Gen Z is Watching: How to Court Younger Consumers With More Sustainable Return Policies

Most U.S. consumers (three out of five) now rank environmental sustainability as a top factor in their purchasing decisions, and that number jumps to 75 percent for Gen Z.

However, while many online retailers are adopting eco-friendly production and sales practices, the post-purchase process remains a challenge to sustainability. Shoppers return between 15 percent and 40 percent of purchases made online, and retailers discard or liquidate an estimated 40 percent of those returns — creating 5 billion pounds of waste annually.

It’s clear that brands must reduce the environmental impact of their returns to achieve sustainability goals. And in doing so, they can demonstrate their shared values with younger consumers and cultivate their long-term loyalty.

Expensive, Unsustainable, and Unacceptable Return Practices

Returns are costly for both the environment and retailers’ bottom lines. The reverse supply chain that brings unwanted items back to sellers requires transportation and extra rounds of packaging, which generates emissions and waste. On the expense side, sellers typically foot the bill for labor and other costs, and many lack the tools to efficiently accept returned merchandise. On average, it costs retailers an estimated $33 to process a return for a $50 item.

Consumers aren’t thrilled about making returns, either — especially as Gen Z shoppers become more aware of the carbon footprint they create when they send a product back to a retailer. In a recent poll, more than half of consumers (56 percent) worry about the environmental impact of returns, while more than one-third (35 percent) say they haven’t returned an unwanted item because of environmental concerns.

These figures will only rise as younger generations of consumers increase calls for sustainable retail.

A Sustainability Mindset for Return Practices

Retailers have a vested stake in prioritizing sustainability in the returns process. Your business, your customers, and the environment all win when you take steps to limit returns and their impact on the environment.

With that in mind, here are several initiatives to help your brand improve sustainability in returns and forge closer connections with Gen Z and other generations of environmentally conscious shoppers:

1. Help customers find the right product the first time.

The cheapest and most environmentally friendly return is the one that doesn’t happen. Take the guesswork out of online shopping and help your customers make the right selection before they commit to a purchase. High-quality product images and videos can provide a better sense of a product's sizes, colors, and materials — especially when you pair visuals with detailed product descriptions.

You can also help your customers find the right product by eliminating the wrong products from your store. Proactively identify and remove products with high return rates or negative reviews to prevent return requests. This isn’t a step you have to take alone or ask employees to handle manually. Instead, a retail technology platform can help collect data on purchasing behaviors and customer feedback to flag problematic products.

2. Give customers alternatives to making a return.

Instead of encouraging customers to initiate a return, it’s often more cost effective and environmentally responsible to encourage shoppers to exchange items for something else from your store.

An automated returns management solution can ask customers why they’re initiating an online return, then use that feedback to generate personalized exchange options. Do they not like the color? Show the customer other options. Was the quality not to their liking? Upsell them on a higher quality alternative. You retain revenue, and because the shopper expects to receive a new item in exchange, there’s a better chance the product they send back is in good enough condition for you to resell.

You could also allow the customer to keep their item when the return isn’t worth the cost of processing. You’ll save time and money, and cultivate brand loyalty by simply refunding the purchase price. Again, retail platforms can help analyze data on the price, size and location of an item during a return request to determine if the product is worth taking back.

3. Work with outside partners.

It’s impossible to completely prevent returns. But when a customer sends an item back, you need to maximize the value and minimize the environmental impact. Merchant partners specializing in product returns can help strike that balance.

For example, reverse logistics companies reduce the hassle of taking items back by enabling cheaper, cleaner returns. Their shipping networks eliminate the need for customers to box or label returns themselves, reducing packaging waste. Streamlined supply chains then consolidate those returns for lower transportation and shipping costs, as well as reduced transportation emissions. Some companies even use reusable boxes for storage to eliminate single-use packaging materials and fill trucks more efficiently.

Likewise, when an item is altered or in a condition that precludes its return to inventory, a resale partner can find new life for those products. In many cases, they can refurbish rejected returns, sell items on their own e-commerce sites, and split the profits with your company. Your formerly unusable items become a source of revenue and don’t end up in landfills.

The number of environmentally minded consumers is rapidly growing. Most Gen Z shoppers are already calling for climate-conscious retail practices, and in the near future sustainability may be as important to your customers as factors like product quality and customer service support. Stay ahead of this trend by expanding your commitment to sustainability and undertaking more sustainable return initiatives.

Your customers, the environment and your bottom line will thank you for it.

Hannah Bravo is the chief operating officer at Loop, a returns management app that grows with Shopify brands.