Online shopping returns cost retailers billions of dollars, release tons of carbon dioxide into the atmosphere and generate billions of pounds of waste, according to a report from a global plastic cleaning company. is being disposed of in a landfill.
As stated in a report by CleanHub, online retailers will spend $816 billion in return costs in 2022 alone.
Every year, customers return up to 30% of products purchased online. This is three times the amount returned to physical stores and continues to generate 24 million tons of CO2 emissions.
The report added that after goods are returned, it is often cheaper for retailers to throw them away than to resell them. As a result, in 2022 he will have £9.5bn of refunds going to landfill.
Nikki Stones, vice president of marketing at CleanHub, argues that convenience is a contributing factor to the disproportionate number of online returns. “Online shopping is designed to be as easy as possible,” she told her E-Commerce Times.
“Buyers can try it out at home and if the product doesn't meet their expectations, they can return it with little effort. With in-store purchases, buyers can physically bring the product they no longer want to the store. I have to bring it back.”
There are also fundamental differences between shopping online and purchasing in-store that increase return rates. “The noticeable difference in return rates between online and in-store purchases is largely due to the inherent limitations of online shopping,” says Jason Davis, founder of Makarios Marketing, an SEO consulting firm in Henrietta, New York. explain.
“Consumers can't physically interact with the product, which creates a mismatch in expectations regarding fit, quality and appearance,” he told E-Commerce Times.
piling up problems
According to a recent returns survey of more than 500 U.S.-based retailers conducted by returns management company goTRG, 49% of retailers currently feel that returns are a serious problem, especially during the holiday season. Masu.
goTRG CEO Sendar Shamis said: “This sentiment has increased by a whopping nearly 3,000% since September 2022, when only 2% of retailers said this was a serious issue.” Stated.
“Increasing online shopping volumes and relaxed return policies are contributing to this trend,” he told E-Commerce Times. “Typically, return rates for e-commerce businesses are in the range of 20% to 30%,” he says, “due to factors such as customer dissatisfaction with the product, incorrect sizing, and mismatch between the actual product and customer expectations.” You can.”
It added that uncontrolled returns mean significant costs associated with damage during transportation or storage of returned items such as clothing, electronics and plastic products.
“Many retailers lack the infrastructure to effectively manage these returned items and return them to customers in perfect condition, so they end up selling defective items to liquidators at a steep discount. or, in the worst case scenario, dispose of it completely,” he said.
“What retailers can do to prevent returned products from ending up in landfill is to actively participate in the circular economy,” he advised.
“The majority of returns cannot be refilled immediately, but can be returned to like-new condition through refurbishment and repair services provided by reverse supply chain experts. , sold on various secondary marketplaces, also known as recommerce solutions.”
He added: “If more retailers partnered with returns management and reverse logistics service providers, millions of pounds could be saved without contributing to the 9.5 billion pounds of returns that end up in landfill. Products could have a second shelf.”
“The £9.5bn of revenue ending up in landfill is surprising, but not surprising,” added Mr Davies. “The solution lies in innovative logistics, including streamlined returns processes that integrate quality checks and instant replenishment, and the use of technology to improve product visualization and reduce return rates.”
clothing ban
CleanHub's report also identifies packaging as a significant factor contributing to the negative environmental impact of online shopping.
The report says online shopping generates 4.8 times more packaging waste than brick-and-mortar stores. “Online shopping requires special packaging to ensure that your products are well protected and reach the buyer in perfect condition,” Stones says. “Some retailers are encouraging customers to use additional materials during the return process.”
The report notes that while retailers are encouraging customers to use the original packaging for returns, some are providing guidance on additional packaging. . For example, Shoppee tells customers that if the original packaging is damaged, “tape the product securely and wrap it in at least 1-2 rolls of bubble wrap.”
Once returned to the warehouse, employees unwrap the products, process them, and often repackage them for resale, the report continues. Approximately 91% of all plastic packaging waste ends up in landfills or polluting the environment, highlighting the negative impact of unnecessary packaging.
CleanHub's report also notes that fashion is a major revenue source for online shoppers. The average return rate for clothing is 32%, while the return rate for consumer electronics is 7%. If a customer tries on a garment or wears it once before returning it, the item is difficult to resell and often ends up directly in a landfill.
Agreeing to return management
But Shamis insisted retailers are starting to address the return issue. He noted that 75% have invested in strengthening their returns process in the past year, with most investing between $1 million and $5 million.
“More importantly, 90% said they have increased their investments in this area compared to the previous year. This extends to customer education regarding
“For the first time in history, return issues decreased from $816 billion in 2022 to $743 billion in 2023. This should not be interpreted as a contraction in market size, but on the contrary, as retail and online sales grew. ” he declared. This is estimated at 4% to 6%, but is instead a strong indicator that the investments these retailers are making are paying off. ”
Retailers are deploying innovative return strategies through dynamic returns software with features such as “Keep It,” trusted customers, partial refunds, instant exchanges, instant credits, and additional pick-up options. he added. These options enhance the post-purchase experience by providing customers with additional convenience and preferred return options.
“Ultimately, retailers can improve customer retention by up to 30% and save on sales by converting refunds into exchanges, store credits, or partial refunds,” he continued. Ta. “Additionally, the right returns service provider can also help combat the $101 billion in fraud and unauthorized returns with intelligent detection, identification, reporting, and prevention capabilities.”
