Insight / Blog

Saving profits and the planet: 4 ways to sustainable & cost-effective returns 

Posted on 18th June 2024

Summary: Returns drain profits and damage sustainability. Luckily, retailers can implement both cost-effective and sustainable returns using these 4 ways.

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 landfill if an item cannot be resold – which the EU aims to ban in new landfill laws. In the US 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 landfill or burned every single second. This is particularly bad within 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 that retailers can implement both cost-effective and sustainable returns.

Save items from landfill and increase 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 end up in landfills.

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

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 the shipping, processing or restocking, directly impact the likeliness of an item to be 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 utilising this pre-sort data, retailers gain valuable insights into the condition and nature of returned items before they even reach the warehouse floor. This will help warehousing teams to quickly assess and make the right decisions about each item.

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

In addition, items beyond repair or resale can be categorised 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.

Removing returns label waste

Our 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 for every parcel. 

By offering a digital returns portal, customers can book returns online and provide the reason for each return – removing the cost for retailers to print 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 320,000kg 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 prioritising resale items to increase revenue recapture. 

Reducing miles to reduce emissions 

The more miles 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. So, Having the right returns management solution allows retailers to set and manage rules to easily determine how returns are processed – allowing them to send broken items straight to repair or recycling, or send high value items straight for resale. This prevents every return being sent to a warehouse for sorting, before going on a separate journey to reach the correct facility – removing an entire leg from the transport journey.

Using drop-off networks to consolidate returns

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

By building networks of drop-off points and using automated solutions like self-service parcel kiosks, returns parcels can be consolidated 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 make certain items available for resale immediately and provide an opportunity to upsell to returns customers, helping to recapture revenue.

Creating sustainable and profitable returns

Implementing the above return practices is a win-win for retailers, increasing sustainability while reducing costs.

In addition, these strategies will also 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 value.

Ready to unlock the power of sustainable returns?

Turn ecommerce returns into growth

Our returns platform reduces costs, increases efficiency, and improves the customer experience, so you can give your customers a solution to one of their biggest problems.

Find Out More



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