Supply chains and the climate are shouldering the load of relaxed return restrictions
Finding the right product online can feel like a dream. The perfect gift, gadget, or accessory that fits your exact style, taste, budget, and need.
Except, much of the time, this “ideal” item ends up right back on the store shelves or clothing rack whence it came.
Return culture, as it has been coined, is very much in vogue, and an increased shift to e-commerce seems to have only accelerated the mind-changing trend.
Returns on the Rise
These days, all eyes have been on supply chains, with the COVID-19 pandemic wreaking havoc and causing record-breaking wait times and logjams.
Much of the focus has been on the forward supply chain, or the path to get raw material or products to the final customer.
The other side of the supply chain is just as critical to its efficiency, however, namely products returning to suppliers at a rate of roughly 30% of all purchased items.
“Everybody’s motivated by getting it as fast as you can to the customer to get paid. All of that is not true on the way back,” Gad Allon, a Wharton professor of operations, information, and decisions, told Wharton Business Daily. “While the forward supply chain has improved a lot over the last 20 years, the backward supply chain, the reverse logistics, or what people call the circular supply chain, has not.”
Returns rise even higher when it comes to clothing, with nearly half of all garments sent back to the source — and at a significant cost.
While a finely greased forward supply chain helps the economy and brings in money throughout, returns do the exact opposite, costing businesses both time and money.
A returned item takes a much different path to get back to its original destination than one that is sent on its way to a customer.
The route, in other words, is not direct. A returned item can be re-routed thousands of miles before reaching its original destination, some may never make it back at all, ending up instead in landfills.
An investigation in France from 2019, meanwhile, showed that many products sold by Amazon that were either returned or overstocked were simply thrown away by the company.
The reasons for throwing away an item rather than reselling it can vary, but one has to do with health and safety regulations.
Beauty products and swimwear are both considered unsanitary to resell, for example, however the larger reason simply has to do with what is known as reverse logistics.
Crunching the numbers, less than 10% of returned products come from brick-and-mortar stores. The majority of returns come from e-commerce.
While shopping online has been around for some time, many people were originally reluctant to buy items like shoes and clothes over fears that they would not be able to easily return them if they found they were not a proper fit.
This worry was disrupted, however, after Zappos increased return windows and eased restrictions on what condition the product had to be in. Other retailers followed suit, and consumers’ purchasing decisions followed suit.
“Zappos came and changed the landscape of online shopping for an item most of us were reluctant to buy online: shoes. The moment they introduced that, everybody had to copy,” Allon told Wharton Business Daily.
Keeping Customers Happy
Nowadays, products are returned at all times, shipped to different places, and, depending on the item, a decision is then made on whether or not it should be resold.
While accepting returns can clearly be a nuisance for businesses, many continue to offer generous policies in order to keep customers happy and willing to buy in the first place.
“If you are Amazon or Walmart, you see massive returns, but you have the data to try to funnel things within the organization,” Allon told Wharton Business Daily. “The ones that are really getting hurt with that are the small and medium businesses that cannot match the same return policy, but they have to remain competitive.”
This idea that customers won’t shop where they can’t easily return products is based on statistics, with a recent survey showing more than 50% of people who shop online avoid buying from retailers with return policies that are strict.
At the same time, the survey showed that almost 55% of shoppers purchase items online while knowing they are likely to end up returning some of them.
While thinking ahead about inevitably returning items may be understandable, it also puts a burden on supply chains and, ultimately the environment when returned products simply get thrown away.
Ending up in landfills is more than just a waste of the product itself, in other words, with studies showing that returns pile up and release tons of carbon dioxide emissions into the atmosphere each year.
“So, you don’t get a sale price or you don’t get a receipt for it, but the earth is actually paying the price for this,” Kevin Lyons, an associated professor at Rutgers University, told the CBC. “If you think about the millions and sometimes billions of transactions that are happening on this space, the impact is incredible.”
The number of items is not small, either, with experts labeling the amount in the billions of pounds annually.
And, once again, the compulsion to return items that aren’t an exact perfect fit is the unruly culprit.
So, the next time you decide you want to return an item that isn’t exactly what you ordered, it could be good to keep in mind where it might end up, and who it could affect, before you click order.
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