Keep returning stuff for free, and ultimately it will cost us all a lot
This season’s online holiday sales were worth some $138 billion to online retailers, and nearly a third of that stuff is expected to be returned, according to new research from CBRE, the real estate group. It’s pretty typical for 30% of online shopping to be returned, whereas 8% of stuff bought in shops is taken back.
Some merchandise makes its way back to store shelves via liquidators. All the shipping of stuff takes an environmental toll, and tons gets thrown out. I spoke with David Egan, head of industrial and logistics research at CBRE, who said that right about now, warehouse workers are getting buried. The following is an edited transcript of our conversation.
David Egan: It’s just a flood of packages. When you think about the way the supply chain is built and designed, it really is meant to be as efficient as possible in moving product from the point of production — wherever something is made — to the end point, the point of consumption. All of the networks, the buildings, the flow through the buildings, the transportation networks, even the way the employees are trained to handle the packages are really meant to get that stuff moving out as quickly as possible.
Jack Stewart: Are there ways we can use technology to mitigate the problem?
Egan: In my opinion, the real solution is going to be a technological solution at the point of sale. How do you provide the customer better assurance that what they’re buying is what they actually want? The classic example is someone buys three or four shirts with the intention of only keeping one or two of them because they don’t know if the size is right, they don’t know the colors quite can be right, they don’t know what it’s going to feel like. I do think there are technologies between augmented reality and virtual reality where we’ll be able to shop online and have more sense of an in-person type of experience, which I believe will really substantially reduce the number of returns that occur. The other side of it, though, is that offering that type of free, frictionless, seamless return policy is really important to keeping customers.
Stewart: Do you think we, as consumers, have a role to play here? Returns are so easy. Most of the time they’re free. They’re maybe something we don’t even think about as much as we should.
Egan: I think we need to incur some of the cost, frankly. I do think that the free and painless return system that we’ve all been accustomed to dealing with is long-term not sustainable. I do think at some place, we need to understand how damaging it is, not only to the retailers that we’re doing business with, but also to the environment. One fact that I find shocking, frankly, is that in the United States alone, 5 billion pounds of return merchandise gets put in the landfill every single year, just in the U.S. Merchandise that’s been handled and enough time has passed between the point of sale to the return point that it has been deemed worthless, and it gets thrown away — five billion pounds a year. It’s just a destructive type of system that we’re all taking part in, and I think we all need to do our part to make it go away. One of the ways to do that is to pay for it. When people are asked to pay for something, they will be a lot more careful about the way they behave. The flip side of that is that the consumers have voted overwhelmingly in favor of free and frictionless returns and have said that they will find someone — if you won’t give it to me, someone else will, and I’ll shop with that person instead.
Related links: More insight from Jack Stewart
It’s impossible to talk about online shopping without mentioning the behemoth that is Amazon. In Adweek’s article “5 Ways Amazon Changed Shopping in the 2010s,” it says where Amazon goes, other retailers follow. In the last decade, it set new standards and expectations for delivery, pushing competitors to do the same.
And with returns often being free, it’s not surprising that consumers aren’t aware of the real costs. Or maybe we just assume and hope that those unwanted items that we carefully return with their original packages intact are then restocked and resold. The idea that a good chunk of them end up in landfills is, as Bloomberg calls it, a hidden environmental crisis.
David Egan explained that the logistics operation is set up to run smoothly in one direction: getting things to us. But there are efforts to streamline the opposite direction, too. There are companies making it their business to help retailers and consumers.
If you do step out from behind your computer and actually go to malls more frequently than me, you’ve probably noticed the “return bars” where you can drop off purchases and have someone else deal with sending it back for you. And for the sellers, these companies promise to analyze returns, the reasons for them and reduce the packaging they need. Vogue Business breaks it down.
But I think the New Year’s resolution I’m taking away from this is to buy less.
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