ENVIRONMENTAL IMPACT FROM RETURNED GOODS
E-commerce is increasing rapidly. But so is the number of returned goods. In the fashion industry, the proportion of returns is particularly high, with a substantial negative environmental impact as a result.
Sharon Cullinane and her colleague Michael Browne have studied the energy use and environmental impact that arise when consumers return clothing they have purchased online. “We selected the fashion industry because of the high number of returns, many of them cross-border. The average rate of returns in Sweden turned out to be 22 per cent, but the range is large, varying from 18 per cent to 60 per cent depending on the segment. For example, young people return more clothes than older people, and women more than men, and high fashion items are returned more than basic fashion” says Sharon Cullinane.
Over-order has become the norm A new pattern in consumer behaviour has become discernible with the advent of e-commerce: customers tend to systematically over-order. To find the right size or perfect colour, they order many more items than they intend to keep, returning all but one or two. “One of the reasons that returns are so popular with customers is that the process itself is a ‘big black box’ – people don’t know what the return entails, the cost is hidden. Consumers tend to think about the benefits, not the consequences of their behaviour. It’s hard for people to imagine that their items travel for maybe thousands of kilometres before going back to sale”, says Sharon Cullinane. The most prolific returners also tend to be the companies’ best customers, and no one wants to risk losing market share to competitors by being the first to charge for returns.
In the end we have to pay a little bit more Sharon Cullinane has identified three actors that need to act to reduce the negative climate impact: “First of all, customers need to understand how much returns affect the environment and behave more responsibly. Secondly, retailers can do a number of things to handle returns more efficiently. They also have a responsibility to not encourage consumers to return items. Thirdly, carriers have to both improve their efficiency and switch to warehouses and transports with less impact on the environment”, says Sharon Cullinane. “Another interesting solution is linked to the growing trend of sharing economy. Returns might be sent directly to another customer. There is also a development of digital tools that can help customers make better choices when shopping,” says Sharon Cullinane But in the long run, Sharon Cullinane thinks it is inevitable that we have to start to cover the true cost of returns. “We’re all guilty of wanting to buy things as cheaply as possible. It’s natural, isn’t it? But we must be ready to pay a bit more for products in the future.”
SHARON CULLINANE
Professor of sustainable logistics. Did her PhD on heavy lorries in the UK in 1987. Has worked in Egypt, France and Hong Kong. Came to the School of Business, Economics and Law in 2015.
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