Findings from a recent survey indicate that small and midsize businesses (SMBs) prioritize sustainability in managing customer returns and have found ways to recoup costs of returned items, yet accompanying sustainability claims are not always accurately depicted to consumers.
According to the report by Software Advice, SMB retailers have experienced higher rates of returned items from customers, but reverse logistics approaches such as recycling, repackaging, and refurbishing have been found to recover costs from retired products. 35% of surveyed retailers report the ability to recover over half the cost of a returned product.
Such sustainability practices are also found to make brands more attractive to consumers. 41% of retail SMBs reported that their current returns process improved their brand competitiveness, and nearly two in three SMBs cited increased customer satisfaction from their returns process, up from 35% in 2022.
“The research shows not only are recovery efforts effective in recouping costs, but that there’s a reliable consumer market for recycled and refurbished items,” said Olivia Montgomery, associate principal supply chain analyst at Software Advice. “This strategy is expected to continue growing in popularity as more third-party recycling centers open up.”
Forty-nine percent of SMG retailers reported working with third-party partners to manage returned goods sustainably, and 94% of SMBs have taken action to reduce or discourage returns through practices such as thoughtful shipping packaging or providing extensive product information.
Increased Prevalence of Greenwashing Accompanies Sustainable Logistics Claims
Despite this strengthened retail SMB commitment to more circular return policies, the survey also revealed that 63% of surveyed retailers admitted their company’s sustainability actions didn’t align with public messaging. Greenwashing, or making false sustainability claims, has become a topic of concern for consumers looking to buy sustainably and for investors looking to support green business practices.
Especially as consumers place more value on corporate and retail transparency, the report suggests that SMBs disclose both the successes and challenges of their respective sustainability efforts. Some companies have introduced tools for supply chain traceability, and some legislation has been introduced in order to prevent greenwashing in product labeling and to enforce such disclosures.
A recent study by Novuna Business Finance found that small businesses in the United Kingdom have shown increased prioritization of sustainability, but cost barriers remain an obstacle to maintaining solid commitments.