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09/01/2022

Avoiding the Landfill: How Intelligent Business Networks Can Repurpose Returns

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Implementing a sustainable supply chain

Since the pandemic, online shopping has become more than just a convenience. It has become a necessity. According to one report, global e-commerce rose from 15% of total retail sales in 2019 to 21% in 2021 and now sits at an estimated 22% of sales.

As online shopping fuels increasing returns, preventing returned merchandise from going to waste is a very real concern. According to a National Retail Federation report, in 2021 U.S. shoppers returned more than 16.6%  of retail purchases, exceeding $761 billion dollars of merchandise that are expected to end up in stores and warehouses. While these numbers are staggering, they pale in comparison to the volume of retail goods winding up in landfills

Consumer Attitudes Toward Sustainable Purchasing 

An SAP survey of consumer sentiment conducted in February 2022 revealed key findings about consumer attitudes toward sustainable sourcing and their impact on purchasing decisions: 

  • Consumers are divided on the importance of sustainable sourcing. Among survey respondents, 36% said they have made efforts to purchase from brands that practice sustainability; 35% said they buy from brands that practice ethical sourcing; and 19%  responded that they prioritize sustainable shopping practices for themselves. However, 30% said they make no effort to prioritize such practices, suggesting that while there is a sizable group of consumers concerned with sustainability and ethical sourcing, an almost equally sizable group does not.
  • The awareness of waste generated from returned goods could impact purchasing decisions. When survey participants were informed of a report highlighting the amount of waste generated by returned goods in the U.S., 61% said the knowledge would impact future purchase decisions. 

An Innovative Way to Reduce the Environmental Impact of Returned Goods

The current landscape of online purchases and mounting returns presents a clear supply chain challenge: How can businesses with excess returned goods partner with discount sellers and other organizations that can make use of these goods? 

Enter digital business networks. Cloud-based “supply chain networks” connect with an ecosystem of partners to source goods. In the case of returned items, a large retailer may tap into the partner ecosystem to identify discount stores or online sellers to resell returned merchandise.

With the exponential increase in volume of goods purchased online and returned, older methods of connecting buyers and sellers are no longer enough. Digital business networks not only accelerate the process of connecting suppliers and buyers, but they widen the circular economy by connecting trading partners on a global scale. 

Using Business Networks to Meet ESG Goals

Cloud-based business networks and digital supply chains provide the transparency, visibility, and accountability businesses need to produce sustainable outcomes not only within the four walls of their organizations, but across those of their trading partners as well. 

By connecting trading partners to ethical supply chains via business networks, companies can transform fragmented supply lines into agile, collaborative networks for supply chain, logistics, asset management, and services, making it possible to:

  • Connect with an ecosystem of partners to identify more responsible ways of handling returns, giving them a second life beyond a landfill.
  • Demonstrate to consumers that your business is adhering to ESG standards and engaging in sustainable business practices.
  • Integrate and improve business processes for faster, more efficient handling of transactions and returned merchandise.
  • Find and onboard new sources of supply that adhere to their own ESG standards quickly and efficiently.
  • Coordinate logistics to reduce shipping distances and minimize fuel consumption and pollution.

Business networks aren’t new. But if your organization isn’t already doing this, my call to action is simple: Identify business networks that can help you build more resiliency and agility into your supply chain. This will not only help your business to thrive, but it will be one step toward addressing consumer desire to purchase from brands that act ethically and responsibly in the years to come.

Tony Harris, Senior Vice President and Head of Marketing & Solutions, SAP Business Network

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