Sustainability is an increasingly important issue for many consumers. It’s also one many businesses are paying attention to — both from a social, environmental, and economical standpoint. In fact, 83% of C-suite executives believe that ESG (environmental, social, and governance) programs will generate more shareholder value in five years’ time than they do today.
In this blog, we’ll explain what green returns are, why they matter, and why focusing on sustainability can help boost your bottom line.
The Story: Returns, E-Commerce, and the Environment
Consumers are more likely to return online orders than in-store orders. In fact, they’re twice as likely to do so. For instance, it’s a common practice for a consumer to purchase multiple items of clothing from an online retailer in different sizes, returning the ones that didn’t fit.
All of this sounds like a great purchasing strategy until you realize that a lot of returns — if they’re sent back and labeled as unable for resale — wind up in a landfill. Couple that with the costly nature of returns, and the conundrum facing many e-commerce retailers is how to stay profitable and sustainable in a market driven by consumer demand.
The Dilemma: Online Returns and Landfills
While returns are nothing new to retailers, online returns are — relatively speaking. In-store returns include face-to-face interaction between the customer and the store representative. If the customer is unsatisfied with the item (for one reason or another), they’re expected to bring back the items in new condition (unless the product was defective).
If nothing was wrong with the product, the store could put it back in stock. However, when e-commerce purchases are returned to the retailer, the product has already been shipped in two directions and may have sustained damage or wear on the items.
Online retailers also can’t require returns in original, unopened packaging because opening the packaging is the only way for the buyer to evaluate the item.
The Solution: Green Returns
Large retailers like Zappos give customers a full year to return shoes or even send back pairs that have been extensively used. However, long return windows and leeway accepting used goods in less-than-perfect conditions mean costly returns for your everyday e-commerce company. In addition, items like mattresses can’t legally be resold, and returns on seasonal items may come in too late for resale.
All of this means an estimated 5 billion pounds (or 25 million tons) of e-commerce returns end up in landfills every year, and this data is only reporting on the U.S. This is where green returns can help your business and the environment.
How Green Returns Are Relevant to Your Business
So, what are green returns exactly? The process known as green returns is a strategy created to combat this issue, and reduce waste that would otherwise wind up in a landfill. Think about it: instead of generating a profit, returns cost you money since you have to pay for return shipping. If you can’t resell the product, you’re now also out the cost of the item.
To combat this, many businesses are choosing to introduce a green returns policy. Below are five actionable green returns steps you can implement to help you increase your sustainability practices.
1) The Return-less Refunds Policy
For small items with low-value products, it may make more sense to deviate from a traditional return policy and provide a refund without requiring the customer to send the item back.
This means you don’t have to pay for return shipping, the customer doesn’t have to pack it up (which could improve customer satisfaction), and the item stays out of a landfill (hopefully). This may sound like a generous return policy, but it’s also something that can benefit your business.
2) The Branded Seconds Initiative
More than a few companies have been able to sell returned or refurbished products at a discount. An excellent example of this type of green returns strategy was put in place by the shoe manufacturer, Allbirds. The company has a returns policy that allows customers to return worn shoes, and they created a vertical called Reruns to sell lightly used returns at a discounted price.
3) The Selling To Retailers Approach
Some retailers have opted to create a separate space to remarket their returns. You could sell any returns on a secondary market to companies specializing in the resale of lightly used goods.
4) The Donation Method
The option of donating used goods to charity is another sustainable approach with a positive impact. You could partner with a charity that can repurpose your returns or donate to nonprofits like The Salvation Army or Community Aid. This could also have benefits for your business come tax season.
5) The 3PL Approach
Partnering with an experienced third-party logistics provider (3PL) can make developing a green returns practice simple. Be sure to find a 3PL that offers kitting services to make unboxing and repackaging easy. Your 3PL should also be able to help you assess the salability of returned orders. All of this can help you cut your losses while improving sustainability.
How Are Green Returns Relevant to Your E-Commerce Business?
As consumer attention turns to how businesses are operating and not just what they are offering, a failure to implement green returns could result in poor brand equity and a loss of customer trust. To help you stay green as the world (and consumer awareness) heats up, below are a few reasons you should not neglect green returns.
- A poor returns policy can generate negative press. Your brand’s image could be tainted if consumers discover you’re automatically throwing away returned items.
- Waste may discourage sales. More and more consumers aren’t keen on the idea that a retailer will refund their money and then toss their return in a landfill. Consumers are becoming wary of contributing to waste.
- How you treat the environment reflects on your core values. By neglecting a green returns strategy you are conveying to your target audience that all you care about is capital.
The Summary
To wrap up what green returns are and the benefits a successful plan can have on your company, let’s take a look at their impact in three easy steps.
1) They reduce waste. When you allow your customers to keep what can’t be resold, you help eliminate waste and save money by not having to pay for return shipping.
2) They reduce supply chain costs. Fewer shipments mean less time, labor, and money spent managing them.
3) They increase customer trust. Honesty is a customer’s preferred policy. When you’re upfront about wanting to reduce your company’s contribution to landfill waste, you help build trust through transparency. This is great for brand equity.
Green returns can boost your bottom line and convey to your customers that you care about and prioritize sustainability. While it sounds difficult, going green is easy when you find the right 3PL partner to help implement a successful green returns strategy.
Every e-commerce company needs to focus on creating a great brand experience for its customers. Contact us today to see how we can help you grow your business through our fulfillment services.
