Circular economy
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World Environment Day on June 5th: Studies show sustainability trend in (e)Commerce

Initiated by the United Nations (UN), the World Environment Day on June 5 aims at promoting global awareness and action to protect our environment. An ideal time to take a look at the sustainability dynamics in the booming online and mail order market. Consumers are increasingly questioning the sustainability aspects of products, retailers, and sales platforms. In addition to factors such as manufacturing processes or packaging, the use of resources and goods also plays an important role in these considerations. This also applies to the handling of returns and B-goods. We have therefore summarized current observations on sustainability dynamics as well as three convincing arguments for more sustainable handling of returns and B-goods on the way to zero-waste eCommerce.

Studies show that the issue of sustainability has triggered a turning point in people’s shopping behavior. The growing awareness of global environmental problems is changing consumer habits: 66 percent of consumers in a current CapGemini study from nine different countries choose products or services because of their “environmental friendliness” as one of the decision-making factors. Consumers are becoming increasingly involved in social causes and are looking for products and providers that match their values. Almost six in ten consumers are willing to change their shopping habits to reduce their environmental impact. Almost eight out of ten respondents say that sustainability is important to them.

In the past, corporate sustainability initiatives were often met with skepticism and the accusation of “greenwashing”. Today, however, there is a strong movement towards tangible and demonstrable corporate efforts to be truly “greener”. These range from the use of renewable energies and raw materials for production to the sustainable use of resources and goods. A very visible development in this direction is the reuse and resale of returned products, excess goods and B-goods in the steadily growing online and mail order business.

Growing consumer interest in the circular economy

Recent surveys show that more and more consumers are actively looking for used or B-goods, re-furbished, or re-purposed items: Seven out of ten respondents said that they have tried or would like to try buying used, repaired, or reconditioned products. 84 percent of those who have tried this, plan to continue shopping this way in the future. The interest in actively supporting a “circular economy” is even clearer among Generation Z and Millennials: Almost eight out of ten respondents said they had bought or wanted to buy used products iii.

As a result of the growing consumers focus on sustainability and the circular economy, buyers are increasingly turning to new consumption models – for example, to the fast-rising number of new platforms, where consumers can buy or even rent returns, B-ware, overstock, and refurbished goods from various product groups: consumer electronics and mobile devices, household goods, furniture, sporting goods, etc.

This trend influences retailers and brands, creates opportunities for new market participants, and is also a way to differentiate from the competition. What began as a movement against “fast fashion” has meanwhile reached many other market segments. Reselling B-goods as well as returns and overstock not only enables good profit margins for retailers as well as attractive (price) advantages for consumers. The return of the goods into the circular economy also meets the consumers’ interest in the responsible use of resources.

Three compelling arguments for reselling returns and B-goods

The following three points show that the optimization of returns management and the handling of B-goods not only contribute to a company’s ecological footprint but also offer several advantages for both suppliers and buyers:

Sustainability does not contradict profit: Many companies currently leave their returns management to logistics service providers. That sounds like an efficient solution, but that is usually not the case from the perspective of sustainability or cost-efficiency. Logistics service providers often sell returns unsorted, on mixed pallets, and as “C-goods” to bulk buyers. This way, the products are often sold for less than 10 percent of their value, and goods that the bulk buyer cannot use may even be destroyed. It is therefore much more sensible to check the individual steps of the return management process to see which areas can be optimized in-house or addressed together with a qualified partner in order to achieve better value retention. After a quality check, evaluation (the so-called “grading”), and possibly some repairs, returns can be sold to new owners much more profitably via marketplaces, auction platforms, or on your own webshops. This is also possible for overstock and other B-ware.

Attractive offer for consumers: The purchase of returned products and B-goods offers customers an attractive alternative. You can purchase goods that are almost as good as new as well as products with transparently documented small defects or signs of use at attractive prices. This is not only interesting for consumers who are looking for an inexpensive alternative to new goods, but also for those who pay attention to the sustainable use of resources. Current study results clearly show the growing interest of consumers in such offers.

Differentiation from the competition: In the highly competitive market, the offer of B-goods also offers great potential to stand out from the competition and establish yourself as a brand or retailer that uses resources sustainably by adding returns and other B-goods to the circular economy to be led back. Suppliers are sometimes concerned that they will cannibalize their offer and image if they also make so-called B-goods available to their customers. However, our experience in working with well-known brands has shown that the offer of returns, in particular, opens up exciting new customer groups for them who have been won over by the good price-performance ratio or the sustainability concept.

 

The statements made by consumers in current surveys speak for themselves and demonstrate the growing interest in more sustainability in retail. We still have to set things in motion for our vision of zero waste in eCommerce, but the more intelligent handling of goods and the optimization of returns management and related processes are an important step towards achieving this goal.

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