Amazon Return Sign

People are used to thinking of business ethics as pertaining only to vendors. They often mistakenly believe that only sellers are culpable of shady tactics.

A recent article in The Atlantic (Amanda Mull, “Unhappy Returns: What really happens to all the pants that don’t fit,” November 2021-22-26), describes the conundrum facing retailers. What began as an astute exercise in consumer convenience has become a costly and abused situation, rife with consumer fraud.

Bricks and mortar retailers have long allowed customers to try on clothes in dressing closets (“rooms” would be an exaggeration). This policy minimized the rate of returns due to ill-fitting clothes. Even with this simple policy, however, some customers would fraudulently wear an expensive garment to a fancy soiree and return it. Most retailers, though dubious, would refund the money.

You might think that such consumer behavior is a dandy way to stick it to the retailer, but the reality is that retailers will attempt to pass theft and pilferage of inventory onto consumers in general. If they cannot reduce such losses, some retailers may go out of business.

Internet shopping precludes trying things on before purchasing. Free shipping has become the industry norm. As with any resource, “free” shipping leads to wasteful behavior. Customers order two or three sizes of a particular style, since they don’t pay directly for shipping. Retailers hope that maintaining customer goodwill will be beneficial.

Many companies began offering free refunds for returns which only exacerbated the problem. Retailers may have underestimated the extent of returns, which, according to Mull’s article, run between 15 and 30 percent.

Some retailers are now simply refunding money and letting customers dispose of the allegedly ill-fitting clothes. You don’t have to be very imaginative to realize how rife these policies are to fraudulent consumer behavior.

Students of supply chain management are familiar with the challenge of forward logistics, getting goods to customers. Reverse logistics means collecting from diffuse customers to send to concentrated pickup locations. Most retailers are unprepared for large volumes of such pickups. Many of the returned garments are discarded in landfills. Retailers are loath to donate garments to poor people, because it dilutes their brand.

Manufacturing cotton cloth and clothing are be destructive of the environment. The fact that we are shipping clothes back and forth across the country only adds to the environmental damage. On the one hand, that we can afford such waste is a stark demonstration of modern-day productive power, but I suspect ancient people would be appalled. “Clothe the naked?” is no longer a relevant question in modern-day America. We have cleverly devised cheap clothing to excess.

Although Americans don’t often think about clothing in the rush to “go green,” maybe they should. To be sure, one garment, one return has minuscule effect upon the environment, but the decision is one that each individual confronts. If we collectively begin to alter our behavior, we can make a small dent in the mountains of landfill and energy used in manufacturing and transportation of wasted goods. This might adversely some companies in terms of reduced sales, but other companies might benefit, as consumers rearrange their shopping habits.

 

David Surdam

Professor of Economics

University of Northern Iowa

david.surdam@uni.edu

 

The views and opinions expressed are those of the author and do not imply endorsement by the University of Northern Iowa.