Loop Works to Cut Emissions From Online Returns

About 21 percent of online purchases– worth $218 billion –were returned in 2021, according to the National Retail Federation. E-commerce returns are about three times higher than those from brick-and-mortar store purchases, by several industry accounts.

Besides associated financial costs there are environmental ramifications:  greenhouse gases from shipping merchandise to and from customers and multiple stops in between. And in the end, most of what comes back ends up in landfills, burned, or in thrift stores or discount stores, many which receive more than they can move, and sometimes in no condition to sell.

Loop is among companies that is focusing on avoiding costly returns. Actually, its primary focus has been to leverage its digital platform to encourage consumers to exchange rather than simply send unwanted items back.

But the technology also gathers and analyzes data on why consumers send merchandise back, whether to exchange or return, to help brands improve their merchandising and reduce chances of it happening again. When returns are inevitable, Loop offers its 1,700 Shopify brand customers other supports, both through its platform and a network of other service providers.

“Loop is the digital experience, making it easier for shoppers to do exchanges and helping brands minimize returns. The other component of our business model is building partnerships to help merchants with logistics [when products are returned],” says Aaron Schwartz, Loop president.

Those partnerships are important in order to address many processes along the supply chain, which can be complex.

Traditionally, unwanted merchandise goes back to warehouses, and while these operations are good at outbound shipping of large volumes of material they are not as equipped to receive and manage single returned packages. There is a lot of work to do once products come back, and few brands have the infrastructure or other resources to do the job.

That’s where Loop’s partners come in. They are carriers and companies that take on multiple roles on behalf of brands: opening boxes and inspecting their contents. Assessing products’ condition to determine if they can be resold as is or can be salvaged if not.  Refurbishing and or repairing products to get them back in circulation. Determining the best outlet and routing products there – whether for resale on the brand’s website or secondary sales channels, or for donation to a charity organization.

“On the brand side, Shopify has invested in us, so we work with a lot of very big brands, and logistics companies want to partner with us. They want us to send packages their way and introduce our customers to them. Usually, they find us,” Schwartz says.

Among its newest partners is Happy Returns/PayPal, a return software and reverse logistics company with over 5,000 locations where customers can drop off items without a box or label.

“Loop is good at collecting and providing information and making it easy to return or exchange. And Happy Returns is great at the logistics side.  They make it easy to drop off and inexpensive for the brand to get packages back due to consolidation. [Additionally] merchants reduce their carbon footprint through aggregated returns and because Happy Returns ships in reusable totes,” Schwartz say.

It took some vetting to make the process born of this collaboration work. The merchandise must move from the shopper to the merchant through both systems, requiring technical integration to ensure brands have visibility into the flow of packages.

“We strive to make exchanges and returns seamless for merchants. That’s why we are working with Loop—to offer our physical solution to as many merchants as possible while maintaining a best-in-class experience,” says Andrew Pease, senior director, Growth at PayPal.

Schwartz, who has worked in the Shopify ecosystem for a decade has observed over time, especially lately, that the “best” brands are increasingly thinking about the sustainability side of their operations.

“One brand really good at doing this is Cotopaxi. Their first products were using remnant fabrics from apparel factories to make bags. They think of every step in the supply chain.  How to make returns more sustainable and how to recycle material and get it back in circulation versus leaving it on the warehouse floor,” Schwartz says.

Retail Reworks is another pioneer in the sustainable merchandising space, refurbishing returns for retail brands, doing quality control inspections, warehousing, and distribution.

Then there are resale models like that offered by Recurate. Recurate sets up brand-owned platforms enabling these enterprises to offer several options: for instance, a peer-to-peer channel where customers sell and buy resales and get credits to buy more, and a take back program somewhat similar to what Retail Reworks does where the company integrates with partners to be able to take back items from customers, authenticate, clean, and fulfill orders.

Even newer to e-commerce is carbon credits.  Loop works with a company called EcoCart, enabling Shopify merchants to invite customers to buy credits to reduce carbon emissions associated with an individual transaction, whether sale or return, considering variables such as shipping distance, package weight, and product type.  Collected funds go to a vetted environmental project.

Schwartz says he continually looks out for what is, or could be, next on the sustainable e-commerce front, particularly new ways to do returns –even drones, which he sees as a potential logistics tool in time.

For today, he says, there is a growing understanding of not just dollar cost but environmental costs of wasted products.

“So, we are pushing refurbishing of items and selling in different channels.   Secondary sales and re-commerce are a huge focus for us.

We have invested heavily to make sure items get in the hands of people who want them. And we are doing whatever we can to help push [sustainable e-commerce] forward,” Schwartz says.

“I think the best brands are thinking that this is the way to go and beginning to move in that direction. But we are in the early days on that journey.”