"I'll order this in two sizes, what doesn't fit will be returned." With just a few clicks of the mouse, we can order the latest trends conveniently and cheaply to your home - returns included!
Within a few days, the goods are delivered to your doorstep, saving you the trip to the local store where, in the worst case, you still have to contend with poor lighting in the dressing room. No, thanks. Then it's better to try on the clothes in the comfort of your own home and send back anything you don't like free of charge.
It's actually quite practical, isn't it? A representative survey conducted by Greenpeace in 2018 shows that young people in particular order a lot and also intend to return a lot. According to Greenpeace, every fifth item of clothing ordered is returned. We tend to forget how damaging this attitude to returns is for the environment.
Germany is an ordering nation
Online retail is booming. In Germany alone, online retailing of clothing and shoes generated sales of around 21 billion euros last year. With the growing online trade, the number of parcel deliveries in Germany is also rising enormously. According to the Bundesverband Paket- und Expresslogistik (BIEK) (Federal Association of Parcel and Express Logistics), around 4.05 billion parcels were sent in 2020, an increase of around 10% on the previous year. Of these parcels, approximately 315 million parcels were returned, most of them from the apparel industry. In order to withstand the high competitive pressure, providers are trying to outdo each other with services and offers. Anyone who cannot offer their customers free returns and a long return period is not competitive.
What happens to the returns?
Optimally, the returns should be re-offered as A-goods. This is where a few problems come into play. We all know it, the top looked totally super on the website and is now completely different in reality. The quality leaves much to be desired and it does not fit well either. Fast fashion goods in particular are often so poor in quality that it is not worthwhile or even possible to repair them and sell them as A-quality goods. The effort would simply not be worth it in relation to the value of the product. But what to do with all the clothing?
Is this merchandise or can it go away?
Products with quality defects or slight damage are sold to outlets as B-goods, for example. When this is no longer possible either, the returns are either recycled or destroyed. According to the returns management research group at the University of Bamberg, around four percent of all returns end up in the incinerator. Fast fashion items in particular are not recyclable due to their high plastic content in the material and thus end up in the trash unworn. Even returned goods without defects are not safe from destruction. Repackaging and relocating the product is too expensive and labor-intensive, so it is more profitable for the company to destroy it.
Of course, the returned goods could also be donated, but donations in kind are subject to 19% VAT in Germany - this option is out of the question for most companies.
With around 315 million parcels returned across Germany, that's around 12.6 million returns that are destroyed. And that's a problem.
How harmful to the climate are returns really?
By the time the ordered product is on its way to your doorstep, it has been transported a long way. The market is international. Goods are flown in, repacked, packaged and delivered. All these transport routes leave quite a carbon footprint. On the second way, the goods are packed again, transported and repacked again, resold and again ... (you can imagine). Huge CO2 emissions are created and a labor-intensive process is triggered and all this for one package.
Especially after discount campaigns like "Black Friday", the number of returns shoots up again. This puts a strain on the climate. According to researchers at the University of Bamberg, Germans cause 238,000 tons of CO2 every year with their returns. This is roughly equivalent to the amount of CO2 that 2,200 daily car journeys from Hamburg to Moscow would generate within a year.
Is there a green solution?
It is not only the climate that suffers from returns, retailers also make losses due to the return process. A returned package costs the company around 20 euros per package (source: retourenforschung.de). At first glance, that seems like a lot. The 20 euros are made up of the renewed transport and processing costs. If you extrapolate that, there are total costs of about 5.46 billion euros that are paid annually for returns. As a result, companies' profit margins are minimized and products become more expensive. Ultimately, you feel this in your own wallet.
It would be obvious to dispense with free returns altogether. However, competition in the online retail sector is as fierce as ever. So new alternative ways have to be found so that online retailers can keep up in this fiercely competitive market while also conserving resources and the environment.
Eliminating returns altogether is almost impossible, but there are some ideas to reduce the volume of returns somewhat.
Take your foot off the gas: would you rather wear fair fashion than fast fashion?
The online offer is temptingly cheap and the selection huge. The goods are returned just as quickly as they are consumed. Once the ordering frenzy is over, everything doesn't look as great as it did on the super sale website. Fast fashion relies on mass and fast-moving goods and can thus hardly be sustainable.
