Those holiday returns come with a massive environmental footprint

This locked-down holiday season, retailers are making it easier than ever for customers to shop online, in many cases expanding shipping and return policies to accommodate what's expected to be a record-setting year of online shopping. But the ease of e-commerce comes with hidden environmental costs.

The returns from online shopping last year created 5 billion tons of landfill waste and produced as much carbon dioxide as from 3 million cars driving for one year, according to Optoro, a tech company that manages retailers' returned items.

The process of sending back unwanted items and potentially re-selling them results in 10 billion unnecessary transportation trips every year.

"That's the entire reverse process of returns — that includes the customer hopping in their car to a retail store to make a return, or maybe driving to a UPS drop-off point, then the package getting shipped to a retailer's distribution center, then it goes potentially to another distribution center," said Meagan Knowlton, Optoro's director of sustainability.

As online shopping surges, so, too, will the number of returns.

Overall, about 10% of all purchases are returned, according to industry estimates. But items bought online are three times more likely to be returned than those bought in-store. For some categories of clothing —think shoes and women's jeans — more than half of online purchases are returned.

"With clothing, apparel and shoes, people are picking out what works and what fits. We haven't been able to figure out how to make that remote experience good," said Miguel Jaller, co-director of the Sustainable Freight Research Center at the University of California at Davis.

The "buy now, choose later" online shopping approach was common even before the pandemic hit. But now, more shoppers do it than don't, according to some research. 

A survey from shipping and logistics company Narvar, which counts 800 retailers as clients, found that nearly two-thirds of shoppers this year bought multiple sizes or colors of the same item, with the intention of returning some of the items. Buyers of luxury goods, as well as shoppers under 30, were most likely to use this practice, known in industry parlance as "bracketing."

"Consumers were already in the habit of using their bedrooms as fitting rooms for online purchases, but the practice skyrocketed this year," Narvar found.

From warehouse to landfill

Shoppers most likely assume that those ill-fitting boots they returned will make it back to a warehouse and, eventually, be sold to another person — who loves them. In reality, only a fraction of returns ever get resold. Even if they've never been used, returned items more often end up in a thrift store or discount store, offloaded by the pallet or dumped in a landfill than resold on the shelf.

Some of this waste is due to legal reasons. For instance, many states disallow the reselling of used mattresses, while others limit the number of re-sales of used children's items. 

But a lot comes down to the time — and therefore cost — it takes for a store to inspect, repackage and reshelve an item.

"It can cost twice as much to process an online return back on shelf as it does to sell it the first time. Given online return rates are triple that of brick-and-mortar, it's often more efficient for the retailer to liquidate," Eric Moriarty, vice president at B-Stock Solutions, a liquidator, told eMarketer recently.

In Europe, Amazon routinely sent a billion items to the landfill each year, a practice that led France to outlaw the destruction of unsold consumer goods. 

The Canadian Broadcasting Corporation, in its own investigation of Amazon's return practices, recently purchased and returned 12 items from Amazon Canada. It found that only four items were eventually resold, while some "perfectly good items" ended up in a landfill.

In the U.S., the 5 billion pounds of returns sent to the dump is equivalent to three times the amount of trash produced by the city of Seattle annually.

Industry watchers have yet to predict exactly how much returns will rise this year — but all expect the figure to increase drastically.

"Unfortunately we're going to see more and more of an increase in returns. That has not slowed down," said Narvar CEO Amit Sharma. 

Salesforce recently predicted the value of holiday returns this year to top $280 billion, an amount equivalent to the GDP of Finland.

"As e-commerce replaces in-store shopping, returns become an even bigger issue, and a logistical issue as well," Optoro's Knowlton said.

The more shoppers buy, the more they return. The reverse is also true: a generous return policy makes shoppers more likely to buy from a website. That's why, despite the losses that returns represent, companies are loath to tighten free-return policies lest they drive away shoppers.

"It's now a consumer expectation," said Sharma. "It's table stakes."