Upset individual with an open box, overlaid text 'Free returns at a cost', hinting at hidden shipping costs.

Free Returns, At a Cost

by LJM Group

Recent research reported by Business Insider suggests that, as retailers struggle to cut shipping costs, they are asking customers to pay more to ship back unwanted items. Retailers have also raised their free shipping minimums to prevent overbuying and revamped their warehouses to reduce excess inventory. Meanwhile, some brands cut their free returns policies, forcing consumers to pay for returns or instead allow them to keep the unwanted items, since they have more merchandise than they can sell. In addition, the cost of storing returned and unwanted items adds up quickly, and retailers are forced to devote substantial amounts of space in their stores for the surplus inventory.

Online sales analysts suggest retailers are likely to continue or expand strategies that limit the amounts shoppers can order—including cutting off or limiting free returns, and charging more for free shipping, as a countermeasure to reduce over-buying. Some sellers are even experimenting, allowing customers to keep the unwanted items they ordered, because of an unplanned surplus of stocks due to the pandemic, and the cost of storing this surplus inventory. 

Some company analysts, however, argue that this strategy poses a risk in that some customers will not dispose of unwanted items responsibly. “People don’t want things for a good reason,” contends Thomas Borders, in a recent report at Inmar Intelligence. “There’s also the harmful impact of that, that I don’t think a lot of people consider. You can’t just throw everything in the garbage,” citing the proliferation of products that contain harmful materials that should not be disposed of in landfills. Hence, removing free shipping is one growing trend for curtailing overbuying online, where people feel like there are no consequences because they can ultimately return a product if they don’t like it.

The environment suffers from policies that eliminate returns and shipping fees, as wasted textiles are thrown away when people do not want them or cannot return them. The average American throws away about 70 pounds of clothes and other textiles every year, much of which end up in landfills, since 60% of textiles aren’t recyclable. Other retailers are allowing unsold items to pile up due to a pandemic-related glut of inventory, citing the cost of storing that surplus and the compounding cost of returns.

Are consumers to blame? In a recent study reported by, there are many ways that consumer bad habits harm the environment without even realizing it. One of the most common causes is called “bracketing” where one buys multiple options of an item to try them on for size or suitability before committing to one.  Another practice known as “wardrobing” is when a person buys an item for a one-time online appearance, then returns it. Wardrobing was the number one cause of clothing waste reported in the UK recently, where 9% of shoppers admitted to single use for an online presentation. Another 2.6 million tons of returned or unused goods gets thrown into the landfill every year, leading to 15 million tons of carbon dioxide emissions, with significant environmental harm.

Meanwhile, consumers are expected to shoulder the burden of disposing of unwanted items in an environmentally friendly way. While this may appear to be a win-win for consumers and retailers, Inmar data suggests it places an unfair burden on customers who must hold and safeguard the unwanted items they receive. They specifically point to merchandise such as electronics, which may have harmful materials inside. When customers no longer have use for such products, they may be improperly discarded.

As a potential solution, a number of online startup firms have created platforms that address this problem by letting consumers rent, then exchange, gently worn clothing and accessories. Members deposit gently worn items, select what they would like to receive, and associates deliver a box with the selected items. Collectors then pick up the items that were borrowed to be laundered and redistributed. “The most sustainable option for the consumer is to keep their clothes and reuse them,” says online entrepreneur Melissa Esposito, who has founded several related services. While online recyclers are helping to solve this problem, more companies and consumers need to continue thinking about how they can responsibly dispose of excess items. “It’s a whole culture change in how we’re thinking about things,” says Borders. “I would never have considered giving away a kitchen appliance before the waste crisis.”

Companies across all industries can gain new insight and control over returns by utilizing LJM’s  Real-Time Logistics Advisory Services, Business Intelligence Profitability Tools for online retailers, Carrier Contract Negotiation with optional Flat Rate Pricing design, and Facility Rationalization research. These tools use advanced software and AI to supply intuitive shipping cost analysis and offer in-depth features and reporting mechanisms which positively impact financial performance.



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