The celebration of Earth Day serves as our annual reminder to do our part to protect the planet. For retailers, Earth Day has particular significance. Retailer operations significantly impact the planet, from the manufacturing of goods to shipping products to stores or warehouses, and even the eventual disposal of every imaginable type of item in landfills throughout our nation. That’s not even mentioning the environmental impact of retail returns.
In 2022, U.S. consumers returned items totaling $816 billion against $4.95 trillion in sales, according to the 2022 Consumer Returns in the Retail Industry report. Ecommerce returns account for 26% of all returns, adding up to $212 billion in 2022; of that, 10.4% were fraudulent. These online returns have greater impact on the environment due to the release of greenhouse gases, soil, and water pollution caused by return transportation, additional packaging, and disposal of unusable returned goods in landfills.
Retailers have an imperative to develop more sustainable returns strategies to do their part to protect our planet.
At the same time, consumers and company shareholders are growing more cognizant of Environment, Social, and Governance (ESG) standards related to environmental protection. According to Yale Program on Climate Change Communication research conducted in September 2021, 41% of Americans indicated that they intended to reward companies that are taking steps to reduce global warming more frequently.
When environmental impacts and ESG standards are considered, it becomes clear that retailers have an imperative to develop more sustainable returns strategies to do their part to protect our planet.
Help Ecommerce Shoppers Buy Right to Minimize Returns
A whopping 40% of shoppers return items due to sizing issues according to the 2023 Omnichannel Returns Index report. A good portion of apparel returns is due to “size bracketing” – a tactic shoppers use when the sizing information about the product is not clear enough to be sure of selecting the right size. Imagine the reduction in environmental impact that could be achieved simply by helping consumers choose the right size and fit the first time, eliminating a return altogether.
Whether purchasing apparel, home goods, hardware, or other items, consumers have come to expect retailers to provide interactive digital tools like detailed product descriptions, videos, filters for industry nuances, product comparisons, reviews, ratings, virtual mirrors, sizing tools, and more to help them buy wisely. In addition, retailers should be taking advantage of sophisticated software tools that utilize artificial intelligence (AI) and machine learning to detect when size bracketing and other tactics are being used by consumers to hedge against purchasing the wrong item. Software like Engage® Incentive Optimization can detect these practices in real time and provide shoppers with customized incentives to visit a nearby store to find exactly the right item, rather than overbuying and returning what they don’t need.
Offer Alternate Retail Return Options
A large part of the environmental impact of ecommerce returns comes from the reverse logistics of sending the items back to the retailer, including the greenhouse gases from the trucks having to pick up the item from the consumer and deliver it back to the retailer. Even the air pollution from consumers driving to a nearby store is a contributor. However, a greater concern comes from the excess packaging required for online returns. Some retailers like Amazon accept unpackaged returns at third-party drop-off locations to minimize using additional corrugated boxes and packing materials. Returns from many consumers are aggregated to reduce transportation impacts and costs.
There’s no better way to embrace this year’s Earth Day theme of “Invest in Our Planet” than by building a more robust, environmentally friendly retail returns strategy.
Here again, AI-assisted software can be used to offer consumers real-time options to return the item to a store or third-party drop-off site to eliminate additional transportation and packaging requirements. Engage can analyze transaction data to pinpoint the nearest store location and even offer the consumer an incentive, such as a same-day discount, to encourage the in-store return.
Reduce Fraudulent Returns
As we stated at the outset, 10.7% of ecommerce returns are fraudulent, adding up to nearly $23 billion. Some consumers take advantage of lenient returns policies to get a refund or reshipment, and then return an empty box or a completely different item. So not only have they cost the retailer the amount of the item, but also the cost and environmental impact of the reverse logistics of the return.
AI-powered software like Engage Return Authorization helps retailers control the returns process to minimize fraudulent returns. Detecting potentially fraudulent returns as they are happening can help retailers minimize the environmental impact of retail returns on the environment and their bottom line.
Invest in a Returns Strategy to Invest in Our Planet
There’s no better time to embrace this year’s Earth Day theme of “Invest in Our Planet” by building a more robust, environmentally friendly retail returns strategy. Providing comprehensive product descriptions, clear images, supporting materials, access to reviews, and incentives to shop and return in-store, retailers can not only keep returns to a minimum to reduce their carbon footprint, they will also build trust with and delight their consumers.
Only a few retailers have realized the strategic importance of managing returns. Most continue to fly blind. Are you one of them?
Dr. Adi Raz, Vice President of Data Science, Appriss Retail
Adi has more than 25 years of experience managing data scientists and modeling teams, developing and integrating analytical products, and building efficiencies in data operations, analytics, and modeling. Adi is responsible for end-to-end management of all operational aspects of the data and analytical products for Appriss Retail across hundreds of global retailers. Before joining the company in 2004, Adi was the senior director of data sciences at Washington Mutual and a pricing analyst for Circuit City. Adi earned her Doctorate in Business and an MBA from Pepperdine University.