Online returns: an ecological and economic challenge
The rise of e-commerce
Over the past decade, e-commerce has radically transformed the way consumers shop. The world has become a marketplace accessible at the click of a button. Gigantic platforms such as Amazon, Alibaba and eBay dominate the landscape, but thousands of smaller online stores have also emerged.
Some revealing figures
- In 2021, more than 2.14 billion people worldwide will have made an online purchase– almost a quarter of the world’s population.
- According to a study by Statista, total e-commerce sales volume reached US$4.2 trillion in 2020, up from just US$1.3 trillion in 2014.
- It is estimated that by 2023, almost 22% of global retail sales will be made online.
Convenience at the heart of growth
The main reason for this boom is convenience. Consumers can browse a multitude of products, read reviews, compare prices and order with ease. All without leaving the comfort of their home. What’s more, with the arrival of smartphones and dedicated applications, online shopping has become even simpler. By 2021, 73% of online sales will be made via mobile devices.
The other side of the coin: returns
However, this convenience comes at a cost. One of the biggest challenges of e-commerce is the high rate of returns. According to a study by the National Retail Federation (NRF) in 2020, the average rate of returns for online purchases was 30%, compared with 8-10% for purchases in traditional shops. This has major implications, both in terms of logistics costs and environmental impact.
Economic and ecological consequences
Product returns are costly for companies: shipping costs, returns processing, restocking or even destruction of items. What’s more, the environmental cost is enormous. Greenhouse gas emissions from transport, packaging waste and the destruction of returned items have a significant impact on our planet.
The economic impact of returns
While free returns may seem like a benefit to consumers, they come at a high cost to retailers. Not only do companies have to bear the cost of returns, they also have to decide whether the returned product can be returned to stock, repaired, refurbished or disposed of. This chain of decisions entails considerable operational and logistical costs.
The carbon footprint of returns
Every stage in the transport of a product, from the distribution center to the consumer and potentially back again, is a source of greenhouse gas emissions. The trucks, planes and other means of transport needed to move these goods consume large quantities of fuel.
- According to a study by Environmental Protection Agency (EPA)the transportation sector will account for around 29% of all greenhouse gas emissions in the United States in 2019.
- Optoro, a company specializing in returns management, estimates that product returns in the USA produce 15 million tonnes of CO2 every year, equivalent to the emissions from more than three million cars on the road.
Packaging waste and pollution
Product returns also generate a significant amount of waste, mainly in the form of packaging. This packaging, often made of plastic or materials that are difficult to recycle, frequently ends up in landfill or pollutes the environment.
- The World Packaging Organisation estimates that around 140 million tonnes of packaging are produced every year. A significant portion of this packaging comes from online orders, with a sizeable percentage associated with returns.
The disposal dilemma
When returned products cannot be put back into stock due to defects or damage, they pose a management problem. All too often, these products end up in landfill sites.
- Optoro also estimates that U.S. returns contribute to over 5 billion pounds (approx. 2.27 million tons) of landfill waste each year.
What’s more, unfortunately, there is evidence that even new or barely used products are sometimes destroyed for a variety of reasons, from preserving brand value to the difficulty of redistributing them.
- A 2018 investigation by UK Channel 4’s « Dispatches » revealed that some major brands, such as Burberry, had destroyed millions of pounds worth of unsold goods to protect their brand image.
Innovative solutions to meet return challenges
As e-commerce continues to grow at breakneck speed, the challenges associated with product returns highlight the urgent need for sustainable solutions. Here are some of the innovative approaches retailers are taking to meet this challenge.
1. Virtual fitting technology
Augmented reality (AR) and virtual reality (VR) are transforming the way consumers shop online. Virtual fitting allows customers to visualize clothes, glasses or even jewelry on themselves before finalizing the purchase.
Its benefits:
- Fewer returns: By offering a better idea of product appearance and fit, this reduces the likelihood of unwanted or ill-fitting purchases.
- Enhanced customer experience: Consumers can « try on » numerous items quickly, offering a more immersive shopping experience.
2. Artificial intelligence (AI) :
AI analyzes purchase history, preferences and even past returns to predict what consumers might prefer, or how an item might suit them.
3. In-store returns :
Rather than returning an item by mail, consumers are encouraged to return items to a physical store.
Its benefits:
- Reduced carbon footprint: By eliminating return shipping, the associated emissions are also reduced.
- Cross-selling: When a customer enters a store for a return, they may be tempted by other items, increasing potential sales for the retailer.
4. Sustainability and education :
The principle is to inform consumers about the environmental impact of their purchasing habits and encourage them to adopt more responsible purchasing behavior.
Its benefits:
- Informed consumers: An informed consumer is more likely to adopt sustainable purchasing behaviors.
- A better reputation: Brands that educate their customers and take steps towards sustainability are often better perceived, reinforcing their brand image.
The rise of e-commerce has revolutionized the way we buy, offering unrivalled convenience. However, like every medal, it has its downside.
The challenges associated with returns, and their impact on the environment and the economy, are urgent issues that the industry needs to address for a more sustainable future.
With the aim of reducing greenhouse gas emissions, CircularPlace has developed a marketplace for the resale of your unsold non-food products between professionals, and puts you in touch with non-profit organizations to recover your products.
You can also opt for a white label solution that will allow your company to circularize your equipment internally and to engage your employees around ecological themes.
Don’t throw away any more, opt for the second hand!
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