Sustainability isn’t just a trendy term any more. It’s a huge part of normal day-to-day business, and it has been for a while. Consumers are increasingly scrutinizing corporate practices, and regulations around sustainability are tightening.
There are many aspects of eCommerce that don’t gel with sustainability. Packaging waste and the burning of fossil fuels by delivery trucks come to mind. But one issue that doesn’t get talked about nearly enough is returns.
No company wants to have a lot of returns. After all, returns are very expensive and have a big impact on the bottom line. But returns also have another hidden cost – they’re damaging to the environment.
Fortunately, though, there’s an easy way to turn this challenge into an opportunity. Through effective repackaging and refurbishing strategies, companies can reduce waste, save money, and enhance their brand value in the eyes of increasingly conscientious consumers. That’s what we’ll talk about in this post.
How Returns Negatively Impact The Environment
If you think about how often you return eCommerce goods, you might be tempted to underestimate the problem. But if you ask the National Retail Federation, Americans were estimated to return $816 billion in merchandise in 2022 alone. The average return rate was about 16.5%.
This unfathomably large number represents a massive financial drain on retailers. Mother Nature doesn’t like it either, given that every returned product requires transportation, often over long distances, which uses energy and releases CO2 into the atmosphere.
Beyond the energy used in transportation, there’s also a tremendous amount of waste. Not all returned items make it back to the shelves, and many end up in landfills, contributing to the growing waste management problem. A study by Optoro, a tech company that focuses on retail returns, highlighted that returned merchandise in the U.S. produces 5.8 billion pounds of waste in landfills annually.
Traditionally, returns are disposed of or sold off at a fraction of their value. This ends up burning both CO2 and spare cash that would otherwise be a part of companies’ profit margins.
Why Companies Should Care About Sustainability
It’s easy to understand the financial incentive behind better returns management. After all, repackaged and refurbished goods can be sold at a higher price, which is great for profit margins. But the value of sustainability, from a corporate perspective, shouldn’t be understated.
A recent study by NielsenIQ states that as many as 78% of U.S. consumers consider a sustainable lifestyle important to them. This effect is even more pronounced in younger consumers who, as a broad demographic, are more concerned about the well-being of the environment. With such an overwhelming majority of consumers favoring sustainable brands, making efforts to go green is an easy way to earn favorable public relations.
There is also the regulatory piece to this puzzle too. Governments worldwide are cracking down on waste and emissions, penalizing businesses for unsustainable practices. In sectors like eCommerce, ignoring these regulations is not an option. The cost of non-compliance could cut into already-thin margins, making staying in business impossible without at least some effort made toward more sustainable practices.
Meeting or exceeding governmentally enforced environmental standards is an excellent way to shake off regulatory risk. It also doubles as a great way to signal to consumers and stakeholders that the company is staffed by savvy, responsible leaders.
How Repackaging Works
By now, it’s clear that having a more sustainable returns process makes sense from a financial and public relations perspective. But what does that actually look like in practice?
Repackaging is perhaps the simplest way to put returned goods back into the marketplace. The goal is to take returned goods and make them resaleable, reducing waste and increasing profit margins in the process.
To do this, all returned items need to go through a sorting process to assess their condition. Items that are in good shape but may have damaged packaging or minor cosmetic issues are prime candidates for repackaging.
If the goods pass this initial screening, they move to the cleaning phase. Products are cleaned thoroughly, sanitized, and sometimes even tested to ensure they are in optimal condition for resale. Finally, the products are given new packaging material, sealed, and placed back into inventory.
Quality control here is key. Any eCommerce company that wishes to use repackaging to make items resaleable needs to have well-documented and unambiguous quality assurance protocols in place. The end goal is to make sure that people cannot tell repackaged items and new items apart.
Not every kind of product can be repackaged, but some take really well to it. Non-perishable items such as electronics, books, and household appliances usually make excellent candidates because they are not significantly affected by environmental factors and are easy to bring back to a like-new condition.
