Profitable & Sustainable Ecommerce Return Solutions for This Holiday Season

While generous retail return policies help drive sales, brands are seeing a phenomenal volume of merchandise flowing back to their warehouses each year. Shoppers returned about $428 billion worth of purchases to U.S. retailers in 2020, and the impact wasn’t just financial: an estimated 5 billion pounds of goods also ended up in a landfill. 

The holiday season is especially challenging for retailers, as shoppers spend generously on gifts they hope will spark joy. Once presents are unwrapped, however, an average of $158 billion of merchandise, equivalent to 18% of holiday sales, is typically returned, according to National Retail Federation (NRF) data.

Numerous factors are at play when it comes to the high volume of returns. Online shopping is convenient, but products may not meet expectations once shoppers have the goods in their hands.

As noted by McKinsey, brands also lack effective reverse logistics for processing and reselling returns at scale, and there’s little coordination between business functions or ownership of the returns process.

As a result, brands are losing significant revenue and creating massive amounts of waste.

Environmental Impact of Free Returns

Shoppers expect free shipping and returns, taking advantage of a risk-free experience and buying more than they need. It’s easy to add a variety of styles and sizes of apparel to a cart and send back what doesn’t fit, a common practice known as bracketing.

Most shoppers are unaware of what happens to returned clothes. They assume items are put back on the shelf for others to purchase.

The reality is, without the right infrastructure in place, it’s often more economical for companies to dispose of merchandise than to go through the labor-intensive process of manually evaluating items and determining whether they can be restocked.

New and secondhand clothing is frequently shipped to locations such as West Africa and Chile, where it ends up in overflowing dumps.

Discarded clothing is quickly becoming a long-term concern for the planet, especially when made with synthetic materials that don’t biodegrade and polluting chemicals.

Even premium brands such as Coach, Burberry, and Nike have made headlines for destroying new, usable goods instead of finding ways to put them back on the market.

Free returns for shoppers take a huge toll on our environment. As more of these news stories surface, shocked shoppers are taking note of how brand practices affect the planet.

According to a study by ReBound, 57% of shoppers check a retailer’s sustainability policy before making a purchase.

Another 71% understand that free returns are a luxury that comes at a financial cost, and are willing to pay more for sustainable return options.

Financial Impact of Free Returns

What is the financial impact on a company when a customer returns a product for a refund?

The NRF reports that for every $1 billion of retail sales, an average of $106 million of merchandise, or 10.6% of sales, comes back in the form of a return.

Furthermore, according to Optoro data, only 20% of returns are defective.

Returns come with a hefty price tag for businesses beyond the initial lost revenue. Optoro estimates that brands can spend $33 to process the return of a $50 item or two-thirds of the cost.

Companies must pay numerous expenses, such as the cost of return shipping and transporting items to processing centers or warehouses.

Additional staff is needed to examine items and determine whether they can be resold. In addition, delays in customers returning items to retailers can cause goods to lose value, especially near the end of a season.

Returned items may end up being significantly marked down or liquidated, or become excess inventory that must be recycled or disposed of.

The industry is reaching a point where more profitable and sustainable ecommerce returns solutions are needed.

In the following few sections, we’ll look at how businesses can meet shopper expectations and deliver stellar service while maximizing opportunities to recapture revenue from returns.

Strategies for Handling Ecommerce Returns

Returned merchandise causes a financial headache for brands, but when you manage the process efficiently from the shopper’s point of view, you can inspire customer satisfaction and loyalty. At the minimum, customers want:

  • A lengthy return window. It’s in a brand’s best interest to recover items quickly in an effort to get products back on the shelf, but 63% of shoppers expect to have up to 30 days to consider a product and return it, according to a ReBound Returns survey.
  • A timely refund. Once shoppers decide they no longer want a product, they are focused on getting a refund as quickly as possible. ReBound also found that one-quarter of shoppers feel a delay in getting their money back is poor customer service and creates a negative overall returns experience.

It’s worth it in the long run, however, to make ecommerce returns smooth and effortless for shoppers. Research shows that nine out of 10 customers will purchase from you again if the returns process has been easy.

Offer In-Store Returns

Brands with physical storefronts have the ability to offer in-store returns for goods purchased online. This can help drive sales for the 62% of shoppers who say they’re more likely to purchase online if they can return an item locally.

