As the world adapts to ease and convenience, consumers, more eager to buy, are more eager to return. In 2020, the US returned 10.6% of all online retail sales, amounting to $428 billion in merchandise. $102 billion of this was accounted for by e-commerce purchases with 20-30% returned to merchants.
The process of returning products to merchants is a major part of retail, however, with no infrastructure built to support the returns, our planet suffers the consequences.
The logistics sector has many associated problems relating to its efficiency and sustainability and so it may come as no surprise that the reverse chain of logistics is even more inefficient and unsustainable. This lack of infrastructure consequently has resulted in 5 billion pounds of returned waste going to landfill each year. Even more shocking is that in the US, only 20% of 3.5 billion returned products are defective, meaning that billions of products are discarded for no reason.
When it comes to returnable goods, it expands into more than just the problem of landfills. There are huge financial implications with global retailers estimated to be losing up to $600 billion each year to sale returns. Additionally, returned goods are responsible for 11 million metric tons of carbon dioxide being emitted into the atmosphere per year.
When a product is purchased, that purchase brings with it a carbon trail starting at sourcing the materials, manufacturing, shipping, transport, and delivery. If a customer then decides they don’t want the product, or it doesn’t work, the trail might then continue straight to landfill where it will exist for hundreds, if not thousands of years.
COVID-19 has pushed people to a more virtual world, with more people and more people moving away from physical stores and shopping online. When people buy goods online, they are almost three times as likely to return them, which is a problem as the market for e-commerce grows. There is even a millennial trend – consumers buy multiple items, try them, sending back the ones they don’t like.
Online orders are now being treated like virtual changing rooms – a problem further exacerbated by the ease of free returns. Unfortunately, it is never free, and what might not cost us, costs the environment.
When we buy items online or return them, they require packaging, shipping, and printing labels. As e-commerce continues to rise, so will the demand for these and the demand for wood-pulp-based packaging. The demand for wood-pulp-based packaging is linked to deforestation, with an estimated three billion trees logged every year for the packaging alone. Many of the trees are derived from ecologically-critical tropical forests in Southeast Asia and South America and therefore, if excess packaging is reduced, it could help mitigate the pressure that these forests are put under.
It is not that companies don’t want to have a sustainable way to handle their returns but with so many returns, they need to have processes in place which help facilitate how they are handled. For example, a smashed iPhone screen is very different from a pair of faulty trainers – you need to have the right people to help identify the problem and then relocate it accordingly. The relocating, sorting, and storing of returns will also require additional space which some companies do not have. Companies do not intentionally disregard returns, the problem lies with the size and amount of returns, so there needs to be a solution that encompasses the demands put on a company to sustainably handle returns that do not cost the consumer or the business.
The world of returns must be reshaped as the environment cannot be forgotten when it comes to buying and returning. We cannot return our planet – when it doesn’t work or we don’t like the extreme weather, we have to live with it. Therefore, solutions must be put in place allowing people to return their unwanted or defective goods in a way that is least impactful to our world.
Here at ReturnGO, we are that solution. Through the use of AI, we help companies maximize their revenue whilst also reducing refunds and waste. Customers are not going to stop returning, they just need a smarter return and exchange solution, personalized to their needs.
ReturnGO offers a solution, not only beneficial for the planet; but also for the merchant, saving significant reverse logistics costs; and the customer, improving satisfaction and user experience. Returns should not cost the planet, business, or customer, and ReturnGO ensures a harmonized process benefitting all three.