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Save the Planet and the Bottom Line: 4 Routes to Sustainable, Cost-Effective Returns

2 minuti di lettura

Returns are one of the biggest challenges facing retailers today. Not only are they a drain on profits — for every $1 billion in sales, the average retailer incurs $145 million in merchandise returns — but they’re also damaging for sustainability. Each return adds to carbon emissions through extra transportation, leads to packaging waste and contributes to landfills if an item cannot be resold, which the EU aims to ban in new landfill laws. In the U.S. alone, the carbon dioxide cost of returns is equivalent to the output of 3 million cars.

On average, one-third of all returned clothing bought online is destroyed — and one truckload of clothing is sent to landfills or burned every single second. This is a particular problem for the fashion industry, where returns rates can rise as high as 40% — and are estimated to be responsible for 10% of global carbon emissions.

However, there are ways for retailers to implement both cost-effective and sustainable returns. Let’s take a look at a few strategies to help save both the planet and profit margins.

1. Divert landfill waste by increasing resale rates 

There are many reasons returned items cannot be resold, including damage, missing parts or being out of season. These unsold items often pile up in warehouses, taking up valuable space and ultimately ending up in landfills. The solution is increasing the salability of returns.

The more items that can be resold, the more revenue a retailer will make, and the less waste will be sent to landfills. 

The key to increasing resale rates is speed. The faster retailers can get returned items back, repaired and restocked, the more chance they have of reselling the items. Any delays in shipping, processing or restocking directly impact the likeliness of an item being resold.

However, if retailers know what goods are being returned and why — before they arrive at the warehouse — smarter decisions can be made in less time. By utilizing this pre-sort data, retailers gain valuable insights into the condition and nature of returned items before they even reach the warehouse floor. This helps warehousing teams quickly assess and make the right decisions about each item.

Items in good condition that have been returned because they didn’t fit, or because a customer changed their mind, can be prioritized for repackaging and resale. If an item is flagged as having damage, it can be sent directly to the repair shop for a quick fix. It can also be flagged as a second-chance item to be offered at a discounted rate, depending on the type of damage.

Items beyond repair or resale can be categorized for proper recycling based on the item type and materials. Partnering with responsible recycling facilities ensures these materials are diverted from landfills and potentially used to create new products.

2. Reduce waste from return labels

Blue Yonder’s research found that 27% of merchants still offer pre-printed carrier labels in the package. For every customer who doesn’t return an item, these labels go straight into the trash, creating tons of returns label paper waste across all parcels.

By offering a digital returns portal, retailers enable customers to book returns online and provide the reason for each return —– eliminating  the cost and waste associated with printing labels for every package. By switching to a digital returns portal, UK retailer ASOS has removed 64 million paper returns inserts per year, saving around 8,450 trees or 320,000 kilograms of paper and avoiding 312 tons of CO2 emissions.

In addition, digital portals also give retailers greater control over what returns are coming back. For example, if a customer tries to return an item that is out of policy, retailers can automatically reject the return. By collecting return information from each customer — including what items are being returned, customer information and the return reason — retailers can use this information to fuel more efficient processing and management, like prioritizing resale items to increase revenue recapture.

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3. Minimize miles to reduce emissions

The more miles over which returns have to be transported, the more emissions they will produce. Reducing the amount of miles driven will not only help cut emissions, but also help retailers save on transportation costs.

The best way to reduce miles is to ensure that returns data is collected and used to intelligently route items based on order information, item type, location and return reason. Having the right returns management solution allows retailers to set and manage rules to easily determine how returns are processed — which allows them to send broken items straight to repair or recycling, or send high-value items straight for resale. This prevents every return from being sent to a warehouse for sorting, before going on a separate journey to reach the correct facility — removing an entire leg from the transportation journey.

4. Consolidate returns via drop-off networks

Drop-off networks are another way of reducing the total miles driven to collect and transport returns.

By building networks of drop-off points and using automated solutions like self-service parcel kiosks, retailers can consolidate their returns parcels to create more efficient shipping routes. Self-service drop-offs also offer customers a better returns experience, helping to increase brand loyalty and lifetime value. In addition, the more convenient the location for customers, the more likely they are to return items early, again increasing the chance of reselling.

For retailers with brick-and-mortar stores, in-store drop-off points can ensure items are available for resale immediately, as well as provide an opportunity to upsell to returns customers, helping to recapture revenue. One U.S.-based Blue Yonder customer uses an automated drop-off network across its chain of grocery stores, allowing it to fill space on existing logistics routes with returns rather than create new routes — minimizing emissions.

Drive more sustainable, profitable returns

Implementing these four best practices in returns management is a win-win for retailers, increasing sustainability while also reducing costs.

In addition, these strategies provide more opportunities to increase revenue by promoting sustainability savings to attract customers who value environmentally conscious businesses. What’s more, the ease of use of a digital returns portal and a self-service drop-off network also improve the consumer experience, helping to strengthen loyalty and increase lifetime customer value.

Ready to unlock the power of sustainable returns? Get in touch to discover how Blue Yonder Returns Management solutions can help you streamline your processes, reduce costs and delight your customers — while also saving the planet.  

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