Fashion has a notorious environmental footprint, accounting for up to 10% of global carbon dioxide production. This situation is exacerbated by a fast-fashion business model that encourages the frequent purchase of low-cost, non-durable items.
Around 30% of online purchases are then returned, with a large proportion going to landfill. In 2020, an estimated 2.6 million tons of returns were disposed of in this manner in the United States alone. The problem has become so notorious that online retailer Boohoo recently followed a number of big brands in starting to charge for returns in order to discourage them.
But what are the reasons for high returns and why are many returned items not resold?
The pandemic has fundamentally changed the way we shop, with the temporary closure of physical stores representing a boon for e-tailers. However, the growing market share of online retailing has its roots in long-standing fast fashion marketing practices. The premium on novelty, low prices, and free shipping and returns encourages all customers to purchase multiple options knowing they can return items freely (known as “upgrading”). in parentheses “).
Buy-it-now, pay-later programs, such as Klarna, which allow customers to order without upfront payment, have accelerated online consumption. Research indicates that by offering such “payment solutions”, retailers will typically see a 68% increase in average order value.
Industry research suggests that cart abandonment rates drop by nearly 40% after payment solutions are introduced. Discount events such as “Black Friday” also drive sales, with fashion accounting for around a third of all Black Friday spending.
Fast fashion means returns
Despite the allure of low prices and discounts, cheaply made fast fashion items can usually have quality and fit issues, and are therefore synonymous with returns. Impulse spending, driven by discounts, often leads to regret, again increasing the incidence of returns. The 32% return rate for clothing orders therefore eclipses that of other e-commerce sectors, compared to only 7% in consumer electronics.
For retailers, processing returns is also fraught with uncertainty and complexity. Which items will be returned, and in what condition, is unknown. Often, once used, there is not much you can do to make them desirable to repurchase.
This is especially true in the case of ‘dressing’, where a purchased item is worn once before being returned. Retailers not only suffer financial losses from reprocessing, but they also risk reputational damage if worn or damaged items are returned to circulation.
ASOS previously announced it would crack down on the ‘wardrobe’ by closing fraudulent returns accounts. However, the threat of a bad review often leaves the retailer with nothing but a refund.
Many retailers instead resell that revenue to liquidators, who turn obsolete goods into quick cash. A quick look at eBay reveals dozens of “Amazon Customer Returns” palettes available to the highest bidder.
The Challenges Facing Retailers
The cost of processing returns and their increased volume is a challenge for retailers. The substantial reprocessing costs involved in product returns mean that for fast fashion items they often exceed potential resale revenue. The relatively expensive remuneration of domestic workers in labor-intensive reprocessing of returns is widely believed to be responsible for this.
Getting rid of returns is therefore often the most profitable decision. An ITV investigation into Amazon’s warehouse in Dunfermline found the online retailer was disposing of tens of thousands of returned consumer goods every week. Amazon said none of its items went to landfill, but instead were donated, recycled or incinerated for energy recovery.
The fashion industry collectively produces over 92 million tons of textile waste per year. In the United States alone, clothing returns create more annual carbon dioxide emissions than 3 million cars.
Carbon dioxide is initially emitted during the collection of returns, before increasing as returns are either incinerated or deposited in landfill. Due to the prevalence of fast-fashion synthetic fibers, returns can take up to 100 years to fully decompose, emitting carbon dioxide and methane in the process, as well as leaching harmful substances into the surrounding soil.
How are retailers tackling returns?
While the environmental implications of product returns are clear, fashion retailers also have a financial incentive to tackle the problem of costly returns management.
Due to the complexity of reprocessing, fashion retailers are increasingly outsourcing responsibility to specialist companies, such as ReBound Returns, who work with retailers to make the returns process more sustainable.
ReBound encourages retailers to donate returned consumer goods to charity through their ReBound Regift facility. This has so far facilitated charitable donations worth £190m. ASOS says 97% of its returns are now resold and no items are sent to landfill.
As Boohoo’s recent decision shows, several online retailers have tried to pass the cost of returns on to customers. Although the reason is mainly financial, the impact of similar policies on improving customers’ environmental awareness is well known. Since 2015, the use of plastic bags has dropped by 97% in major supermarkets in England, following the introduction of a small fee.
Despite calls for greater sustainability within the fashion industry, fast fashion continues to thrive. If marketing practices that encourage waste and fuel emissions persist, the fashion industry will retain its undesirable reputation as a significant contributor to climate change. Retailers need to reconsider the unintended effects of the leniency afforded by their return policies, balancing the need for customer loyalty with environmental awareness.
Why Customer Returns Are Losing Business Money
Provided by The Conversation
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