As the holiday shopping season concludes, retailers brace themselves for a significant increase in product returns, marking January as what is now commonly referred to as “Return-uary.” According to a report from the National Retail Federation and Happy Returns, it is projected that in 2024, nearly $890 billion worth of products, amounting to approximately 20% of all purchases, will be returned, reflecting a notable year-over-year rise.
The implications of these returns extend beyond mere revenue loss. Companies like Asos, Amazon, and Wayfair have reported substantial profit declines attributable to the high costs associated with returns, which include transportation, labour, and logistics. The report further highlights an urgent concern regarding the environmental impact of these returns, with approximately 9.5 billion pounds of returned items—many of which are still brand new—ending up in landfills annually.
As the ecommerce landscape expands—projected to eclipse $8 trillion by 2027—these challenges are compounded, with retailers experiencing unprecedented levels of both sales and product returns, especially during peak shopping events like Black Friday and Cyber Monday. As a result, balancing customer satisfaction with the associated costs of managing returns has become paramount for many brands.
Flexible return policies are now viewed as essential components of a successful omnichannel retail strategy, fostering customer loyalty and reinforcing brand trust. However, as noted in the report, these policies come with a significant operational burden. The need for retailers to strike a balance between profitability and sustainability has never been more urgent.
An emerging solution gaining traction is the concept of recommerce, which allows retailers to maintain the flexibility of return policies while simultaneously managing their inventory in a more sustainable manner. Recommerce involves rethinking the entire product lifecycle from the outset, with a focus on planning for the end of a product’s life. Reverse logistics—the process of planning for and handling returns—is now becoming increasingly crucial in helping retailers navigate this complex landscape.
Investments in reverse logistics systems or partnerships with returns partners can significantly enhance the efficiency of processing and reselling returned items. An example of innovation in this space is Rebelstork, North America’s largest returns recommerce platform for open-box and overstock baby and home goods. Rebelstork collaborates with over 2,500 brands and utilizes advanced technology to prevent more than 12 million pounds of products from being sent to landfills each year.
The environmental consequences of the returns crisis are noteworthy, particularly in sectors such as fashion, baby gear, and home goods, where excess returned items contribute to mounting waste. This accumulation is likened to the weight of 10,500 fully loaded Boeing 747s, a stark statistic that underscores the strain on retailers’ sustainability efforts and their carbon footprints.
Innovative approaches to returns processing are necessary, with emerging companies actively developing technology to address these challenges. Rebelstork has created its own proprietary technology that enables the daily processing of truckloads of returned merchandise, allowing it to handle over 70,000 unique units weekly.
The retail industry is poised at a crossroads where minor adjustments to existing systems can drive significant improvements in efficiency, profitability, and sustainability. The rapid evolution of AI automation technologies may further facilitate this transformation, presenting an opportunity to turn a considerable challenge into a driver of positive change across the sector.
Source: Noah Wire Services