Why Returns Hurt The Consumer More Than The Retail Industry
The items consumers return to a retail store are hurting them more than they realize. This is because consumers are the ones who ultimately end up eating the extra cost that their returns cost the retailer. As an added detractor, millions of pounds of returns end up in landfills each year, and the number that does is only continuing to grow.
According to data collected by logistics firm Optoro, it costs a retailer 66% of what the customer initially paid for an item to process a return. Retailers will eat this cost at first but will aim to recoup the money by adjusting the prices of the items they sell in order to maintain profit margins.
In addition, individuals are now returning goods in such vast quantities that it’s overwhelming the landfill and warehouses where all of these unwanted goods end up. In 2021, nearly 10 billion pounds of returned goods ended up in landfills. In 2016, 4 billion pounds of returned retail industry items ended up in landfills. In just five years, the number of returns piling up in landfills more than doubled.
The situation is not an ideal one for the consumer or, frankly, the environment. So how did we get here? And what, if anything, can be done about it?
According to the Wall Street Journal, returns in the retail industry have gotten so out of control largely due to Amazon and the rise of online shopping. Speaking to the Wall Street Journal, Alan Amling, who works as a fellow at the University of Tennessee’s Global Supply Chain Institute, pointed out that customers who purchase items in person at a store get a full sensory experience before buying those items. Conversely, Amling said that those who shop online are largely deprived of that sensory experience and thus purchase more to compensate, which inevitably leads to more returns.
Amling’s observations suggest that if consumers start to reduce the number of items that they buy online and increase the number of trips they take to brick-and-mortar stores instead, the number of returns plaguing the retail industry could begin to subside. Still, communicating that message to consumers on a national level does not guarantee results. Let’s face it, online shopping is an increasingly faster, easier, and more convenient way to shop.
An alternative that some retailers like Target use to prevent millions of pounds of returns from being dumped at landfills is to leverage liquidation services. Big retailers will sell off returned merchandise in bulk to liquidation companies. Those liquidators will then sort and redistribute the returns to outlets and other second-hand stores.
However, the liquidation method is not perfect. It’s a time-consuming process, and it doesn’t guarantee that a product will end up back on the shelf at another store. Hence, this avenue is still not without its obvious pitfalls.
Overall, the returns process in the retail industry clearly needs a massive overhaul. In order for that to happen, there needs to be an immense collaboration between retailers on a national scale to develop a standard that would prevent merchandise from ending its lifecycle at a landfill prematurely.
For now, the only thing that a consumer can do is to be mindful of what they are purchasing, be cognizant of where a returned item will likely end up, and shop in person when possible. And, perhaps, instead of choosing to return an unwanted item, choose to donate directly to a charity or second-hand store instead.
