This is How Sustainable Returns Management Works

1. What does sustainable returns management mean?
2. How does returns management work?
3. Why are there returns?
4. How can returns be reduced?
5. What advantages does sustainable returns management have?
6. What challenges exist in sustainable returns management?
7. 16 Tips on how returns processing can be made more sustainable
8. Practical example of sustainable returns management
9. Which tools are suitable for a sustainable returns management?
10. Conclusion: Avoid returns or organize them sustainably

"Online trade is becoming increasingly important" - a headline that hardly surprises anymore. More sales through virtual shopping, more packages being delivered, and more items being returned. The need to manage returns with economic skills and environmental friendliness is becoming a growing challenge. In this article, we take a look at why returns occur at all and what means can be used to organize them sustainably.

What does sustainable returns management mean?

Returned items have both economic and ecological consequences. Costs for the reversal, including logistics, shipping and packaging materials, as well as the effort for reconditioning returned products can burden both your company and the environment considerably. By implementing a sustainable returns management, you minimize these impacts, take on ecological and social responsibility and at the same time contribute to the efficiency of your business processes.

Sustainable returns management therefore refers to the responsible control of return processes through environmentally friendly and resource-preserving practices.

How does returns management work?

What often comes intuitively to consumers* - putting items back into the shipping box, sticking on the supplied returns label and off to the post - usually involves a very complex and well-thought-out process chain for the shipping or online trade:

• Define return rights and policies: Long before a customer* buys from you, your company needs clear and visible return policies. This will inform your customers about when and how they can return products. In addition, there are legal requirements, such as the right of withdrawal valid in Germany, which states that consumers have 14 days to withdraw from the purchase contract.

• Costs for packaging and shipping: The choice of packaging, delivery type and carrier are also part of returns management. What costs are incurred for the respective items? Does the goods have to be picked up by a forwarding agency? Can the original packaging be used for the return, and is disposal or recycling carried out by you? Depending on the type of item, size, packaging and shipping method, very different costs are incurred. In this context, you also have to consider who will bear the costs for the returns.

• Determine reason for return: If your customer* has decided to return a product, it is important to actively involve them in the process. Often, pre-filled forms are offered to enter the reason for the return. This feedback is crucial for your company to identify problems with shipping, quality, packaging, etc. and to counteract them with sustainable methods.

• Provide return label: A small step in returns management, but a big one in terms of customer friendliness. If you provide your buyers* with a sticker label, you facilitate and speed up the entire return shipment. The label already contains the most important information such as the return address and tracking information as well as a machine-readable QR code to record the return mechanically in your warehouse and process it further.

• Goods receipt inspection: What happens after a return shipment has arrived at your place? Does the item have to be disposed of? Can the item be reconditioned for resale after a quality check? Or can you still offer the item as B-goods due to missing components? Depending on the type, reason for return and condition of the item, there are different follow-up processes that need to be initiated in the course of returns management. This can, for example, be updating the stock if the goods can be resold, or initiating a repair order.

• Communication and cash flow: Transparent information about return options, return status and refund procedures are also part of returns management and are taken for granted by your customers*.

• Data collection and analysis: Particularly important is the collection of all data related to shipping and return shipping. They help you identify patterns and problems and take targeted quality or marketing measures.

Why are there returns?

Depending on the industry, product type and customer expectations, there are various reasons for returns. Often it is already clear at the time of purchase that several items in a category are ordered just for comparison, and therefore the less fitting items can be expected to be returned. This costly phenomenon is particularly common when buying clothes and shoes.

Source: Statista

The most common causes of returns that you should know:

1. Wrong size or fit 
2. Defective or damaged products
3. Poor quality
4. Wrong or inaccurate product description
5. Wrong delivery
6. Change of mind
7. Dissatisfaction
8. Delivery delays
9. Gift returns

How can returns be reduced?

A variety of returns can be avoided with these tips, but not all. A better goal is therefore to reduce their number and thereby already make an important step towards sustainable returns management. To do this, analyze your entire returns management and uncover its weak points. A major clue is again the customer reasons for return shipments. Be sure to evaluate the following topics. Which of them could contribute to strengthening your shipping items or improving the process?

Rely on first-class product information

Make sure that your products are described comprehensively and accurately, including size specifications, material composition, colors and detailed product descriptions. This includes high-quality product images, product videos and aspects of live-shopping, where items are tried on or demonstrated in a live broadcast. Customer reviews also help clarify the nature and function of a product.

