Will retailers pull back on free returns in the name of going green?

Retailers know all too well that returns can be a costly proposition. According to a survey from the National Retail Federation (NRF), they accounted for more than $816 billion in lost sales in 2022.

Now public awareness of the environmental cost of returns is growing as well, and some in the industry see this as an opportunity. In a 2023 report looking at the carbon footprint of retailers, the NRF said “minimizing returns” was one way to lower costs, bring down greenhouse gas emissions, and appeal to sustainability-focused customers.

“This is yet another example where the financial incentives to the business (reducing returns) also generate environmental benefits,” Scot Case, NRF’s vice president for sustainability, said in a statement released with the report.

This narrative connecting returns with the broader push for sustainability is emerging as many companies are beginning to modify their return policies anyway. H&M, for example, recently expanded its policy of charging customers for online returns.

• The fast-fashion retailer joins other apparel brands such as Abercrombie & Fitch, Zara, American Eagle Outfitters, J.Crew, and DSW, to name a few.
• Even Amazon, which helped pioneer the era of free returns, now charges a $1 fee for customers who return some items to UPS stores.

It ain’t easy bein’ green: But none of these companies have so far pitched ending free returns as a sustainability initiative, and some experts are skeptical that consumers will buy this kind of messaging if it comes with costlier returns.

“It remains to be seen if the environmental message has any effect to stop returns,” Cathy Roberson, research manager for the Reverse Logistic Association, wrote in an email to Retail Brew.

She noted that many retailers are trying to reduce the cost of returns without pulling back on returns themselves because they are afraid of losing customers to companies with more generous policies.

Zac Rogers, a former returns manager and business professor at Colorado State University, echoed this insight: “Companies have been trying to figure out how to pull back on returns for a long time,” he said. “Everyone is looking at each other, and no one wants to be the first one to blink.”

He added that the goal of reducing the environmental impact of returns could serve as a plausible justification for just such a pullback, but that this argument “falls pretty flat,” as most consumers will prioritize price and convenience over sustainability.

Pleasing everybody: The way to break through this impasse is to bring down both environmental and financial costs without taking away free returns, explained Amena Ali, CEO of Optoro, an omnichannel platform for managing returns.

Her firm offers tools for helping retailers embrace the so-called “circular economy,” in which fewer goods, returned or otherwise, end up in a landfill. Its Express Returns program, for instance, is a nationwide network of return drop-off locations that accept products without the need for a new box or label.

She said retailers offering “box free, label free” returns is an example of a policy that’s a “win, win, win” for customers, companies, and the environment.

More broadly, the growth of the resale market is a sign that companies are finding an alternative to sending returned goods to the landfill. A report from the online consignment shop ThredUp predicts the global secondhand market will double to $350 billion by 2027.

“All of that stuff that gets returned, probably about 30% of it can be resold. That goes back to vendors, and it used to be 20 years ago, ‘OK, we’ll throw away that stuff.’ That’s not how it works now,” Rogers said.