In December, American consumers will return more than 1 million packages to e-commerce retailers each day. It's a flood of unwanted stuff that’s expected to peak on Jan. 2, which UPS Inc. cheekily calls "National Returns Day.”
For UPS and other shippers, that's reason for plenty of post-holiday cheer. For everyone else, those tens of millions of packages are a real problem. By one recent estimate, they accounted for 5 billion pounds of landfilled waste in the U.S. alone and an additional 15 million tons of carbon emitted into the atmosphere. At a time when consumers and companies are otherwise rethinking consumption choices in light of climate change, e-commerce returns amount to a hidden environmental crisis.
Of course, the “money-back guarantee” is likely as old as retail itself, and many storied brands built their reputations by honoring it. The benefits don't just accrue to consumers; a retailer that stands by its products likely sells more of them. L.L. Bean Inc., the outdoor-goods company, offered a lifetime return policy for more than a century and prospered because of it. Likewise, recent studies of e-commerce suggest that lenient return policies correlate with more returns and an increase in purchases. As far back as 2010, Zappos.com, the pioneering shoe retailer, bragged that its best customers were the ones who returned the most products.
The problem is that consumers are returning more and more every year. In 2018, Americans sent back 10% of their purchases, valued at $369 billion, up from 8% two years earlier. Younger shoppers, in particular, are more inclined to treat online purchases as rentals or to buy clothing to try on, then return what doesn’t fit or look good. It’s a global trend: In Sweden, return rates are as high as 60% for some products.
The logistical burden of these returns is so heavy it’s inspired an entire industry devoted to dealing with unwanted stuff. But the environmental toll may prove to be more significant. In 2017, Optoro Inc., a company that helps retailers manage their returns, estimated that only10% of the merchandise it handles ends up back on the shelves. Some is sold on to discounters and recyclers, or routed to charities. But the high cost of transporting, sorting, and repackaging those goods also ensures that billions of pounds of returns end up in landfills and incinerators.
Making matters worse, getting those products from a dissatisfied customer's home to wherever they’ll end up is a carbon-heavy process. And because e-commerce products are returned at a much higher rate than traditional ones, emissions exceed what they’d be at brick-and-mortar outlets. By one accounting, 165 billion packages were shipped in the U.S. last year — using about 1 billion trees worth of cardboard. Even as companies like Amazon.com Inc. transition to more sustainable packaging, returns will continue adding to their resource usage.
It won't be easy to convince consumers or retailers to curb these practices. The most obvious solution — a ban on free returns — would understandably meet stiff opposition. But a few other steps might help. Companies could adopt carbon-emission labeling on return packages for instance, or stop providing ready-made return labels altogether, which would easily eliminate the use of millions of pieces of paper. They could also experiment with "returnless refunds" for products that can’t be sold again, such as under-garments, cosmetics, and packaged foods. As augmented reality and touch-oriented technologies become more common and affordable, online apparel retailers could deploy them in “digital dressing rooms.”
So long as there are shoppers, of course, there will be returns. But with a little added effort from retailers and consumers — and perhaps some ingenuity — they can be friendlier to the bottom line and the planet both.
By Adam Minter