How the high demand for quick and inexpensive returns are challenging businesses

By: Stuart Ager

Online shopping has surged in the post-pandemic era, with speedy delivery becoming essential in the daily lives of shoppers globally. In 2022, the global retail market generated sales of over 27 trillion US dollars, while the total retail sales worldwide in 2023 are expected to be $29.7 trillion and forecast to reach over 30 trillion US dollars by 2024. This marks a 5.5% annual increase, and the projections for years to come are only pointing one way – upwards.

With more than 55.2 million people buying products online in 2021, the UK market has emerged as one of the world’s leaders in ecommerce sales and the country is turning into a proof point for rising demand and challenges to businesses. And while outbound online orders continue to boom, it is the act of returning these orders to their original locations that has become an integral part of the retail landscape – and one that is proving to be a significant challenge.

At Metro Supply Chain, we see the challenges these issues are raising for our customers, which is why we are well positioned to support managing the change in demand. In fact, the UK has been grappling with a staggering £7 billion worth of internet purchases returned, with more than a fifth of all clothes bought online being sent back. This begs the question: Are returns for UK businesses an unsustainable part of our new way of consuming goods, and can we fight the issue?

The changing landscape of retail

The UK leads Europe per capita for new clothing purchases, driven in part by the ease and speed of online shopping. With technological advancements and streamlined fulfilment processes, consumer expectations have risen, making it equally convenient to return items via parcel shops, drop-off points and return fulfilment centres.

In June 2023, the return rate for clothing peaked at 31% in the UK, which has increased the need for businesses and retailers specifically to be more prepared than ever not just to process returned items, but to repair faulty products and quickly return them to the product line. Here at Metro Supply Chain, we are working with our customers in the UK, Canada and the US to tackle this challenge through a unique value-added model, helping to make managing returns a much more efficient and less costly process for businesses.

The hidden costs of faulty products

The boom in returning orders and ‘bracketing’ (buying multiple items and returning unwanted ones) is costing UK retailers an astonishing £60 billion annually. This is a growing issue, and in the US, 81% of online product returns are due to the item being damaged or defective, an additional complex layer to the operations where repairs are required as well as the initial processing to get products back into the supply chain. It is also not uncommon to see businesses sending damaged or unwanted goods straight to landfills due to the costs they face – bringing the ever-discussed subject of cost vs sustainability to the fore once more.

Recurring product faults and damage are major costs to retailers, but Metro Supply Chain is helping to change this. By leveraging data and trend analysis, we help brands identify and resolve persistent issues, redesign products and parts, enhance customer satisfaction, and save manufacturers both time and money. This approach contributes to a cleaner and more environmentally friendly process, ultimately reducing the reliance on landfills as an easy solution to their problems.

We also work with businesses to offer repair services, allowing retailers to fix products rather than replace them, a crucial lifeline for businesses navigating economic downturns. Repairing is not only cost-effective but also aligns with sustainability goals by minimizing product waste.

Services and systems such as “Faultbook” also allow Metro Supply Chain customers to maintain a consistent log of faulty or damaged products and identify what types of solutions are required on a case-by-case basis. This does not just allow them to streamline their order management operations and ensure efficient issue resolution, but also creates more sustainable processes that do not risk damage to local ecosystems where solutions cannot be found, and products must be discarded to landfills.

A Better Supply Chain Partner Can Mean a Better Bottom Line

While many manufacturers outsource warehousing and distribution to multiple contract logistics providers, they should consider how end-to-end solutions with one provider like Metro Supply Chain will alleviate the burden on their operations by handling multiple aspects of the supply chain with one partner. From handling thousands of product repairs and refurbishments to providing highly trained staff for customer support, this comprehensive approach ensures that returned orders can be dealt with minus the costly impact and removes the need for them to end up in landfills, contributing to a cleaner planet and reduced CO2 emissions, as well as a fluent and healthy approach to managing returns.

As sustainability becomes increasingly important to how businesses operate, the right solutions must be put in place at the right time by the right partners that support both the bottom line and the planet.