Twitter
Facebook
Linked In
RSS
Login or Register
New to InternetRetailing?
Register Now
Internet Retailing
You are in: > Home > Views

This is your 1 complimentary article for this month

Become a member for unlimited and immediate access.


Register
Already a member? Log in here

GUEST COMMENT The environmental price tag of free delivery and returns

Linked InTwitterFacebookeCard

Single use plastic was one of the most talked about issues in 2018. Not only was the issue first pushed up the global news agenda by renowned documentarian David Attenborough, but many businesses and individuals also subsequently made changes to reduce single use plastic consumption. This culminated in the European Parliament voting to ban all single use plastic by 2021.

 

It is also widely thought that more than 700,000 plastic bottles are littered in the UK every single day and that nationally we generate nearly 5 million tonnes of plastic waste every year. Given plastic takes around 500 years to decompose, it’s a serious issue that’s having a huge impact on wildlife and nature today.

 

The issue of single use plastic doesn’t stop at coffee cups and cotton ear buds, in fact it is rife across the retail industry and especially so in apparel retail. The use of carrier bags has dropped with the introduction of the 5p charge, but as eCommerce sales continue to surge, there is a mountain of items delivered in plastic packaging up and down the country every single day.

 

Many online retailers offer free delivery and returns in order to entice customers to shop. Though this is a relatively new phenomenon, it already feels indispensable for many. But, as more and more retailers provide this returns option to consumers, it’s increasingly had a negative consequence - shoppers have now come to expect the service to be offered for free, rather than see it as a benefit.

 

What’s more, it’s encouraged shoppers to make non-committal purchases. As a result, increasingly, people are adding items to their shopping basket on a whim, with the likely end scenario being that they buy 10 items with the intention of keeping just one, if any at all.

 

Free delivery and returns have fostered a ‘try before you buy’ commitment-free environment. When customers aren’t required to pay for either delivery or returns – they have no ‘skin in the game’, meaning there’s little to no value or commitment to the order in their minds.

 

These commitment-free purchases, however, come with a large environmental price tag, which so far people have neglected to consider. When taking some time to try and quantify the environmental impact of this sizeable rise in delivery and returns, it quickly becomes apparent that we’ve been overlooking a huge green issue.

 

Looking at Amazon alone, as the world’s largest online retailer, though we don’t know specific carbon emission figures, the company distributes 608 million packages annually, which equates to 1,600,000 packages every day. Not only would the carbon emissions of the delivery vehicles alone be huge, the cardboard, plastic and energy consumption required to create that volume of packaging means that the carbon footprint for just that one retailer is likely to be astronomical.

 

The environmental impact isn’t the only negative effect of this new buying behaviour however; free returns for consumers also incur costs for retailers. It’s believed that the average returned purchase passes through seven pairs of hands before it is listed for resale. According to consulting firm KPMG, to pick and deliver an order costs between £3 and £10 — it can even cost double or treble that to be processed on the way back through the supply chain.

 

In fact, our own research found that during the Christmas trading period in 2017, UK retailers lost on average £2.2 billion due to the total number of items returned and the cost to process each one. This figure equates to four days of trading for UK retail during the busiest time of year. That’s a staggering amount of money lost, especially for a sector that is currently going through a period of intense challenge and uncertainty.

 

If a business has to incur a cost on the sales side, it will undoubtedly attempt to offset this cost on the buy side, especially when margins are so tight. That could mean retailers opting for cheaper clothing producers that are less safe, or less responsible. This only intensifies the unethical practices, practices that are now turning prime millennial customers off brands. This also goes against the pressure facing the retail industry to foster more responsible, sustainable supply chains. But when the balance sheet needs to add up, it’s often the first thing to go.

 

The trend for faster delivery and more convenient returns doesn’t seem to be shifting. With Amazon trialling drone deliveries and services like eBay’s Shutl offering delivery in an hour, it’s simply unsustainable for retailers to continue to absorb these costs.

 

With the demand for quick, free delivery reaching a new peak, combined with moves against single-use items such as coffee cups, bags and a carbon emissions targets at a governmental level, it’s not a massive leap to think that a government ‘delivery tax’ could soon become a reality.

 

Retailers are increasingly stuck in this cycle. Offering free delivery and returns is the snake that eats its own tail, so envisaging an intermediary step to enforce change is understandable. Yet crucially, it’s a when, rather than an if.


Author: Gary Rohloff, Co-Founder & MD, Laybuy

Picture credit: Fotolia

Linked InTwitterFacebookeCard
Add New Comment
LoginRegister

The InternetRetailing Newsletter

A curated update containing news analysis, reports, podcasts and opinion - completely free and delivered three times weekly

Become a Member

Create your own public-facing profile
Gain access to all Top500 research
Personalise your experience on IR.net
Internet Retailing
We are the magazine, portal and research source for European ecommerce and multichannel retail, hosting the board-level conversation for retailers, pureplays and brands across all of our platforms. Join the conversation.

© InternetRetailing Media

Latest Tweet

Internet Retailing
Tamebay
eDelivery
Twitter
Facebook
Linked In
Youtube
RSS
RSS
Youtube
Google
Linked In
Facebook
Twitter