Fair fashion, on the other hand, is particularly attractive for customers who have often already thought about their own consumption behavior and sustainability in advance. How urgently do I really need this T-shirt? Do I want to spend "so much" money on it? The selection is often smaller and the price for various items is significantly higher in order to be able to finance the fairness aspect.
Avoid returns from the start
Fair fashion companies like Loveco rely on a close exchange with their customers already during the ordering process in order to keep the return rate as low as possible. The fit and size of the products should be communicated as precisely as possible via social media, by phone, and with detailed product descriptions, so that everything that is ordered also fits later.
Using modern 3D technology, the company Pre-Size has developed an intelligent solution to reduce returns and thus save resources. It sounds like the future, but it's already a reality. The 3D body scan can be integrated into any online store and helps customers select the perfect size garment. The pre-size algorithm is also actively learning. If, for example, a person with similar body measurements complains about the item, Pre-Size points this out.
Optimized returns management is a must!
But even the most conscientiously purchased fair fashion jeans can eventually arrive at our doorstep damaged, soiled or simply not fitting. What now?
If returns have to be made, then green, please. Sustainability is the trend. Customers want more sustainability in their consumption. A survey conducted for Trusted Returns in 2021 revealed that this is also true for online shopping. But is it possible to create an environmentally friendly shipping and returns process that also contributes to a positive shopping experience?
The millions of returns are a mammoth logistical task; the aim is to satisfy the huge customer base while at the same time protecting the climate.
Current trends in returns management can already be observed, which can generate optimized transport efficiency.
In concrete terms, this means minimizing travel distances, collecting returns and optimally structuring the entire returns process. Goods with the same return destination must be collected in order to save transport routes. Intelligent concepts are also needed for warehouse management and intermediate storage of returns and their different return priorities.
Use digitization
For the sake of the environment, it is also important to minimize the amount of material used. With reusable parcels, ecological filling material and no pre-printed return labels, resources and materials can be saved. The digital answer to the label problem is a returns portal that customers can use themselves to manage and control the returns process.
Customers can check the status of their returns at any time and from anywhere via the portal or by e-mail. This is convenient and saves resources.
In practice, paperless return slips that consumers can use via download are already a proven option and could soon become the norm. With 315 million parcels returned every year, 100 percent paperless returns would be an enormous relief for the environment.
Customer loyalty through simple returns process
A survey conducted by MetaPack in 2021 revealed that uncomplicated return processes have a positive effect on customer loyalty to the company. Around half of those surveyed considered the information surrounding the returns process to be frequently too complicated and unclear. 72% say they buy from online stores that offer a clear returns process. While most customers are not willing to pay for a more convenient return option, as long as there are enough companies offering free returns, they are more likely to reward reliable companies with their purchase loyalty.
Green solution in sight!
The list of problems related to returns processes is long. Liefergrün offers a solution by combining aspects of customer loyalty and a sustainable returns process. Returns are picked up from home in a relaxed manner. This saves the trip to the nearest parcel store and the nerves. To make it as easy as possible for customers to pick up their returns, they can conveniently book a time slot on the website that is ideally suited to their own daily routine. The return shipment is then easily picked up from the customer's own front door in the booked time slot - completely emission-free! Liefergrün relies on e-vans and central micro-hubs to reduce CO2 emissions in the delivery and returns process.
Well-structured and fast supply chains have a positive effect on the flow of goods, as return times for goods are significantly reduced.
What we can do
"I order this in two sizes, what doesn't fit gets sent back." The goods that we order so quickly and cheaply are flown halfway around the globe after production, transported further, repacked and shipped again. All this only to start this journey backwards again as a return and possibly end up unworn in the trash.
66% of all goods ordered in Germany are fashion items, and the trend is rising. We send a lot of that back. That can't go on like this.
Online retailing is inconceivable without returns. This is why smart and, above all, green solutions are needed to actively work on an environmentally friendly returns process. Some solutions already exist: transparent product descriptions, close communication with customers, and artificial intelligence can be used in an attempt to curb the general volume of returns, but they cannot completely replace them. An intelligent and sustainable returns management concept can benefit not only the environment, but also retailers. The environment is very much in vogue: customers want a more sustainable shopping experience. With an optimized and above all environmentally friendly concept, the "returns problem" can also become a "returns opportunity" for online retail.
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