Merchandise returns have accounted for over $260 billion in lost sales for U.S. retailers annually, according to a report by the National Retail Federation. The report notes that if merchandise returns were a corporation, it would rank number three on the Fortune 500 list. But the crux of the problem is the waste generated from returns, as the unwanted merchandise generally winds up in landfills — unbeknownst to many shoppers.
The retail industry manages 3.5 billion products returned by consumers every year, which is a tremendous strain on the environment and on the brands that suffer financial losses.
And companies such as Optoro, a reverse logistics software solution, streamline processes for returns and excess inventory by enabling efficiencies through every retail channel, including clearance and outlets, returns to vendors and donations or recycling. Optoro’s transparency throughout the reverse supply chain allows users to view full-unit life-cycle tracking, key supply chain metrics and trends and sustainability reporting via its dashboard and reporting system, including real-time visibility for unit-level movements at the warehouse. The solution runs the entire full reverse logistics operations in tandem with third-party logistics — such as UPS — and can be employed within existing return centers.
The company said returns result in 5 billion pounds of waste annually; Optoro’s partners reported waste and carbon savings of up to 60 percent and 31 percent, respectively. Tobin Moore, the chief executive officer at Optoro, told WWD, “Most consumers are unaware of the fact that a significant portion of returned items end up in landfills, causing a notable environmental issue. According to a survey Optoro conducted last year, 88 percent of shoppers are not even aware that returns are often thrown away. So it is less about shoppers not practicing sustainability and more about a lack of understanding regarding the reverse logistics process. That said, companies can be working to properly manage their returns and attempt to decrease the amount of returns they handle overall.”
Moore also noted that “E-commerce has played a significant role in creating a buy-to-return mentality where consumers purchase goods knowing that they can easily return something if it does not fit or work as they wanted. In order to mitigate this, retailers should be focusing on creating highly accurate and precise item descriptions as well as high-quality images that accurately represent the product. This is especially relevant for clothing items. People often return clothes because they do not fit properly. If retailers can provide consumers with more accurate sizing details, consumers will return fewer items, therefore reducing the amount of waste being generated.”
And size is one of the most common pain points amongst shoppers. Christy Dawn, the founder of her namesake sustainable fashion brand based in L.A., told WWD, “Specific to fashion, fit is the most common reason an item is returned. With consumers moving more and more of their spending online, return rates for clothing have sky rocketed. It’s so hard to know how a dress is going to fit, until you actually try it on.” Dawn continued, “Since fit is the most common reason for a return, emerging technologies that help customers get a better understanding of how a garment will fit are going to be drivers for reducing returns.” Dawn’s company partnered with Fits Me, an app that employs customer data and dress measurements to predict accurate dress sizing, and said the company has seen return rates drop significantly since implementation.
Another contributing factor is the ease of the return process, which has been wholly perfected by online retailers. Isabel Eva Bohrer, the director and founder of RoosterGnn, a non-profit news agency, told WWD, “Brands and retailers, especially those selling goods online, are consistently advertising free shipping and returns. In fact, when an online store does not offer free returns, it runs the risk of losing clients to another shop that does. With pre-paid return labels and numerous drop-off points throughout a city, or let alone pick-up at home, consumers no longer have to stand in line at the post office. Returns are easier than ever.”
Bohrer added that consumers are often tempted to purchase multiple sizes of the same item at one time with intent to return the unwanted merchandise. “While consumers say they want to practice sustainability, they are easily lured into purchasing various sizes of a shoe in order to see which one fits, or to buying more than one dress only to return all of them because they simply changed their mind and decided they didn’t need them in the first place. The sending back and forth of products on a national, and even global level generates waste, from packaging to delivery costs to operational expenses required to track and process all of the returns.”
And to further combat textile waste, companies such as ThredUp offer a secondhand clothing online resale platform for consumers to buy and sell apparel. James Reinhart, the chief executive officer of ThredUp, told WWD, “According to ThredUp’s 2017 Resale Report, the average woman doesn’t wear 60 percent of what’s in her closet, and the average American throws away 70 pounds of clothing each year. That’s millions of items of clothing that could have been reused or recycled. Rampant throwaway culture has led to the increased popularity of fast fashion, meaning the amount of waste these companies and their factories produce increases each year. This needs to change.”
Reinhart’s company is part of the Collaborative Consumption movement, which promotes and embodies the sharing economy. “In order to tackle the problem of textile waste, retailers and resellers need to work together to promote a circular, more sustainable fashion economy. I’m encouraged by recent efforts to reduce the waste caused by fast-fashion factories but it’s not enough — we are still producing and consuming more than any person needs.” Reinhart added, “By participating in the virtuous cycle of secondhand, consumers and brands can feel good knowing there’s a way to responsibly recycle their clothing.”
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