14 Ago Returns on Amazon: Hidden costs and sustainable solutions

While the convenience of being able to return an item at no cost has been an appreciated advantage for Amazon customers, this policy is generating detrimental effects both economically and environmentally.

At Nozama, we delve into the consequences and high costs involved in the Amazon returns process for sellers and how they are seeking solutions through logistical changes. Let’s dive in!

Economic Cost

Amazon often allows for free returns. This is undoubtedly a perk for consumers and a boost for making purchases. However, is it as positive for the seller?

When an order is returned, the online store is the one to bear the cost of processing, courier and delivery services, and the reconditioning or return-to-factory process. These expenses accumulate swiftly, especially when dealing with low-value products that are not profitable for the seller.

In this regard, a study conducted in 2022 by the multinational DHL revealed that sellers incurred losses totaling over $800 billion due to returns. This marks a significant increase compared to the amount recorded in the year 2020, signaling a concerning trend and indicating that this model is not beneficial for retailers.

Environmental Impact

Beyond the economic detriment, returns on Amazon also harm the environment. The logistic process of returns, including the transportation of returned products and the management of packaging waste, contributes to greater environmental pollution.

Not only that, some of the returned products may need to be reconditioned before being resold, which could require the unnecessary use of additional resources like energy and materials for repairs.

This is particularly worrisome at a time when the world is grappling with the effects of climate change and waste accumulation.

Logistical Changes to Save Economic and Environmental Costs

Aware of the significant impacts associated with returns, Amazon sellers are seeking ways to optimize logistics and reduce economic losses.

One of the proposed solutions is designing more efficient and environmentally friendly product flows and cycles. This involves better categorizing returned items and making more informed decisions about their fate: restocking at full price or discounted, repairing, reselling, or recycling. The recycling option might even involve charitable donations to minimize waste.

Another approach being explored is integrating technological advancements to reduce the volume of returned items. For example, virtual fitting rooms can help customers make more accurate decisions before purchasing.

Furthermore, some companies are considering altering their customer return policies. One possibility is charging for returns that aren’t made in physical stores, a strategy already implemented by some fashion firms. However, these changes must be approached with caution, as they could impact the customer experience and their purchasing decisions.

Conclusions

In conclusion, returns on Amazon incur high costs for both sellers and the online store itself, while also negatively impacting the environment due to waste generation and carbon emissions. Sellers are seeking logistical changes to save money and reduce their environmental footprint, focusing on more efficient product flows and technologies that enhance the shopping experience and decrease the number of returns. As e-commerce continues to grow, finding sustainable and cost-effective solutions for returns management becomes a crucial challenge.