the true cost of returns is not just a number but a call to action for a more sustainable future.
At Terra Thread, we encourage our customers to shop conscientiously no matter where or what they are purchasing. We follow some simple guidelines to help our customers make purchasing decisions: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.
- Honesty is the best policy
Divulge all possible additional notes about our products to address any questions or concerns that may arise.
- Encourage customer reviews and question
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.
- 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.
- A video says more than 1,000 words
Product videos can give customers more confidence in their purchases as they demonstrate the quality and features of the products.
- Sturdy packaging
Without a doubt, a sold item will come back to the retailer if the user receives it damaged. Going cheap on packaging to save money will only harm our business, and your trust. This is why we use proper packaging capable of withstanding the transportation while upholding sustainability. Making sure the packaging is strong enough to reach our customers safely helps 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.
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.
Terra Thread is here for you!
Should you ever have questions regarding our products to help with your buying decisions, or product returns, we're here for you. You can email us at email@example.com, or give us a call at 949-215-8515 to speak to a real-live person who will be delighted to help!