Returns, What’s the Environment Got to Do With It?

The following article is submitted by guest writer Gina Lee, Founder of Circular CoLab, an organization dedicated to empowering the transition to a Circular Economy. 

Suppose you are buying something online but are unsure of how it will look or can’t decide between two items.  Why not just buy a few styles? Or even a size up and down?  Whatever doesn’t work out just gets easily returned with a click of a button and the printing of a mailing label. Simple, right?

My experience with returns tended to stop there.  I assumed that items went back to whomever I bought it from and the product would find a new home. I had never thought about the sheer logistics involved in returns or questioned where products ended up.  But at the recent “Returns to the Future” event hosted by PostalVision 2020 and the Reverse Logistics Association, I began to understand the significant environmental consequences of our lackadaisical view on returns.

Consider this. Over 30% of items purchased online are returned versus less than 9% for in-store purchases.  This 30% in 2017 accounted for over $113 billion in product value and this amount is expected to double within the next decade as online sales grow!

More shockingly, many products do not make it back to the brand but are sent to third parties who, depending on the product’s condition, may discount it, auction it, donate it, recycle it, or even destroy it. Thus, not only are we wasting a huge amount of energy use in the 3X transport of these returned items, but we are also drastically reducing its material value. Think of all the energy that went into the actual making of a product only to have it destined for scrap just because the box is dented!  Besides being an environmental burden, businesses are also dealing with spiraling costs as they are now responsible for shipping costs due to consumer expectations of free return shipping, as well as having to write-off their products for pennies on the dollar.

So, what’s to be done?

A key focus of the event was on the future role of the United States Postal Service and how it can fit within the returns space.  As the only business that already has 6 day a week delivery with every single U.S. household, it makes sense that the USPS should be part of the broader equation in optimizing for returns.  They already have centralized hubs for delivering packages and act as one of Amazon’s main carriers; why not build out their reverse logistics capabilities?  Indeed, instead of having 3 or 4 couriers on our streets at all times, wouldn’t it make sense from a traffic, efficiency, and environmental point of view, if the USPS was our main logistics provider? It’s obviously not this simple and I’m not advocating for a monopoly, just interesting food for thought!

Another solution comes in the form of rental or subscription models.  With these types of models, the “return” is part of the value-add to consumers.  These businesses design the returns into their reverse logistics and business models, and the value of the product is never lost.  Well known examples of these models include Rent the Runway, where subscribers can rent dresses for special occasions, and try-on programs such as Amazon Prime’s Wardrobe service. While these new models do not address the need for reverse transportation, they can ensure that the product (and therefore the energy and material that went into making the product) are kept in circulation.

As e-commerce continues to grow along with consumer demand for convenience and choice, returns will be an interesting industry to monitor both from an innovation as well as an environmental footprint perspective.  Indeed, many of the learnings from this industry could probably be applied to create more recirculation opportunities for goods we already own instead of sending them to landfill!

 

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