As returns continue to increase in line with ecommerce, the retail industry is dealing with an urgent need to address the resulting waste. We’ve found ecommerce returns can produce 14% more landfill waste than brick-and-mortar returns, thanks to inefficiencies in traditional reverse logistics[1]. To help address this issue, we’ve identified the following trends and next steps to help retailers grow a sustainable business through returns.
Importance of Brand Values & Sustainable Missions
Now more than ever, consumers are willing to pay for sustainable options and seek out companies that protect the environment and stand by their core values. In fact, consumers are now 4-6X more likely to purchase from and champion purpose-driven companies, according to a recent global study from Zeno Group[2].
Over the last few years, retailers such as IKEA and H&M have seen growing success both in ethically-sourced and sustainably-marketed products, as well as in community investments. Consumers– particularly Gen Z – have a growing expectation for businesses to actively support and positively impact surrounding communities. A company’s social footprint (volunteerism, donations, or diversity and inclusion efforts) has become just as important as its environmental footprint.
The Race to Circular Business
With an increased focus on sustainability, more and more companies are playing in the circular space. The circular economy has become a huge differentiator in the retail industry, with many retailers and brands already piloting circular business models.
These businesses are incorporating systems like take backs, trade-ins, and rental programs, or products-as-a-service. Frontrunners in this space include brands like Patagonia, Eileen Fisher, and The North Face, all of which have long-standing programs to resell or recycle their used merchandise. Others include Best Buy, which has long allowed product trade-ins from customers, and IKEA, which is working towards a fully circular business by 2030.
Next Steps: Focus on Returns
Retailers, brands, and delivery companies are all trying to lessen the environmental impact of returns. For businesses looking to get involved in this effort, consider the following:
- Prevent Returns: Incorporate better product descriptions, imagery, fit guides, or AR tools to help consumers make more educated decisions and lessen the likelihood of returns.
- Packaging: Adopt reusable and recyclable packaging or offer in-store and drop-off options (such as our Express Returns offering) to allow for packageless returns.
- Recommerce: Resale is a great way to move unsold inventory to avoid trashing excess merchandise. Many retailers, such as Overstock.com and Best Buy, offer open-box prices on their websites, while others have dedicated resale channels, such as Patagonia Worn Wear. Optoro owns and operates BULQ to help retailers resell goods wholesale.
- Analytics: Use a tech-driven, back-end process to efficiently move excess/returned inventory to its next best home. This means fewer shipments and optimized operations so items aren’t sent to a landfill.
If you’re interested in learning more about Optoro’s positive impact and ways to grow a sustainable business through returns, check out:
Sources:
1. Comparison of waste produced in e-commerce vs. brick-and-mortar reverse value chains from Optoro’s client impact models, 2020. Impact model developed for Optoro by Environmental Capital Group.
2. Unveiling the 2020 Zeno Strength of Purpose Study | Zeno Group (June 2020)