Logistics

Sustainable eCommerce Returns Strategy

eCommerce returns have a significant environmental impact. Having a sustainable eCommerce returns strategy provides both sustainability, and profitability, benefits for online retailers. We summarise the top 7 techniques for a more sustainable returns strategy.

Returns have become a big talking point in eCommerce. Sustainable eCommerce returns are not discussed quite so much!

Returns have traditionally been wrongly overlooked by many eCommerce retailers. The significant impact on conversion rates, user experience and ultimately profits are only now being acknowledged.

As an industry, online retailers have quickly come round to the importance of returns. In recent years we have seen a considerable shift in retailers providing both easy and free returns for consumers.

What effect, however, does your return policy have on sustainability? And how can we strike a balance with user experience?

Returns User Experience (UX)

Having a well-conceived and attractive returns policy is vital for an online retailer. Providing customers with the best possible user experience is fundamental to all aspects of eCommerce and returns are no different.

Giving consumers the security of being able to return easily is a driver for two out of three fundamental pillars of eCommerce – conversion and retention. Ensuring a frictionless returns experience, both pre and post-sale will have a significant impact on business success. 

Often overlooked, however, is the fact that returns are a bi-product of many other eCommerce elements. Product sizing, product fit, styling, photography, colour matching – these are all elements of a product description page (PDP) which can be used to improve customer UX and reduce returns.

Providing customers with the tools to digitally replicate an in-store experience will ensure consumers purchase the correct product. 

Increased eCommerce Returns 

Traditional bricks and mortar retail has always had the key benefit of view/touch/try-on before purchase. In the fight to compete against this, the eCommerce industry has to offer the ability to return products.

What initially started as a basic service offer, has quickly evolved; with retailers offering more and more attractive return policies as part of their sales and retention strategy. Returns have become a handy tool in gaining market share.

Alongside fast/free shipping, we have educated consumers to expect free returns. Its widely encouraged to buy more and return what you don’t want. Not sure of your size? Buy two and return the one that doesn’t fit. Not sure which style you prefer? Buy a variety and send the rest back.

Returns have evolved from being a service, into a sales strategy aimed at driving conversion and consumers have certainly bitten. UPS expects to handle over 1 million returns per day in December- that is one courier company, in only one country!

Sustainable eCommerce Returns: Business Reasons

While the sales uplift is good on paper, returns are a killer for any eCommerce business. ASOS, originally one of the pioneers in the returns space, only recently announced changes to their returns policies to include blacklisting “serial returners” due to the financial impact of this learned behaviour.

ASOS model for The Ecobahn article
ASOS introduces new returns policy to block serial returners. Source: The Independent

Research from retail insights firm Appriss Retail showed nearly $369 billion in lost sales for US retailers from returns. The key term here is ‘lost sales’. While a returns policy can be utilised to drive conversion, the effect of the returns themselves is often overlooked in eCommerce revenue reporting.

On top of this lost revenue, how do returns affect overall profitability? In most retail businesses, the margin number will sit with the merchandise teams. They hold the responsibility for the profitability of a product and will, therefore, control all pricing and promotions. 

Who, though, is calculating and considering the effect of returns on this online margin? While most won’t admit to it, the answer for the majority of online businesses is no one. 

Returns rates will be a statistic sitting somewhere between eCommerce and Operations/Logistics – a hidden cost of doing business not spoken to, or analysed in any great detail.

Sustainable eCommerce Returns: Environmental Reasons

The returns culture and consumer behaviour of ‘buying more to return’ will have a significant and unnecessary carbon footprint.

Infographic showing carbon footprint of eCommerce returns
2018 Optoro Impact Report: https://www.optoro.com/2018-impact-report/

Global eCommerce is celebrated for having no borders. Is it, however, really sustainable to be purchasing products from the other side of the world? Even domestically, having products transported using trucks has an environmental impact.

When you then factor in returns, for every returned item the logistics carbon footprint from this individual online order is doubled. When we are encouraging returns to drive extra sales, and creating this as consumer behaviour, the impact on the environment is significant.

A 2018 report from returns technology provider Optoro estimated that eCommerce returns contributed 6.5 billion USD of landfilled waste in the U.S. alone, and an additional 15 million tons of carbon emitted into the atmosphere.

Sustainable eCommerce Returns Strategy

Reducing returns is, therefore, a rare win-win for eCommerce. Increasing profitability and sustainability don’t traditionally go hand-in-hand.

