Free shipping is a powerful incentive for online sales. It is the defacto standard for online apparel shopping, one which brands large and small ignore at the risk of sales.
Free shipping has helped brands ride the shifting sands from brick and mortar shopping to online retail. Several studies have discovered that the first reason for abandoning an online shopping cart may vary but the second reason consistently comes down to unacceptable shipping options.
However, a new and correlated waste stream is growing in tandem; losing brands money and adding to the already high environmental footprint of the apparel industry.
Previously in apparel retail, customers tried on clothes in-store and purchased only the garments they thought they wanted. With the exception of incidental damage like a lipstick stain, unwanted garments were left in the changing room and returned to the sales floor, immediately ready for the next potential buyer.
Nowadays, online shopping encourages customers to use their bedrooms as changing rooms. Customers order more than they expect to keep, they load up online shopping carts in order to try different sizes, touch the material or confirm the color.
“The try-at-home customer behavior shift disrupts the restocking and returns flow for retailers, leading to a rise in the rate of product wasted instead of sold,” says Nicole Bassett, co-founder of The Renewal Workshop.
The free shipping offer catalyzes two consequential impacts. One, an increase in the environmental footprint of shopping with the increase of items moving back and forth between customer and warehouse, requiring packaging and emitting pollution for delivery and return. And two, an increased risk of the product being unsellable as new. Bassett says that “without a renewal system, returned product runs a higher risk of being swept into the waste bin.”
When clothing is in a customer’s home, the chance of damage rises significantly outside of the controlled store environment. “At home, apparel can be exposed to pet hair, lingering scents, the tags or packaging may be removed and sometimes customers even wash clothes before returning it” says Bassett.
A 60-day return policy is standard for returns on online purchases. And the long window for returns also increases the risk for product becoming waste. Apparel is an industry notorious for turning over new product at breakneck speed. Outdoor apparel has two seasons and fashion can have up to six seasons. The window of opportunity to receive and restock is small and the capacities of the warehouse can be mismatched to realities of customer behavior.
For example, imagine an item purchased online at the end of a season and returned 60-days into the next season. Perhaps the customer also removed the hangtags and packaging. The item should be reshelved upon receipt at the warehouse but since its out-of-season and there is presentation work to be done before it can be resold, easier returns are processed first. The returned item is pushed to the back of the line, until it’s too late to market. Sometimes, these products can be sold as secondary goods or donated. If not, the item is marked as waste and written off from an accounting perspective. Waste product piles up in warehouses and when the pile reaches a critical mass, it’s shredded and sent to landfill.
“We see evidence of free shipping driving a new waste stream and we understand from experience that free shipping serves an important sales function. The Renewal Workshop for example, offers free shipping to give renewed customers an analogous experience to buying new clothes” says Bassett. Free shipping may be a reality of the future of retail, but waste doesn’t have to be.
The Renewal System enjoyed by partners of The Renewal Workshop converts the free shipping waste stream into profit. It cleans returned apparel in a closed-loop, water-free machine using liquid CO2. This cleaning removes oils, particulates, and odor that degrade the useful life of apparel. Next, the item is repaired (if necessary), certified to the brand’s original standards and labeled as a renewed product. Last, the item is photographed, repackaged and ready for sale.
Retailers offer free shipping to entice sales however, Bassett concludes, “the reality is that losses will continue to grow in tandem with online sales. To work around this, brands need to adopt a renewal system to organize and recapture value from the online shopping waste stream. What business wouldn’t be excited about recovering money from waste?”