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‘Green Guilt’, experienced by 89% of consumers, is a phenomenon resulting from contemporary life's significant environmental consequences, which presents moments when you realise you could, and should, be doing more to help the planet. There has never been a better time to establish a sustainable offering, as consumers, particularly Millennials, are increasingly expressing a desire for businesses that embrace sustainability. While sustainability is the morally right thing to do, it is also a profitable endeavour that can help position your brand in the minds of 'the elusive green consumer.'
Quantifying anything allows you to monetise it and this defines the reality that is slowly unfolding in front of our eyes thanks to organisations like the Sustainable Accounting Standards Board (SASB), the sister company to the Financial Accounting Standards Board (FASB) that operates on Wall Street's intersections. Its primary mission is to establish guidelines that benchmark companies' disclosure of financially significant sustainability information to their investors.
The phrase "transparency" has grown in popularity, from workplace demographics to environmental effects, and most importantly the customer believes it matters, with a 71% increase in sustainable searches. Consumers wish to better educate themselves on the environmental impact of the retailers they choose. While retail contributes significantly to waste, there is potential to considerably reduce unnecessary waste through better return management. With proclaimed environmental impact objectives such as "net-zero" looming, retailers must reduce their carbon footprint across all aspects of their business. Managing consumer returns is an opportunity, for retailers, to drastically reduce indirect waste and even minimise direct impacts.
Sustainability Spurs Sales
For years, brand managers have lamented that while customers claim they want to buy sustainable items, they do not do so in-store. Many firms have utilised this to justify not making their products sustainable. Nonetheless, items with a sustainability claim accounted for 16.6% of the market in 2020, up from 14.3% in 2014, generating approximately $114 billion in sales, a 29% increase. Most importantly, sustainability-marketed products increased faster than their conventional counterparts in more than 90% of the Consumer Packaged Goods (CPG) categories.
To turn data into action, dashboards guided by predictive analytics are required. These technologies provide visibility into a single source of truth across the reverse supply chain, recommending proactive measures, and tracking specific indicators to ensure that performance meets requirements. Traditional methods for managing returns as a lower priority within the value chain are insufficient in today's retail market. Customers' expectations of a more holistic shopping experience are evolving, and organisations must respond by building a cross-channel returns strategy that connects the supply chain from the first transaction through the entire sales cycle.
Managing Consumer Returns Is An Opportunity
Returns are quickly becoming one of the most significant supply chain challenges that businesses face, with reverse logistics strategies vital to ensuring good inventory turn and operating expenses. Understanding the intricacies of how, when, and why customers return things is essential for understanding their purchase behaviour and optimising their entire experience. Every product return is an opportunity to learn more about the consumer and drive the next sale. Online returns are frequently the consequence of digital problems such as poor image presentation and wrong fit. Items never seem the same "in person" as they do in photographs.
Emerging retail strategies such as curated shopping, rentals, and try-on services are contributing to the volume of e-commerce returns. This approach produces a behaviour for many retailers that the supply chain is not currently prepared for. To capitalise on these behaviours, merchants must integrate siloed return procedures into a unified returns strategy. It also necessitates considering returns at the time orders are completed, as well as cooperating with suppliers on curated selections that will reduce return rates.
The Environmental Consequences Of A Poor Return Policy
Returns are undeniably harmful to the environment. Shipping items back and forth generates unnecessary greenhouse gas emissions. Every year, an estimated 5 billion pounds of returned products wind up in landfills. Many shops also burn, shred, or otherwise destroy returned merchandise to maintain the value of their brands. On average, 20% of all online purchases are returned, but in physical stores, the figure is closer to 9%.
When it comes to online returns, retailers have access to vast quantities of data. Many even encourage their customers to complete surveys to explain why they are returning a certain product. Nonetheless, most brands do not maximise the use of this knowledge. That is where technologies like artificial intelligence and machine learning may help. AI can swiftly and effectively evaluate large volumes of data, identifying the most often returned products as well as the reasons for the returns. If a product is consistently disliked by consumers, it is beneficial for both the brand and the environment to remove it from circulation.
A substantial percentage of returns are caused by a discrepancy between the item's online description and the actual product received. Much of this may be remedied by simply changing how businesses display items online. It's critical to describe all measurements and sizes to customers in ways that make sense and match what they know from other merchants, providing a variety of images that show the merchandise from all angles. Additionally, rather than simply depicting shoes or clothing in photographs, a video can demonstrate how the material handles movement. AR and VR technologies can even allow consumers to try on garments virtually from the comfort of their own homes.
Ultimately, the most effective e-commerce sites are those that best replicate the human-to-human contact that occurs in brick-and-mortar stores. Online stores should actively listen to their customers, provide individualised advice, and assist them in selecting the appropriate materials, sizes, and fits. Rather than rushing consumers to "add to basket" and "purchase now," online retailers should lead them through the purchasing journey. Product finders are one example of a new technology tool that may easily provide this experience for users. Similar to your Netflix preferences algorithm, the shopper is directed through the process with a few simple multiple-choice questions. With the shopper's aid, the product finder may provide a more personalised suggestion.
Sustainability Has To Be A Way Of Life To Be A Way Of Business
Businesses can no longer disregard the need for a coordinated reverse logistics strategy to proactively handle the problems that the expansion of e-commerce brings to outdated return logistics procedures. When there is a crisis, there is a chance for holistic change and the elimination of dysfunctional systems. Following the gasoline crisis, for example, more fuel-efficient automobiles were developed. In the sustainability domain, businesses must respond to the climate crisis, or be left behind. Consumers are voting with their dollars, and they are voting against unsustainable brands. CPGs that were slow to react to the digital revolution are lagging. The same may be said about sustainability. The fifth industrial revolution has begun.
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