Why are retail firms burning or binning returned items?

21 June 2022

There is a gap between retail sustainability claims and reverse logistics processes as only half (54%) of companies dispose of product returns responsibly, according to a report.

The report, by consultants Software Advice, found a quarter (23%) of survey respondents sent returned items to landfill and 15% burnt them.

The survey, involving 320 inventory and supply chain managers in small and midsize retail businesses, found 89% had sustainability as an important factor in reverse logistics but almost half (46%) said communications about sustainability did not accurately reflect practices.

Repackaging items for resale is still the top action taken in reverse logistics, with 52% doing so. Three-fifths (58%) said they were designing recyclable/reusable shipping boxes, and 56% were using right-size packaging to reduce waste.

However, just 46% were repairing or refurbishing returns, 42% were recycling, and only 20% were harvesting them for materials. 

The report suggested misunderstandings were the reason for the mismatch between sustainability claims and processes, as procurement and marketing were siloed from each other.  

The report stated: “The public is well aware of greenwashing and false promises made by too many companies as to their commitment to being environmentally-friendly and it’s important that your company does not engage in this practice.

“And if your company is doing more to be environmentally-friendly than what is marketed, it’s important to share that with your customers. Sustainability matters to consumers, especially the increasingly important Gen Z crowd who will only continue to increase their buying power and take over more purchase decisions as time goes on.” 

The report recommended three actions:

1. Accurate messaging 

Procurement should partner with marketing teams to ensure public messaging accurately reflects company practices.

2. Refurbish, repair, resell 

Lack of repair and resale of items was a missed opportunity because “recouping any of the costs and getting your products in customers’ hands should be a key focus of your reverse logistics management”, 

If this is beyond the scope of your business activities, procurement teams could look into outsourcing reverse logistics processes to a third party.

3. Update policy 

Customer behaviour should be researched and policy adjusted to reduce the number of returns. 

“Charging for returns, or charging a restocking fee, is becoming increasingly common,” the report said. “Major retailers previously known for free returns are starting to charge. A small fee can help not only discourage returns and hopefully encourage customers to shop more thoughtfully, but also help offset the costs of your reverse logistics.”

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