How Refurbishing Works
When repackaging isn’t the right approach, refurbishing can sometimes be a good alternative. The basic idea of refurbishing is to restore used goods to a condition that is as good as new. Unlike repackaging, which mainly involves cleaning and possible cosmetic touch-ups, refurbishing often includes repair work and part replacements to make sure the product is up to the brand’s standards.
The refurbishing process begins with a detailed inspection to identify defects or areas that require improvement. After this, each item undergoes a thorough cleaning and sanitization. Next comes the repair or replacement of parts. For example, a returned laptop may need a new hard drive or battery. Once all repairs and replacements are completed, the item undergoes rigorous testing to make sure it meets or exceeds original factory specifications.
As with repackaging, quality control in refurbishment is very important. Every product needs to function as if it were new.
Different products are better suited for refurbishing than others. Electronics, machinery, and certain types of furniture are often excellent candidates for two reasons. First, their functional components can often be swapped out. This makes it easy to replace or repair parts of products rather than entire products. Second, these products have high enough price tags to justify the extra work of refurbishment. It’s for these two reasons that refurbishment cuts down on whole-product waste and saves money in the process.
How To Achieve Maximum Sustainability Through Both Repackaging and Refurbishing
You can implement both repackaging and refurbishment in your company at the same time. High-value items with minimal repairs are best suited for refurbishment. Likewise, products that are in near-new condition can often be repackaged and put right back on the shelf. Knowing which method to apply – and when – can help optimize returns processes and maximize profitability and sustainability.
In-house cost-benefit analyses often reveal that the upfront investment in repackaging and refurbishing initiatives can lead to long-term savings. And again, there is also the difficult-to-estimate economic value of being seen as an eco-conscious company, which is great for branding.
Practical Tips for Implementing Repackaging and Refurbishing Processes
If you wish to implement a repackaging and refurbishing program in your eCommerce company, start with planning. Establishing a clear workflow with well-documented standard operating procedures is crucial. Doing this will help detail out every step required in repackaging and refurbishing. This level of detail is critical for maintaining quality control.
You will also need the right tools for the job too. Repackaging is fairly simple. All your company will need are readily available supplies like cleaning agents and new boxes, as well as sealing machines if you need a new layer of shrink wrap.
Refurbishing is a little more complicated and heavily depends on what is being sold. If you are in the electronic business, you will need soldering kits, for example. But if you’re making your fortune in furniture, you’ll need a full kit of tools for reupholstering.
Because doing this right hinges on quality control, training is also key. You will need to make sure your staff is comprehensively trained, ideally through hands-on experience. Having a regular routine for quality assurance is critical, and this may include establishing assessment metrics, holding periodic retraining, and even having dedicated quality assurance personnel. No matter what, though, regular quality checks are required.
As time goes on, you will want to track the progress of your repackaging and refurbishment program. Pay attention to the cost saved by reselling items versus the costs of repackaging and refurbishment itself. This data will be helpful when it comes time to evaluate the effectiveness of your programs and seek ways to improve.
To sum it all up, going green with returns isn’t just a nice thing to do. It’s smart business all around. The environmental impact of returned goods is substantial, and it makes sense both economically and ethically to implement strategies like repackaging and refurbishing to mitigate these effects.
By doing so, companies not only reduce waste and energy consumption but also create opportunities for enhancing their brand image and customer loyalty. So, the call to action here is clear: find ways to put your gently used products back on the market. It’s a win for both your business and the planet.
- Optoro: A tech platform specializing in returns optimization, providing insights and solutions for reducing waste and improving reselling.
- Reverse Logistics Association: An organization focusing on all aspects of returns, from policies to best practices in reconditioning.
- Ellen MacArthur Foundation: Known for its work on the circular economy, offering resources that can be applied to repackaging and refurbishing strategies.
- EPA Guidelines: The U.S. Environmental Protection Agency has guidelines and recommendations for waste reduction and sustainable management of returned goods.
- Sustainable Packaging Coalition: Provides resources and certifications for companies looking to adopt more sustainable packaging options.
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Brandon Rollins is the Director of Marketing at Fulfillrite. His main areas of expertise are online marketing and supply chain management.