Customers can receive money back as soon as they hand over the item, rather than risk the item getting lost in the mail or a processing error at the warehouse. Some shoppers may also want to see what other products or sizes are available for immediate replacement.

In-store returns also make sense from a business perspective. Staff can collect merchandise and return it to the warehouse in a bulk shipment, which costs less than individual shipping and cuts down on carbon emissions. This type of returns solution also streamlines workflow for staff receiving the returns in the warehouse.

Turn Returns Into Exchanges

Brands can leverage returns into exchanges when assisting shoppers in person. You may need to train customer service teams to better understand how products are related, but it may be possible to capture some or all of the amount of the original sale if you can pinpoint alternate products that satisfy shopper needs.

Staff often begin the returns process by asking if something is wrong with a product, but questions can be phrased to discover why products didn’t meet expectations. You’ll find customers tend to be brief in their responses, but staff can dig a little deeper to learn why an item is being returned and recommend solutions tailored to a customer’s needs. It’s an excellent opportunity to cross-sell or upsell products that are in store.

Even if a customer chooses to proceed with a refund, the data gathered can help product designers and buyers understand why customers are dissatisfied. If expectations aren’t being met, you may need to help shoppers make a more informed decision before they add items to their carts.

This may take the form of detailed sizing charts, additional product photographs, in-depth descriptions, videos that offer a 360-degree view of the product, or feedback and reviews from other customers about fit.

Leverage Returns to Supply Branded Resale

Perhaps the most impactful way for brands to divert merchandise from landfills and generate revenue is to offer returned products for sale. By adopting a resale channel, brands can sell new and pre-worn merchandise to customers using a white-label, branded resale platform. This ecommerce returns solution reduces waste and extends the life of your products.

According to Just Style, the resale clothing market is only going to expand in the coming years. Motivated by sustainability concerns, as well as their own pocketbooks, budget-conscious shoppers are finding the brands they love to wear on resale platforms.

The clothing resale market was expected to notch 31% growth in 2022, and expand by another 52% during the three-year span from 2023 to 2026.

Patagonia and REI are examples of stores that sell returned items. Their resale inventory also includes gently worn gear that customers bring into retail stores or send in by mail. In exchange, shoppers receive credits that can be used in person or online for new and used apparel.

These resale programs have been hugely successful in capturing revenue for goods that would otherwise have gone to third-party resale channels or the landfill. On average, 80% of Patagonia’s WornWear online inventory sells in one week. In 2021 alone, REI sold more than 1 million preloved items.

Launch Your Branded Resale Channel with Trove

Launching a new branded channel may seem daunting, but it doesn’t have to be with Trove. Patagonia and REI power their resale programs through Trove. Trove helps design, create and execute branded resale programs, providing back-end technology and assuming much of the end-to-end, behind-the-scenes work.

Reverse logistics are one of the biggest challenges for brands managing inventory returns, but Trove streamlines the process of moving goods back from the customer. This includes inspecting returns to ensure they meet your brand’s standards for resale. Once items are accepted, Trove uses data from your catalogs to create product listings. High-quality product photos are taken in line with your brand, and prices are set using algorithms to maximize profitability. Trove can fulfill orders or you can manage the resale program in your facilities using Trove technology and item IDs.

The dedicated brand site keeps customers within your ecosystem, delivering a seamless experience. Trade-in credits are quickly issued and redeemed using Trove’s apps. The resale program can also be connected with loyalty rewards and gift cards. Trove collects valuable analytics throughout the entire journey, providing you with insight into site engagement and customer behavior. You can use this data to further inform your marketing strategies.

Transform your returns into profit with Trove’s end-to-end branded resale platform. Chat with us today!

How to Save Money on Gifts this Holiday Season

Are you feeling the pinch of holiday expenses this year? You’re not alone. According to a study by Jungle Scout, 84% say inflation and economic uncertainty will affect their budget for holiday gifts. 

As shoppers look to stretch their wallets and reduce waste, many are turning to pre-loved apparel and gear. The same study found that 25% of respondents planned to gift pre-worn items to help combat the impact of inflation. 

Here are six ways to save money on gifts this year—and how buying pre-loved contributes to a more sustainable and budget-friendly holiday season.

1. Create a budget and stick to it

It’s easy to overspend during the holidays. While gift-giving can be rewarding, holiday promotions often encourage impulse purchases. A well-formed budget helps you plan ahead and prevents overspending on presents. 

