Environmental Impacts on Product Returns
Between the manufacturing, transportation, building and maintaining of brick and mortar stores, consumerism surely has a significant carbon footprint. Even online shopping has an environmental impact. And after the product is purchased and in the hands of the consumer, what happens when that shopper changes his or her mind?
What contributes to the environmental impact on shopping?
In order to truly understand how consumerism has affected our environment, it’s important to first understand how fragmented the fashion industry is. There are thousands of actors involved in this complex global production of clothes. And although the fashion industry is one of the world’s largest consumer industries, generating over $1.6 billion in annual apparel and footwear revenue in 2016, it’s also leaving a severe impact on our environment. Although the fashion industry is not the most obvious contributor to the environmental and social footprint, it’s a considerable one. But fortunately, it is also one that has the tools, resources and creativity to make a stark change. In fact, The Boston Consulting Group and Global Fashion Agenda have estimated that if the fashion industry successfully addresses the issues, the world economy will gain about €160 billion annually! That’s is a HUGE number.
There are many different categories where the fashion industry can begin addressing the issues — from water and energy consumption to ethical practices. This article aims to discuss just one such category: product returns. To truly see where actors can begin implementing change, it’s necessary to divide each element that pertains to a product return of the entire supply chain into quantifiable measurements such as:
- Distance the product must travel
- Method of shipping the product — This includes what fuel is expended. One-day or same-day shipping makes shopping especially environmentally costly
- How rural the destination is — If a product is shipped to the customer, the number of additional destinations in the vicinity affects the environmental effectiveness.
- Restocking or lack thereof
Though it may seem that online shopping is much more environmentally efficient, a lot of other contributing factors would suggest otherwise. In fact, 40% of shoppers are buying multiple items online with the intent to return all but their favorite item. E-commerce sales has a return rate of 30% and because less than half of returned goods are re-sold at full price, retailers may end up losing 10% of their sales. This shift in consumer behavior has forced retailers to produce more than the real demand. So not only does the initial production affect the environment in many ways not mentioned in this article, overproduction now doubles the environmental cost. And because 84% of returned garments end up in a landfill or incinerator — the costs keep rising.
Online vs Brick-and-Mortar Returns
Online shopping sure is convenient — you can do it in your pajamas with a glass of wine (not recommended). Probably in part due to its extreme convenience, online shopping is an extremely profitable business. Although only 10% of retail sales are purchased online, e-commerce is rising at an exponential rate. In fact, e-commerce sales hit a record high of almost $400 billion in 2016. Between the convenience of ordering a product with just a few clicks and the fact that the shopper doesn’t really have a direct experience with the product until it has arrived, returns for online shopping is much higher than that for brick and mortar purchases. As mentioned, over 30% of products that were purchased online are returned, compared to less than 9% for brick and mortar stores. Merchandise returns alone accounted for more than $260 billion in lost sales in 2015. Add out-of-stocks and overstocks into the equation and you’ve reached an unfathomable number in what’s known as the “Ghost Economy”. Fueling this is the act that nearly half of online retailers provide free returns. The most common reasons for returning a product include the following:
- Damaged product
- Wrong product
- Wrong size — a high of 64% blame fit as the reason for a return
- Other reasons
Approximately two of every three online shoppers check the return policy of a retailer before making an online purchase. This means that most online shoppers have some idea that they may need to return the product.
Reducing the Environmental Impact
It’s important to think about how our choices impact the environment. With how easy it is to shop online and return a product, people don’t usually consider how this convenience may affect the globe. With that said, it’s not like it’s all the consumer’s fault that product returns have such a negative impact. If companies can limit the inefficiencies and consumers can make more careful choices in their shopping, we can all reduce the stress shopping puts on the environment together.
What can the consumers do?
Choosing the most environmentally friendly companies as well as the least wasteful packaging and shipping options are great ways to limit the impact of consumerism on the environment. When asked if you wish for multiple purchases to be shipped together or separately, choose together if you can spare the extra day it takes to aggregate them. A lot of the efficiency of shipping is uncontrollable by the customer. Perhaps customers can pressure companies to avoid styrofoam peanuts and other specific practices, but how is a customer to know exactly how a company can increase their shipping efficiency? The best way a customer can limit their impact on the environment is to be choosy with their purchases. Be sure you really want a product and won’t change your mind once it arrives on your door. Do your research and be an informed buyer! Check reviews and the product dimensions. These are very easy ways to increase the likelihood that you will be happy with your purchase.
What can retailers and brands do?
Reducing the environmental impact of returned products is often considered excessively costly for the company. Companies with specific returns policies and departments are much less likely to experience high amounts of wasteful returns. A major reason for returns is that the product arrived damaged. This means that the product cannot be resold and thus is trash. That means a company mails a product, which hurts the environment, and then the customer mails back the broken product, so they’re essentially mailing garbage — how wasteful! Efforts to reduce damage can increase the amount of resalable goods and decrease the amount of returns. There are many other ways companies can reduce the wastefulness of product returns, especially ensuring returned products are still appealing to other customers, perhaps with a certified “as new” evaluation program.
It’s important we all work together to limit our environmental impact as much as possible. This means thinking about how our actions affect the world. You may just be one person but it’s the cumulative effect that matters. Get educated and be the change!