The holiday season is drawing to a close, marking the start of a significant surge in product returns. The National Retail Federation forecasts that approximately 17% of holiday purchases will be returned this year, prompting many retailers to extend their return windows and ramp up staffing levels to manage the increasing volume.
One of the key reasons driving these returns is the uncertainty associated with buying gifts for others. When selecting items for friends or family, consumers often engage in a guessing game, especially when it comes to fitting preferences. Online shopping exacerbates this issue, as customers typically face challenges in determining the correct size and color from just images on screens. Saskia van Gendt, chief sustainability officer at Blue Yonder, explains that clothing and footwear, where fit is critical, tend to have the highest return rates.
However, the environmental ramifications of product returns are considerable. Products typically arrive at customers in plastic packaging, a derivative of oil, which contributes to greenhouse gas emissions during its production. When items are purchased online, they frequently require transportation via oil-fueled means—planes, trains, or trucks. A return necessitates repeating these processes, ultimately leading to increased emissions. Joseph Sarkis, a supply chain management professor at Worcester Polytechnic Institute, estimates that returning a product amplifies its environmental impact by 25% to 30%.
Alarmingly, in one-third of return cases, items do not find their way back to consumers, often due to the cost-effectiveness of reselling. For instance, if a customer returns a phone simply because they dislike its color, the retailer incurs expenses not only for return shipping but also for inspecting whether the item has sustained damage. Sarkis notes that this can become cost-prohibitive, leading retailers to feel reluctant about reselling returned items, especially lower-cost items like a $6 silicone spatula.
The costs of returns extend beyond environmental concerns. These expenses often cascade down to consumers, raising prices even when retailers offer seemingly “free” returns. Christopher Faires, an assistant professor of logistics and supply chain management at Georgia Southern University, remarked that refurbishment, inspection, and repackaging costs inherently influence product pricing.
Consumers can take steps to mitigate the impact of returns. Danni Zhang, a logistics and operations management lecturer at Cardiff University, advises that properly preserving the condition of items and utilizing original packaging can enhance the likelihood of resale. Timeliness is also crucial; returning items soon after purchase significantly improves the chances of resale success. In-person shopping is typically associated with lower return rates as well, and items returned directly to physical stores tend to be resold more efficiently.
Consumption habits contribute heavily to the return rate as well. Many shoppers practice “bracketing behavior,” purchasing multiple sizes to keep only what fits, which is unsustainable. A more eco-friendly approach might involve giving gift cards, allowing recipients to choose items they truly desire.
Sarkis advocates for increased transparency regarding the environmental costs connected to returns. He suggests that providing consumers with clear information about the impact of their potential returns could lead to more responsible buying behavior. Although, he acknowledges, companies might be wary of sending a negative message that could hinder sales.
Moreover, charging for returns could help alleviate some of these burdens. Already, companies like Amazon are implementing fees in certain scenarios.
To enhance return management, technologies are emerging to assist retailers. Blue Yonder’s recent acquisition of Optoro highlights how retailer-focused software can streamline the assessment of returned products, determining their condition and helping route them to stores where they are most likely to be sold again. This tech solution benefits both the environment and retailers.
The clothing sector remains at the forefront of return challenges, largely due to inconsistent sizing. Improved sizing standards and technologies such as 3D imaging and virtual reality could offer customers a better fit, helping to minimize the need for returns in the future.