Before heading to the mall, use a budgeting tool to determine your spending limit. How much can you afford to buy?

Next, look for opportunities to reduce or eliminate non-essential expenditures during the holiday season. Make room for holiday purchases by eating out less, cutting back on morning coffee runs, or pausing subscriptions—such as your monthly beauty subscription box. 

Use cash to stay on track. You can also set limits on your credit card to ensure you remain within your holiday budget. 

2. Shop pre-loved for fashion, apparel, and gear

While the recommerce industry is not new, branded resale is booming. Over the last few years, brands across categories have established their own resale channels—allowing customers to buy and sell pre-loved items directly on a brand’s website. Companies like Allbirds, Arc’Teryx, and Patagonia all operate branded resale channels. 

There are many benefits to purchasing pre-loved apparel and gear directly from a brand. Let’s take a look at a few. 

Makes your holiday season more eco-friendly

With pre-loved clothing and gear, you can reduce waste during the holidays. According to Finder.com, Americans will spend almost $8.3 billion on unwanted gifts. Approximately 8% of those items will be thrown away.  

When you shop pre-loved, you can be more intentional about the type of gifts you buy and help products last longer.

Expands your holiday budget

Pre-loved gifts also allow you to stretch your budget, especially when purchasing luxury items. According to a report by CouponFollow, shoppers who buy pre-loved goods save approximately $1,760 a year. 

By shopping pre-worn items, you may be able to purchase brands that were previously outside your budget. 

Reduces the risk of counterfeit or defective products

Branded resale also reduces the risk of buying counterfeit goods. In 2020, Incopro found that 26% of shoppers had accidentally purchased a fake item within the previous year. 

You will know the items are authentic when you purchase them from a brand’s resale channel. And retailers often offer guarantees and warranties for additional piece of mind. 

3. Reduce spending on holiday wrapping 

Gift wrapping is another opportunity to save money and reduce waste. A study by Avocado Green Mattress found that people produce approximately 43% more waste during the holiday season. The majority of the excess waste comes from wrapping paper, gift bags, and tissue paper.

To wrap your gifts, you can use leftover fabrics, scraps, ribbons, reusable bags, newspapers, and twine. Using recycled materials is not only more sustainable, but it also makes your wrapping stand out.

4. Organize a White Elephant gift exchange

Instead of buying gifts for every person on your list, consider organizing a White Elephant gift exchange. Besides saving money, White Elephant is a fun way to connect with loved ones.

When planning a White Elephant gift exchange, you should provide guidelines around the types of gifts and set a spending limit. Make sure everyone is familiar with the rules before the party starts.

5. Give homemade gifts

Homemade gifts are a sustainable, cost-effective, and—most importantly—thoughtful approach to gift-giving. 

Some ideas for homemade gifts include:

  • Baked goods
  • Body scrubs
  • Soaps
  • Candles
  • An apron with children’s handprints or pawprints from pets
  • Scrapbooks or memory boards of a special event
  • A coupon book such as an evening of babysitting, a weekend of petsitting, or help with home improvement projects (e.g., gardening or painting)

6. Start shopping early

Finally, get started as early as possible. Shopping early enables you to research and compare prices and take advantage of holiday promotions. 

Consider setting up a separate email address and subscribing to email updates from your favorite brands. Then, you can set up filters to forward relevant promotions to your primary email account. Not only will you save money, but you’ll also avoid impulse purchases. 

Additional time also helps you save on shipping costs. You won’t need to select expedited or priority shipping to rush your gifts. Or you can avoid shipping fees altogether by taking advantage of in-store pick-up options. 

Pre-loved holiday shopping with Trove

Trove is an all-in-one platform for branded resale. Trove partners with the world’s most renowned brands—including REI, Patagonia, Eileen Fisher, and Lululemon—to expand the lifecycle of apparel and gear without growing emissions. 
Read our blog to learn more about how Trove is transforming the resale industry and enabling resale as a channel.

We Need to Rethink Fashion’s Current Growth Model

For the last half a century, the fashion industry has relied on a linear supply chain. With this model, growing profit through garment sales means brands must ramp up production. According to the Ellen MacArthur Foundation, clothing consumption doubled between 2000 and 2015, and wears per garment decreased by 40%

While fashion companies are trying to be more sustainable, they haven’t addressed the main issue: rampant growth in the production of new garments makes the current fashion model unsustainable.

