Merchandise returns are a serious headache for leading brands. Consumers are almost twice as likely to return products bought online as those bought in real-world stores, so the COVID-19 e-commerce boom has triggered a corresponding surge in product returns.
The problem doesn’t stop there: as product returns have grown more commonplace, consumers have grown far savvier about merchants’ return policies. In one recent survey, 33% of shoppers said they were more likely to buy from retailers that offered no-hassle returns. Increasingly, merchants are finding that offering generous return policies is the only way to secure a sale in the first place.
That creates a Catch 22 for retailers. On the one hand, excessive product returns can make it hard to operate profitably. On the other, implementing more stringent return policies risks angering consumers or leading them to click away and buy a product elsewhere. Clearly, something’s got to give—but what can retailers do to put things back on track?
A third way
Fortunately, an alternative strategy could allow retailers to rein in product returns without jeopardizing customer relationships or missing out on potential sales. The key is to understand that product returns aren’t just a financial and logistical problem — they’re also a serious environmental problem.
Each year, in fact, product returns lead to about 5 billion pounds of waste being sent to landfills, including millions of brand-new products that can’t be profitably resold. We only recycle about 54% of all packaging and containers used for shipping, leading to even more waste. And the trucks hauling all those returned products generate 15 million metric tons of CO2 every year — the same as the pollution generated each year by 3 million cars.
Reducing returns, in other words, isn’t just about bolstering retailers’ bottom lines. It’s about reducing the industry’s environmental impact. That’s important because consumers say the single biggest thing they want from brands in 2022 is an increased focus on sustainability. That creates a window of opportunity for brands to make consumers their allies in the push to drive down product returns—by framing the effort as part of a broader drive toward responsible and sustainable retail practices.
A win-win scenario
Returning products in-store, as part of an already planned trip, could be presented to consumers as a more sustainable option since it reduces packaging waste and shipping emissions. Not every shopper will take the trip to your store, of course—but some will, and in doing so they’ll reduce your costs. Better yet, by setting foot in your physical store they’ll give you new opportunities to convert a product return into an exchange or a new sale.
Brands can also put a fresh spin on open-box sales, presenting them as a sustainable and cost-effective way for customers to divert returned products from landfills. Consumers are increasingly attracted to second-hand and vintage products, in part as a reaction against wastefulness and environmental impact. With the right messaging and education, shoppers could come to view returned products as an equally sustainable option.
Companies could even take a cue from airlines, and let customers pay a little extra to offset the climate impact of a planned return. The customers won’t hold that optional fee against you, especially if you’re also offering to cover the shipping cost. The additional friction might make them think twice about returning quite so many products, though, or make them reconsider “bracketing” multiple products with the intention of returning most of them.
Action, not words
To make this work, brands can’t guilt-trip consumers: it isn’t enough to simply say, “Returning products hurts the planet.” Today’s shoppers hate greenwashing in all its guises, and they’ll dismiss environmental messaging they perceive as cynical or self-serving. No: the only way to use environmental messaging to rein in merchandise returns is to do so sincerely, as part of a genuine and demonstrable effort to make both outgoing distribution and reverse logistics more sustainable.
One option is to make it clear that you’re taking carbon emissions seriously across your entire distribution chain. Smart, intelligently managed distribution networks—drawing on data from your marketing, sales, and customer service operations—can help ensure that products ship from nearby warehouses rather than being bounced from distribution center to distribution center, for instance, reducing the total miles traveled and the total environmental footprint of your operations.
Another approach would be to empower customer service agents to make smart choices in the name of reducing environmental impact. You might allow customers to keep low-cost products instead of returning them—while making it clear that you’re doing so to reduce unnecessary emissions. If you can tell a customer that they just helped you keep 200 pounds of carbon out of the atmosphere, that message will resonate long after the transaction in question is a distant memory.
No silver bullets
Of course, there are no silver bullets when it comes to product returns. Return policies will remain a key differentiator among competitors in 2022, and in the e-commerce era, many shoppers will continue to return large numbers of products. But by positioning your brand as a sustainability leader, you can ensure that customers are more mindful of the total impact of their decisions around returning products — and you can do so without making your return policies more stringent.
If you educate customers about the extent to which unnecessary returns contribute to climate change and waste-to-landfills, it’s possible to offer free, easy returns while also encouraging people to be more mindful about what “free” and “easy” really mean. Consumers now care deeply about sustainability.
By leaning into that trend and making sustainability a sincerely held value for your company, it’s possible to slice through the Gordian knot of product returns and reduce operating expenses while actively strengthening your brand and your customer relationships.