To fully exploit all visualization possibilities, you can also rely on special tools and technologies. 360° product images or virtual fitting tools make your items appear particularly realistic. Planning tools also help to configure items according to customer wishes or to display them in a typical environment. This is even better achieved through virtual or augmented reality applications that make your products almost tangible.

Create a safety net of the best shipping providers

Not just for international shipping do you need several shipping providers. Also in case of strikes or technical problems, or when the order volume is particularly high, you should be able to resort to several shipping providers. This also improves delivery speed and meets the expectations of your customers*. Articles that arrive too late at their place will thus be a thing of the past.

But commissioning several delivery services also secures you another side effect. Depending on package size or delivery area, your service providers* probably offer very different rates. The more options you have, the more likely you can vary and optimize your shipping costs.

Based on your return reports, you might also be able to gauge how reliable your parcel services are. If the packaging is relatively often damaged, parcels are lost or delivered wrongly, you should definitely take countermeasures.

Put your warehouse processes to the test

How long does your logistics take to retrieve the goods from the warehouse, list them and prepare them for shipping? How often are items stored or taken incorrectly? Which of these steps could be optimized by automation, sensors or controlled material transport? By automating certain processes, you reduce delivery time and error rate, which in turn increases customer satisfaction. Even if there are still returns, these can be processed faster and more resource-efficient.

In online trade, it is especially supply chain management and logistics systems, which help to turn inefficient warehouse management into highly reactive processes.

Offer incentives for retained products

Often it is far too easy and tempting for your customers* to order several items and return them. If you give them incentives like discounts, exclusive offers or loyalty points, you can encourage them to keep products instead of returning them. In this respect, it can also be a strategy that your customers have to bear the costs for the return. These measures will in any case influence their buying behavior, so that your customers shop more consciously and return less.

What advantages does sustainable returns management have?

Although sustainable returns management may seem much more complicated at first glance, it offers a number of advantages for your company. One of the central aspects is the Environmental Protection. While the traditional approach to returns often leads to significant waste generation and resource wastage, sustainable returns management reduces the ecological footprint of your company.

Another advantage lies in the Cost savings through efficient processes. Costs for storage, disposal and unnecessary transport can be avoided or reduced.

Furthermore, sustainable returns management has positive effects on customer loyalty. Customers tolerate companies that engage in environmental issues, and prove this through growing loyalty. Companies that position themselves as sustainable not only appeal to existing customers, but also win potential buyers who value good sustainability management and social responsibility.

An interesting perspective is also the possibility of incentives for innovation. The search for sustainable solutions in returns management can encourage your team to develop innovative technologies or business models. Innovations that not only reduce environmental impact, but also create competitive advantages.

Also remember that sustainability is not always an option. Companies are increasingly being obliged to practice resource-saving and environmentally friendly practices. Regulated climate strategies such as the Environmental, Social and Corporate Governance (ESG) factors or the Greenhouse Gas Protocols (GHG) already push many large companies to sustainable business and are gradually rolling out to more corporate structures. With sustainable returns management, you are already making relevant preparatory work.

What challenges exist in sustainable returns management?

Despite the clear benefits, sustainable returns management for satisfaction and repeat purchases bears some challenges, which are for example associated with rethinking and necessary investments. Sustainability is also not shown from one day to the next, but can only be achieved through measures that need a certain time to show first successes.

• Medium-term results: Sustainability goals are usually not shown from one day to the next. Targeted measures therefore need a certain time until they are fully established and the first successes are recognizable.

• Rethinking and cultural change: The transition to sustainable returns management requires a fundamental rethinking in your corporate culture. Your employees* may first need to change their perspective on dealing with returns and adjust to sustainable practices.

• Investments in infrastructure and technology: Sustainable returns management may initially require expensive measures, such as through automation systems for your logistics or the purchase of reusable packaging materials.

• Training and sensitization: The introduction of sustainable practices requires training and sensitization measures for your teams. Only if your employees are open to change and understand the new procedures can these be effectively implemented.

• Take-back and recycling networks: You might have to search intensively for new partnerships in order to find suitable support in returns, repair or recycling.

• Design for reuse and recycling: As a manufacturer, you should already pay attention in product development that your products can be easily reused or recycled. This may require a redesign of products and the search for innovative materials.

• Transparent communication with customers: Clear and clear communication with customers about changes in returns management is also crucial. They need to understand the impact of their returns, why certain measures are taken and what role they themselves play.

• Complexity and uncertainty: The transition to sustainable returns management can be very complex and bring uncertainties. Your company may therefore need to first test and adjust new practices to identify the most efficient and sustainable solutions.

• Legal requirements and standards: Compliance with legal requirements and standards in the field of sustainability can cause further hurdles. Your company therefore needs to ensure that all practices comply with the applicable regulations and be open for occasional adjustments.