To meet customer demand without increasing manufacturing, brands need to rethink their current growth model.

Branded resale is the most brand-centric obvious solution. Brands that sell their products through resale programs can reduce new production and reintroduce pre-owned branded products into their supply. This shift benefits shoppers and brands as it allows growth in sales without an increase in carbon emissions. Simply put, brands should ask themselves- Why sell an item once when you can sell it multiple times?

Why Fashion Needs a New Growth Model

The impact the fashion industry has on the environment is huge. A 2019 report from the UNEP finds the fashion industry creates about 8-10% of global carbon emissions. A 2020 report from the Princeton Climate Initiative finds emissions attributed to the fashion industry are likely to increase by 50% if brands stick with the current growth model.  Fashion is expected to account for 20% of the 2040 CO2 budget. [McKinsey… need to find the source]

The solution to fashion’s sustainability issue lies in an overhaul of the entire growth model, which includes addressing overproduction and textile waste.

Textile Production Drinks Up Our Water Supply

According to the Ellen MacArthur Foundation, fashion textile production uses 93 billion cubic meters of water annually. The impact of this level of production is felt in the communities of dry regions where clothing is manufactured.

In addition to water consumption, 20% of global wastewater is caused by dyeing and finishing clothing. The harmful chemicals used in these processes tend to find their way into waterways. Due to the chemicals used in the process, the water supply often can’t be treated to become drinkable after it’s polluted.

If fashion brands stick to the current growth model, it would mean an ever-increasing need for textile manufacturing. This model is not sustainable as it simultaneously decreases the total amount of usable water while increasing the demand.

Fast Fashion Capitalizes on Novelty at the Expense of Quality

In the 1990s, fast fashion companies like Zara, H&M, and Forever 21 reshaped fashion seasons from four to 52-micro seasons. More fashion seasons required brands to design and manufacture new clothing lines faster, all while sacrificing quality for quantity.

Shoppers, ever driven by the dopamine rush of something affordable and novel, responded to this trend by buying more items of clothing, more frequently. Brands have continued to reinvest in low-quality, low-durability garments creating a vicious cycle of unsustainable supply and demand.

Branded Resale is the Obvious Solution

While there may be no quick fixes, branded resale is an obvious solution for brands committed to meeting the climate change mitigation goals laid out in the 2015 Paris Accords.

Branded resale reintroduces pre-worn branded products into a brand’s supply chain.  By giving these pre-worn garments a new life, brands can continue to profit from their products over time. This more sustainable model allows for business growth without relying solely on an increase in production.

While retailers have expressed concerns that resale could cannibalize primary sales, new studies published disprove those fears. According to Women’s Wear Daily, 60% of shoppers have discovered a brand through secondhand shopping. The survey suggests that branded resale can introduce shoppers to a brand at a lower price point, which may then lead to primary sales.

The bottom line is, that branded resale pumps the brakes on shopper and shareholder demands for ever-increasing production while allowing a brand continued growth. Reducing production supports global efforts to reduce carbon emissions and water pollution. This creates an overall net positive from a corporate social responsibility perspective.

The future of customer closets looks more fluid as resale becomes a popular way to shop. The only roadblock for brands to create a circular shopping experience is architecture and logistics.

Companies such as Trove, have created end-to-end item intelligence technology that optimizes every step of the circular journey. Trove’s white-label branded resale platform transforms complex logistics into a joyful customer experience, adding to brand equity without increasing carbon emissions.

We believe creating a more inclusive, less wasteful business model is possible. Let us show you how we can help your brand enter a new era of conscious commerce. The seeds of a sustainable future must be planted today. Book a free demo with us today!

How Circular Supply Chains Can Drive Sustainability & Profitability

Recently, customers have become more aware of the global impact unchecked consumerism has had on the planet. They’ve used their wallets to pressure businesses to adopt more eco-friendly business practices. In response, brands began replacing traditional business practices with more sustainable ones. 

Executives could benefit from investigating these solutions to learn how circular supply chains can increase sustainability without sacrificing profits. The future of a circular economy looks like products that can be reused or repaired. Brands can keep up with government sustainability regulations by making products that meet these demands.

Brands like Patagonia and REI are working towards a more sustainable model by opening branded resale for pre-worn branded items.

What Is a Circular Supply Chain vs. Linear Supply Chain?

