One of the services offered today by e-commerce companies is the possibility of returning purchased items to the sender, often free of charge and with collection at the customer's home. It is a great convenience, which unites the comfort of receiving the items at home, with the possibility of experiencing, seeing and feeling the products that were just a bunch of pixels at the time of payment, but this ease comes with some challenges for the society.
With the constant increase in purchases being made over the internet, and with the fiercer competition for service, it is not surprising to see that the volume of returns has also been growing at an accelerated pace in recent years. In the US, the volume of returned purchases was around 18% at the end of 2022 (compared to 11% in 2020), according to figures from the National Retail Federation, with a total estimated value of US$ 816 billion per year.
Naturally, the return operation has a cost, after all collection, transport, storage and additional movements are necessary to fulfill the task, still having the corresponding impact in terms of greenhouse gas emissions. Unlike the “complete” e-commerce operation, however, the total balance of value generated in the transaction is absolutely zero, since the consumer does not earn anything, nor does the merchant company, in relation to the initial state before the purchase. In many cases, the product does not return in suitable conditions for resale, and needs to be discarded, aggravating problems of an environmental nature, such as proper disposal of waste. It is also always important to remember that there is no such thing as a “free lunch”, and the cost of this operation ends up having to be somehow incorporated into the shipping or product price, also impacting customers who never use this type of service.
Figure 1- Returned products increase in digital retail logistics operations.
In Brazil, we have this practice enforced by law, the so-called right of repentance, which allows the consumer to return any product received within 7 days, including receiving the amount paid for shipping. The measure has its merits, as the online world still has its pitfalls, but it also generates bad incentives with respect to waste and increased costs.
It is a complex problem, as you can see, which balances consumer rights and expected conveniences with the negative consequences for logistics and the environment. Perhaps the best way to avoid unwanted returns is to deliver as much information as possible, avoiding breach of expectations. In the case of clothing, for example, instead of just saying whether the size is “S”, “M” or “L” and giving precise measurements, but which no one in practice knows how to apply, a virtual fitting room can be presented, or some visual reference of how the piece fits the body according to the characteristics informed by the user. Likewise, options for 360° product visualization, detailed display of packaging, accessories and more complete usage demonstrations (including limitations) also help.
Figure 2 – Netshoes virtual fitting room (image: Netshoes)
The visibility of physical store stock can also be useful, as it can direct the consumer to one of these establishments, where he can evaluate the product more meticulously. Delivering items within the promised timeframe prevents the customer from looking for another faster solution and returning a redundant product that arrived late. Finding suitable destinations for products that cannot be resold as new is equally important. Finally, it is up to the consumer to understand that the way they buy and return products generates some impacts, and it is important to research more about the products to avoid the “crutch” of easy and free returns (which can be expensive).
References:
- https://www.cnbc.com/2022/04/10/how-amazon-plans-to-fix-its-massive-returns-problem.html
- https://nrf.com/blog/shifting-mindset-around-retail-returns#:~:text=Returns%20account%20for%20%24816%20billion,and%20sponsored%20by%20Appriss%20Retail
- https://nrf.com/research/2022-consumer-returns-retail-industry
- https://agenciabrasil.ebc.com.br/radioagencia-nacional/justica/audio/2022-03/cidadao-tem-direito-de-devolver-produto-comprado-online-em-ate-7-dias
Fernando Chalréo
He has been working on consulting projects in Logistics and Supply Chain for 5 years, with experience in companies in the consumer goods, retail and food and beverage sectors. Types of projects already carried out: Sales & Operations Planning, Inventory Management, Network Planning, Business Process Review, Logistics Indicators and Transport Management
