Two of the busiest online shopping
days of the year are upon us. In the middle of a cost-of-living crisis and
recession, retailers will be desperately hoping that shoppers take advantage of
discounts on Black Friday and Cyber Monday to bump up annual sales figures.
While this would boost a sector that
has yet to fully recover from the COVID pandemic, there’s a major downside. The
more that shoppers buy online, the bigger the problem with returned goods.
Almost 60 million people shop online
in the UK - in other words the vast majority. But most shoppers buy more than
they intend to keep. They order multiple sizes and colours to find the perfect
item, safe in the knowledge that there’s a convenient and “free” return option
to dispose of the rest.
The returns nightmare
This has become so standard that
there’s even a name for it - ‘wardrobing’. Around 66% of people in the UK
consider the returns policy before buying online, and abandon orders when the
policy isn’t obvious. One in ten shoppers even admit to buying clothes solely
for the purpose of taking a photo for social media.
More than half of all clothes
purchased online are returned. Put another way, each British shopper returns an
average of one item per month.
But if people have become used to
treating their bedrooms and living rooms as the new in-store changing room,
it’s not only clothes that cause an online returns problem. For example, 42% of
electrical goods ordered online get returned, mostly because they arrive
damaged or faulty.
Returned goods are much more complex
to process than other stock because they tend to arrive as single items that
need inspecting individually to see why they were returned. They need sorting
and possibly repairing or cleaning before being returned to stock, which for
many retailers is in a different location.
The associated costs are significantly
higher than shipping out new products. According to one US expert, every dollar
in returned merchandise costs a retailer between 15 and 30 cents.
Returns were estimated to be costing
retailers about £20 billion a year in 2016, roughly half that of shop-bought
products. Since then, it will have increased considerably - particularly during
COVID as online sales went through the roof.
Every time you move a product there
are also environmental costs associated with the journey. According to one
recent study, the carbon emissions from returning a product are about a third
higher than shipping it out in the first place.
What can be done?
It is tempting to think we need rules
to curb all this over-buying and returning. But that would be very difficult to
police and also potentially disastrous for online retailers.
In any case, the sector is developing
its own solutions: a quarter of leading UK brands now charge customers for
returns, including fast-fashion players like Zara and Boohoo. They will not be
doing this lightly: the Royal Mail estimates 52% of shoppers would be unlikely
to use a particular online retailer if they had to pay for the returns.
We both still see reports online
claiming that substantial amounts of returned clothes end up in landfill, but
this is not what we hear from our discussions with leading retailers. Over 95%
of returned clothing can be reprocessed and made available for resale as a new
product - subject to cleaning and sewing repairs and retailers having access to
ozone cleaning facilities to remove perfume/aftershave smells, which is
actually a major one issue.
Our understanding is that many
retailers are approaching that sort of turnaround figure. ASOS reportedly
resells over 97% of its returns, for instance.
Challenges with bulky goods
Unfortunately it’s very different with
bulkier goods like furniture or kitchen appliances. These often require
additional packaging, two-person collection and much more besides.
Take memory foam mattresses. A
consumer returning one won’t be able to squeeze out all the air and put it back
in the modest-sized delivery box. The return will therefore be the size of a
mattress, and you can’t get that many on a truck.
Mattresses have also been slept on so
there are hygiene considerations. The cover needs to be washed or discarded,
depending on its condition. The mattress has to be inspected for damage like
scuff marks, then cleaned and sanitised before being reboxed to be sold as
reconditioned.
There are comparable challenges across
the board with bulkier products. To give another example, electrical items are
expensive to repair and by law need to be tested before they can be resold.
Faced with such issues, retailers
frequently take the easy way out. They let returns languish in distributors’
warehouses before eventually sending them to landfill.
We have seen this first hand in our
research, working with four major retail brands that use returns specialist
Prolog. One beauty retailer insists their returned electrical products in
beauty kits be destroyed to protect their brand, leading to many being sent to
landfill.
We were able to demonstrate that these
items could be processed more sustainably by harvesting the unused components
for new kits, retained by Prolog Fulfilment for supplying missing components to
other customers, or salvaged for warranty replacements.
These sorts of options are available
with a bit of investigation. Sometimes value engineering is also possible,
where engineers repair returned products and provide feedback to manufacturers
about common reasons for returns.
Carbon footprints can also be reduced.
For instance, the delivery company could hold the returns rather than sending
them back to the retailer’s distribution centre. It’s still commonplace for
retailers to process returns in a different location from where they ship out
new products, so companies need to look at this too.
These failures are both unacceptable
from a sustainability point of view but also a major missed selling
opportunity. Many returns could be refurbished with little effort and sold as “A-”
grade at a small discount.
When products can’t be resold, other
options include resizing, donating to charity or working with specialist
recycling companies to dismantle and recycle the smaller components to prevent any
material going to landfill.
As everyone gears up for the Black
Friday weekend and then Christmas, it’s time for these retailers to do better.
Consumers also need to be aware of this issue and apply more pressure.
Erica E.F. Ballantyne
Senior Lecturer in Operations and
Supply Chain Management, University of Sheffield
Jonathan Gorst
Principal Lecturer in Supply Chain
Management and Deputy Head of Department of Management, Sheffield Hallam
University
This article is republished from The
Conversation under a Creative Commons license.
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