Articles Magazine

What’s The True Cost Of Free Returns?

By Chiara Spagnoli Gabardi

Free returns seem so logical when we’re shopping online. I mean, how are we to know if that size 6 really is true to size, or what that textile feels like, let alone how it looks on us in real life?

The truth is that many of us would never shop online unless we had the security of knowing we could send unwanted purchases back with no extra cost. But just how sustainable are free returns? And will this system, which we so much take for granted today, be in place forever?

The True Cost Of Free Returns

Free returns are proving to be a growing problem for retailers. A new report from Barclaycard shows that 26% of retailers have seen returns volumes rising in the past two years, forcing 20% of retailers to take action to make their returns policies stricter in the past year with another 19% planning to do so soon. And yet, the number of ‘serial returners’ is on the rise.

The Barclaycard study showed that consumers often order goods they know they will be returning, with 29% admitting that they do so, a figure that rises to 48% for 25 to 34-year-olds. This reflects the high expectations of open returns policies – in fact, 18% of shoppers say they’ll only shop at retailers that offer free returns. Overall, the choice of where to shop for 49% of shoppers is affected by returns policies, showing how much of a risk it can be for retailers to become too strict about returns.

The problem is particularly acute for small, ethical brands who don’t have the funds to pay for shipping and returns both ways.

But cheap returns aren’t just putting smaller, more ethical businesses at risk (or forcing them to surrender a percentage of their profits by teaming up with larger retailers like ASOS or Amazon). The issue is also an environmental one, and it seems many shoppers know it.

What’s Your Size? Really?

One study showed that 46% of UK consumers are worried about the environmental impact of over-ordering and returning goods. However, only around 10% are actively reducing the amount they order and return, while a much larger 31% confessed to wearing items and then returning them. Others say one of the main reasons they need to return clothing often is the wild variation in sizing.

To make consumers feel better about increasing body sizes, some retailers have downshifted traditional sizes. In other words, in some clothing shops, a normal UK size 10 from the 1990s is now called a size 8; a 12 is now a 10 and so on. It’s highly confusing, and has led around 40% of online shoppers to state they regularly returned clothing bought online because items didn’t fit as they expected them to, and to combat the issue of inconsistent sizing across different brands, around 10% of shoppers have taken to buying multiple sizes of the same item and simply returning those that don’t fit.

The True Cost Of Free Returns

The Environmental Impact of Returns

The reality is that all these returns generate an awful lot of waste, and making returns free or cheap only encourages the problem.

Amazon shipped more than 5 billion items worldwide in 2017 through Prime alone, whilst USPS, FedEx, and UPS ship around 165 billion packages in the U.S. each year. Although most packages are dispensed in recyclable cardboard, what this really means is that around one billion trees were cut down to make that packaging.

Clothing items are normally also wrapped in un-recyclable plastic ‘for sanitary reasons’ that cannot be reused once opened. When they’re returned, clothes need to be steam cleaned and re-wrapped in more plastic.

Then there’s the carbon cost of delivery and returning goods. This varies wildly from business to business, depending on the manner of delivery: some companies use ships, whilst others use planes, and all use trucks to get the parcel directly to the home of the purchaser. In all cases, the CO2 impact of going back and forth is double what it would be without the return.

All of this processing has a monetary cost, too, of course. So no wonder three in ten online retailers have said they’ve increased the price of items to cover the costs of managing and processing returns, and ASOS has even said they’re going to penalise people who are ‘serial returners.’

The True Cost Of Free Returns

Solutions

It makes sense that in order to minimise the true cost of free returns, brands must improve online size guidelines, agreeing on the standardisation of sizing across retailers. Augmented reality – i.e. software that allows you to upload your measurements – can help customers visualise how products will look when worn.

A bit of creativity can also help us end free returns. For example, luxury start-up 4Gifters has created a platform where you buy online a present for a loved one, and the receiver gets an exclusive Gift Code via SMS and email to pick up the item in the retail outlet in the city they live in, thus saving on CO2.

Another more eco-friendly delivery option was proposed by Loop, which was inspired by the way milkmen used to deliver bottles of milk, then pick up the empty bottles for refilling. Loop kind of does the same thing by allowing brands to sell products using packaging that is collected, cleaned, refilled and reused by their platform.

Limeloop offers a similar solution, which provides retailers with delivery pouches made from recycled billboards that can be used up to 2,000 times, while online shopping platform Zalando is looking to reduce waste and carbon dioxide emissions by shipping makeup in paper bags instead of plastic, and using reusable packaging for returns

But the best solution is, of course, avoiding ‘shopping bulimia’ – the slang term for over-ordering items knowing that you can just enjoy them for awhile and return them for free with no penalty. Ultimately, the responsibility for the true cost of free returns lies with each of us.

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