A linear supply chain is a directional flow of resources from manufacturer to distributor to customer. Everything always moves in A-to-B-to-C succession, aka “take, make, and waste” and rarely skips around or moves backward.

Circular supply chains connect every point of production to create more value for end customers. The circular model allows customers to supply manufacturers directly through recycling or by connecting with suppliers.

The key difference between circular and linear supply chains is how communication and synergy are used. In a linear system, each point only needs to track its supplies’ origins and destinations. The dairy farmer only needs to deal with who buys his cows and to who he sells the milk. The circular chain requires much more communication and cooperation.

Further down the dairy chain, there’s a perfect illustration of how the circular chain complicates communication: glass milk bottles. A new glass bottle is used for the first time by the customer. Now, it needs to be returned to the dairy supplier to get back into the supply chain for reuse. If the dairy supplier wants to reuse milk bottles, it needs to let the people who buy them know how and why they should return them.

How Circular Supply Chains Contribute to Sustainability

The main way circular supply chains support sustainability is through more efficient use of materials. Keeping materials revolving means less need for new raw materials and reduces the number of used items that become waste.

There are many different ways that resources can move through the supply chain, not just through consumers using and then recycling a product. Clothing companies with lots of returned inventory are partnering with brands like Trove to clean, inventory, and resell apparel back to their customers. This creates a more sustainable system by getting more use out of what we produce.

Positive Social Impact on Brands

“Show don’t tell” has become a maxim to live by concerning brand activism. Developing and using circular supply chains promotes sustainability and demonstrates a willingness to lessen environmental impact regardless of the bottom line.

Working to find real solutions and compromises is more effective than simply posting on Instagram, and it can help protect your brand from being accused of virtue signaling. If your business relies heavily on its brand image for sales, as many fashion brands do, then creating a circular supply chain could help increase sales or prevent losses from negative publicity.

The Circular Economy

A circular economy uses practices such as circular supply chains to promote sustainability and regeneration. 

The holistic goals of a circular economy include: 

  • Reducing or eliminating waste
  • Extending a product’s lifespan
  • Rebalancing natural systems by reducing the use of raw materials 

Five business models are needed to create a circular economy. 

1. Circular Supply Chains

Circular supply chains help reduce the number of single-use products by returning products to the supply chain. This helps reduce waste and unnecessary raw material use.

2. Resource Recovery

Most waste contains reusable resource materials. If the waste isn’t reusable there may be other ways it could be converted into energy. Resource recovery allows brands to gather and leverage these materials.

3. Product Life Extension

Product life extension models start from the product design stage. Brands should prioritize designing products for longer life that can be repaired or upgraded. By doing this, products can be recirculated into the economy extending and maximizing their use. 

Creating product designed to have longer lifespans will lead to bigger changes. If brands consider creating products designed to last multiple lifetimes, they leverage branded resale strategies to monetize second and third sales in a truly circular model.

4. Sharing Platforms

A major part of sustainability is getting the most out of a product or resource. Sharing a product or resource increases its overall utilization. For example, carpooling reduces fuel usage. Sharing platforms connect people to make product sharing easier.

5. Products as a Service

The most common example of a product as a service is a Wi-Fi router supplied by your internet provider. You get a tangible product, but its use works more like a service because you return it when you’re no longer a customer. This helps create sustainability by incentivizing service providers to create products with longer lifespans and repair or upgrade used products.

Help Brands Meet Environmental Regulations

One of the main incentives for companies to implement circular supply chains is to meet government regulations. It’s not hard to see more regulation is on the horizon by looking at recent EU and French laws around producer responsibility, more circular models, or current SEC regulations around GHG disclosures currently under review. Meeting these requirements could be difficult without using circular systems.

Are Circular Supply Chains the Future?

With increased environmental consciousness in customers and global initiatives to promote sustainability and lessen environmental impacts, circular supply chains are the future. Constantly buying, using, and trashing products is no longer a model customers are content with. Additionally, it’s not a model that can compete with supply demands. 

Here are some ways executives can start working on creating supply chain sustainability: 

  • Learn more about circular supply chains in your industry
  • Contact circular technology and solution companies
  • Inform others about the benefits and the need for circular supply chains

C-suite executives must consider how they can implement circular ideas and improve supply chain sustainability if they want their brand to survive in the circular economy. Start by learning more about what other brands are doing.