16 Tips on how returns processing can be made more sustainable

These tips encourage you to take innovative steps to promote the sustainability of your returns processing:

1. Implement repair services for returned products to repair defective items and put them back on the market instead of simply replacing or disposing them.
2. Offer your customers* attractive compensation if they keep products instead of returning them.
3. Use advanced analysis and AI to identify and predict return patterns. From this, measures can be derived to reduce certain types of returns.
4. Set up local return stations or points to minimize transport costs and emissions. Customers* can return their products, for example, in local stores or special stations where they are collected.
5. Perhaps the concept of community-based return options also fits. Buyers* could join together in their neighborhoods to bundle returns and send them back together.
6. Invest in technologies that contribute to product personalization. With more precise product adjustments, the likelihood that your customers* return due to misunderstandings or dissatisfaction becomes smaller.
7. Definitely, consider using reusable packaging. Your customers* can use it to return the products in the same packaging and thereby reduce the need for additional packaging materials.
8. Start upcycling initiatives for returned products. Partner with artists or designers to create new, unique products from returned goods that can be resold.
9. Integrate product reviews and recommendations into your online shop, or reward customers* for their contribution. Potential Buyers* can thus make better informed decisions, reducing their dissatisfaction and your returns.
10. Replace printed return instructions with digital resources. This reduces paper consumption, but lets instructions be retrieved on an individual basis. 
11. Offer training for employees* to promote effective packaging techniques. Proper packaging minimizes the risk of damage during shipping and returns.
12. Your customers* may also be rewarded if they do without additional packaging materials in returns.
13. Implement differentiated return fees, based on the ecological burden of the returned product. Products that are complex in reprocessing could have higher fees, encouraging your customers* to choose consciously.
14. Offer your customers* insights into the value chain of your products. Transparency creates trust and enables them to better understand the origin and life cycle of their products.
15. Similarly, you can offer instructions and ideas for upcycling projects to promote creativity and minimize disposal measures. 
16. Let other sustainable return solutions be developed through crowdsourcing. Involve your customers* and suitable communities in the search for innovative approaches to reducing returns or improving environmental sustainability.

Title: Aspects of Impact Return Management; Source: Federal Environment Agency

Practical example of sustainable returns management

If you want to know how other companies are mastering the challenge, take a look at Patagonia. The California-based outdoor apparel provider has established itself as a leader in environmental responsibility and sustainability and reflects this in its approach to returns management.

Patagonia actively promotes the reuse and repair of products. Customers are encouraged to repair their clothing rather than send it back or dispose of it. Patagonia provides instructions for self-repair, offers spare parts and even operates its own repair services. Through these measures, not only the life span of the products is extended, but also the need for new production and the related resources is reduced.

Source: Patagonia

Patagonia has also created Worn Wear Truck and Worn Wear Second-hand Market to collect, resell used Patagonia products and minimize ecological footprint. The company also focuses on efficient use of packaging materials. For online orders, return labels and bags are included, and customers are encouraged to reuse these bags. This approach contributes to minimizing packaging consumption and reducing of environmental impact by returns.

In addition, Patagonia operates comprehensive recycling programs. Customers can return no longer needed clothing and equipment, and the company recycles these materials to manufacture new products. This closed-loop economy helps minimize waste and use resources more efficiently.

Source: Patagonia

Patagonia also stands out for its transparent communication. The company informs customers about the environmental effects of its products and openly shares progress and challenges in sustainable returns management. This transparency enhances customer trust and makes them an integral part of sustainable practice efforts.

Which tools are suitable for a sustainable returns management?

Whether efficiency increase, data analysis or compliance with legal standards. With the help of suitable tools, it becomes significantly easier to implement sustainability management or sustainable returns management and to occasionally adjust new set screws. The community of OMR Reviews puts the following tools at the top:

• Code Gaia
• The Climate Choice
• CO2mpensio
• Shipcloud
• Sendcloud
• JTL
• Pickware

Conclusion: Avoid returns or organize them sustainably

In summary, sustainable returns management is not only more environmentally friendly, but also offers clear advantages for your company. Through smart processes, data analysis and open communication, your company can not only operate greener, but also declare responsibility, increase customer loyalty and strengthen competitiveness.

This trend will intensify in the future. Technologies are making progress and are increasingly focused on sustainability management. Sensitivity to environmental issues is also increasing among consumers and thus paving the way for alternative solutions such as circular economy, repair services and much more. A holistic look at ecological, economic and social aspects will also help your company to overcome challenges in sustainable returns management.