While impossible to prevent, many strategies can be utilised to help reduce both the financial and environmental impact of returns. The key elements for a more sustainable eCommerce returns strategy include:

  1. Product Description Page Optimisation
  2. Returns Offer
  3. Omni-Channel Returns
  4. Sizing Technology
  5. Try-On Technology
  6. Returns Technology
  7. Return Logistics

1. Product Description Page Optimisation

Net-a-Porter Product Description Page  showing returns policy for sustainable eCommerce returns.
Source: https://www.net-a-porter.com/

Two critical reasons for returned products are incorrect sizing/fit, or the product not arriving as expected. Both of these can be dealt with by improvements in the information provided to consumers on the PDP. 

  • Photography- Ensuring product images accurately represent the colour, style and specific detailing; plus showing the product in use.
  • Models- For fashion based businesses, using consistent models, with associated descriptions of their body type, will help drive sizing, especially for returning customers. 
  • Sizing- Tough to do well but so crucial for both conversion and reducing returns. Allowing customers to select the correct size with confidence and accuracy will be a fundamental part of decreasing returns.

We will come on to talk about technology advancements focused on returns in more detail; with improved technology for sizing and online try-on having the potential to make a considerable impact.

2. Returns Offer

Van image showing free shipping and returns for sustainable reverse logistics

Striking a balance with the customer experience and returns reduction is a challenge, but one that needs analysis. 

Allowing online consumers to return items easily should always be a fundamental eCommerce service. The balance, however, should be made at the point of which returns are encouraged- “buy more and just return what you don’t want” should be a dying concept.

The balance point will be different for all businesses; however, having a returns policy where some consideration must be made before purchasing encourages a more positive consumer behaviour.

3. Omni-Channel Returns

Glowing sign showing click and collect

‘Click and Collect’, ‘Ship from Store’, ‘Endless Aisle’; these are all fantastic omni-channel strategies for connecting traditional retail stores with the digital world.

While the focus for these technologies is on the purchase cycle, utilising the same technology is one of the most effective ways for retailers with a store network to provide a more sustainable eCommerce returns strategy.

Allowing consumers to return items to their local store, rather than it being shipped back to a centralised warehouse, enables the return to be managed effectively for both the business and the environment.

Infographic showing increase in omnichannel returns for eCommerce
Increase in consumer demand for omnichannel returns. Source: Appriss Retail

Omni-channel returns is another win-win potential, with increased consumer demand for this service. Research from retail insights firm Appriss Retail shows consumer behaviour is dictating the rise in omni-channel returns.

4. Sizing Technology

Zozosuit-online-sizing-tool-to-reduce-returns
Source: zozo.com

One of the biggest contributing factors to returns is the problem of sizing. Either a consumer accidentally buys the wrong size, or lack confidence in sizing, so buys multiple options to ensure the correct fit.

Online sizing technology looks to address this by providing interactive, intelligent and sometimes visual, aids to assist with sizing. A challenging task without any complete solution as yet, but such an important potential tool for a more sustainable eCommerce return strategy.

The highest-profile attempt was Japanese fashion e-commerce website Zozo. With a 50 percent share of Japan’s e-commerce market for fashion, they tried and failed to solve online sizing with their ‘Zozosuit’ solution.

5. Try-On Technology

Alongside sizing, allowing customers to virtually try-on items digitally replicates a hugely valuable in-store experience. This aids decision making and will help reduce the purchasing of unwanted items.

Most commonly used with accessories including sunglasses, the technology is evolving to include a wider range of fashion items. The reduction in returns as a result of being able to ‘try-on’ entire outfits would be significant.

The Iconic recently launched their Visualise App, allowing consumers to try on sneakers using a phone app.

6. Returns Technology

Computer screen showing Newmine Returns technology
Source: http://www.newmine.com/

Technology in the returns space will be a key growth area in the coming years. The basic concept will be to use machine learning and AI to manage the returns process and provide a more sustainable eCommerce returns strategy.

As a first point, when a customer begins the returns process, the idea will be to use different offers to encourage the customer to keep the item and not return. Secondly and more impactful will be the learnings about why a customer has returned an item. Technology can then be used to drive onsite experience the next time that customers visit the site.

In this context, sizing can again be considered. Maybe a customer regularly returns items due to them not fitting. During the returns process, technology advancements will be able to understand the issues with sizing intelligently, and then both future recommendations and advice can be offered to combat this.

7. Return Logistics

Sustainable eCommerce returns eCommerce shipping label close up

One of the biggest costs with international orders, both financially and environmentally, comes from shipping packages individually. This is unavoidable with outward logistics, however, optimisation is possible on the return leg.

The smarter logistics companies will be able to provide solutions where multiple return orders are held for a period of time and then shipped back together. This combined shipment provides a more sustainable reverse logistics model.

This model can be taken a step further by utilising 3PL warehousing in high volume countries. Returned stock can be accepted back into the online inventory for that specific country, being resold without the requirement of further international shipping.

Further Reading: Sustainable Last-Mile Delivery: Flipkart India. Read More