Shades of Gray When Going Green: Nearly Half of Product Returns Not Managed Sustainably

Only 54% of retail SMBs currently dispose of materials responsibly—as many as 38% are burning or sending returns to landfills despite sustainability efforts, according to new Software Advice research

Small and midsize retail businesses (SMBs) believe that sustainability should play a decisive role in managing returned items but their actions don’t line up with their beliefs or public statements, according to a new Software Advice survey of 320 supply chain managers. A majority (89%) of retail SMBs say that sustainability is an important factor in their reverse logistics strategy, but only 54% report disposing of materials responsibly.

“Inaccurate statements can hurt a retailer’s reputation, especially as more businesses face public scrutiny for greenwashing or false sustainability promises”

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Nearly half (46%) of supply chain professionals say their company’s communication about sustainability efforts doesn’t accurately reflect what’s actually being practiced. Logistics and marketing teams are often siloed, and this contributes to the misalignment between a company’s sustainability practices and their public messaging. This discrepancy is more extreme among brick-and-mortar stores (31% report misalignment), compared to online retailers (17%).

“Inaccurate statements can hurt a retailer’s reputation, especially as more businesses face public scrutiny for greenwashing or false sustainability promises,” says Olivia Montgomery, associate principal supply chain analyst at Software Advice. “Work to break down silos across marketing and logistics teams to help customers better understand your sustainability efforts.”

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Setting up a more sustainable reverse logistics process begins with eco-friendly packaging and reducing returns. Of the businesses that say sustainability is an important factor in their reverse logistics strategy, 58% are designing their shipping boxes to be recyclable/reusable and 56% use right-size packaging.

Online retailers are keeping return rates low by discouraging returns. Their efforts seem to be paying off as online-only stores report a lower return rate than brick-and-mortar stores in 2021. The top actions taken by online SMB retailers to reduce returns include providing extensive product information on their website (58% of online SMB retailers) and thoughtful packaging to prevent damage during shipping/handling (56%).

SMB retailers also shared their most common actions once they do receive a returned item: 52% say they repackage and 46% repair items to be resold. While varying product designs and material types impact what a business can do with an item after it’s been returned, repackaging and repairing products helps them recoup costs.