The problem with online shopping

Thursday 19 November • Reading time: 2 minutes

Black Friday and Cyber Monday are the busiest online shopping days of the year. But when you change your mind and return a product, smaller businesses pay a high price — and so does the environment.

The Covid-19 pandemic has brought the plight of the UK high street into sharp relief. But it’s been in decline for more than a decade.

As a researcher in logistics and supply chain management, I’ve learned that the rise of e-commerce has caused big problems for many shops. Delivering products out and having them returned is costly, inconvenient and inefficient. This can be particularly damaging for independents.

With Covid-19 making online shopping a necessity, my research in this area is more relevant than ever. So what’s the problem with returns — and what can be done to improve them?

Tight margins

Let's use an example of a fashion retailer. When people buy clothes online, they might buy up to six variants of one item — say, three T-shirt sizes in two colours.

This is understandable. For one thing, trying on clothes in-store has been prohibited for most of 2020, so people need to order more sizes and colours. Also, buying more often means free delivery, so it makes sense to order extra and return them later. 

This poses a number of financial and logistical problems for retailers. If they’ve offered free delivery and returns, then it costs approximately £4 each way. That means an £8 loss can be made from a single item. And that’s before courier, admin, repair and repackaging costs are taken into account, not to mention replacement stock.

For smaller businesses, where margins are tight and there's little extra cash to account for losses like this, returns can be a big problem. But in a competitive marketplace, where 70% of consumers won’t buy from a retailer if they don’t offer free returns, there’s little choice but to keep customers on side. 

Declining town centres and environmental issues

Our high streets have been in decline for years, and this is partly due to the rise of online shopping. This is worrying for a number of reasons. Fewer physical shops means fewer retail jobs. There is also an effect on footfall, which can quickly knock on to other industries that have a town centre presence, like leisure and hospitality.

What’s more, the transportation involved in global e-commerce, coupled with the production and usage of single-use plastics, has released 14 million tons of Co2 into the atmosphere. It’s also sent four billion pounds worth of goods to landfill.

While many brands are more environmentally conscious than ever and use reusable, biodegradable packaging, there’s no escaping the inefficiency and excess of returns.

A toolkit for change

Returns aren't sustainable — either for business or the environment. That's why I’m part of a team of researchers helping to make returns more efficient.

The Reverse Logistics Toolkit was created by researchers from Sheffield Hallam University, The University of Sheffield and Cranfield University.

Founded in 2008 with a new version in 2018, the Toolkit allows businesses to assess industry best practice, collaborate, and find new ways of improving their returns processes. We’ve worked with over 40 major retailers, 3pls (third party logistics businesses) and manufacturers on the project and received initial funding from the Department for Transport.

By helping businesses to work together, we’re helping create a stronger, more sustainable future for retail.

• Dr Jonathan Gorst is Deputy Head of the Department of Management, Sheffield Business School, where he lectures in the areas of Supply Chain Management, Logistics and Quality Management.  Jonathan's personal research is in the area of Reverse Logistics.