The two busiest online shopping days of the year are just around the corner. Amid the cost of living crisis and recession, retailers will be desperately hoping that shoppers will take advantage of Black Friday and Cyber Monday discounts to boost annual sales.
While this will provide a boost to an industry that has not yet fully recovered from the COVID pandemic, there is a huge downside. The more online shoppers shop, the bigger the problem with returned goods.
Around 60 million people shop online in the UK, in other words the vast majority. But most buyers buy more than they want to keep. They order multiple sizes and colors to find the perfect item, knowing that there’s a convenient and “free” return option to throw away the rest.
It has become so standard that it even has a name: “wardrobe”. Around 66% of people in the UK consider returns policies before shopping online and will abandon orders if policies are not clear. One in ten shoppers also admit to buying clothes solely to take pictures for social media.
More than half of all clothing purchased online is returned. In other words, every UK buyer returns an average of one item per month.
Out of the UK’s 60 million online shoppers, each person returns an average of one item per month. Vyacheslav Lopatin / Alamy
But if people have gotten used to seeing their bedroom and living room as the new dressing rooms in the store, it’s not just clothes that cause problems with online returns. For example, 42% of electrical items ordered online are returned, usually because they arrive damaged or defective.
Returned goods are more complex to handle than other inventories because they are delivered as separate items that must be individually inspected for the reason why they were returned. They need to be sorted and possibly repaired or cleaned before returning to stock, which is a different location for many retailers.
The associated costs are notably higher than shipping new products. According to an American expert, every dollar of returned goods costs the retailer between 15 and 30 cents.
In 2016, returns were estimated to be around £20bn a year for retailers, with around half of that coming from store-bought products. It must have grown significantly since then — especially as online sales skyrocketed during COVID.
Every time you move a product, there is also an environmental cost associated with travel. According to a recent study, the CO2 emissions of returning a product are about a third higher than those of shipping it.
What can be done
It’s tempting to think we need regulation to curb this excessive buying and returning. But it would be very difficult to control and potentially disastrous for online retailers.
In any case, the industry is developing its own solutions: a quarter of the UK’s leading brands now charge customers return costs, including fast-fashion players such as Zara and Boohoo. They won’t take it lightly: Royal Mail estimates that 52% of shoppers are unlikely to use a given online store if they have to pay for returns.
We both still see reports online claiming massive amounts of returned clothing are ending up in landfills, but from our conversations with major retailers, we’ve heard no such thing. More than 95% of returned clothing can be reprocessed and made available for resale as a new product – cleaning and sewing repairs and perfume/aftershave deodorization near shops. There is access to ozone cleaning facilities, which is a really big deal.
We understand that many retailers are approaching such turnaround numbers. For example, ASOS reportedly sells more than 97% of its returns.
challenge with heavy luggage
Unfortunately, this is very different with heavy items such as furniture or kitchen appliances. These often require additional packaging, two-person pick-up, and more.
Buy a memory foam mattress. The returning consumer will not be able to squeeze all the air out and put it back in a modest delivery box. So the yield is as big as a mattress, and you don’t get that much on a truck.
Returning mattresses is a complicated matter. robin nobility
The mattresses have also been slept in, so there are hygiene considerations. Depending on the condition, the cover should be washed or thrown away. Mattresses should be inspected for damage such as abrasions, then cleaned and sanitized before being repackaged to be sold as repaired.
There are similar challenges across the board with the bulkier products. To give another example, electrical appliances are expensive to repair and must be tested by law before they can be resold.
Faced with such problems, retailers often take the easy way out. They let returns languish in distributors’ warehouses before finally being sent to the landfill.
We took a first-hand look in our research by partnering with four major retail brands that use returns specialist Prolog. A beauty retailer says their returned electrical products in beauty kits should be destroyed to protect their brand, sending many to landfill.
We have been able to demonstrate that these items can be serviced by Prolog Fulfillment by harvesting unused components for new kits, supplying missing components to other customers, or holding them for replacement under warranty.
These types of options are available with a little research. Sometimes value engineering is also possible, where technicians repair returned products and provide feedback to manufacturers about common reasons for returns.
The carbon footprint can also be reduced. For example, the delivery company may intercept the return instead of sending it back to the retailer’s distribution center. It’s still common for retailers to process returns in a different location than where they ship new products, so businesses should take this into consideration as well.
These failures are both unacceptable from a sustainability point of view, but also lead to a major missed sales opportunity. Many returns can be refurbished with little effort and sold as “A-” grade at a small discount.
When products cannot be resold, other options include resizing, donating to charity, or working with specialist recycling companies to break down and recycle the smaller components to prevent material from ending up in landfill. Could
As everyone gears up for the Black Friday weekend and then Christmas, it’s time for these retailers to do better. Consumers should also be aware of this problem and apply more pressure.