The Environmental Impact of Returns: An E-commerce Reality

The Environmental Impact of Returns

The world has witnessed unprecedented growth in the e-commerce sector. With such transformation, we’ve also witnessed the environmental impact of returns, which has grown larger than most of us realize.

We will be discussing the environmental impact of returns and how your e-commerce business can reduce your carbon footprint by reducing the waste of returned products.

The Rise of Returns

In 2019, the e-commerce sector saw $309 billion in returns. In 2020, $428 billion. With an average return rate of 30% for online purchases and between 8% and 10% for brick and mortar stores, these numbers are only expected to increase as the years continue.

With an influx of e-commerce returns, it’s now customary for more than 60% of shoppers to check return policies before ever considering a purchase. Within the fashion industry, return rates are quickly approaching upwards of 50%.

Why are we seeing these numbers and what do they mean for e-commerce companies, the environment, and your customers?

The Statistics Behind E-commerce Returns

With so many returns happening in almost every sector of e-commerce, it’s difficult to pinpoint where to start making changes and in what ways. If you’re a bit overwhelmed, we’re here to make it a little easier for you.

Reason Given	Verticals with Highest Return
70% said an item didn’t fit 65% said an item was damaged 49% said the item didn’t match the description	70% electronics 62% home and garden 60% health and beauty

78% of all returned items were clothing, with 40% of shoppers admitting they bought multiple items with the intent to return all but one.

Statistics tell part of the story but, let’s dive into the environmental impact of returns and what happens to them once they leave the customer.

The Reality of E-commerce Returns

With a quarter of all consumers returning between 5% and 15% of all online purchases, we’re looking at around 5 billion pounds of returned product. Every…single…year.

So, what happens to e-commerce returns? Where do they go?

Well, as great as it would be to assume companies simply re-sell used and unused returned items, that is not the reality. Less than 48% of all returned items are able to be re-sold at full price.

For most companies, the process of re-selling returned items is oftentimes more expensive than simply trashing or burning returned products.

Learn how your e-commerce can start avoiding returns altogether.

Early last year, an Amazon warehouse in the UK was said to destroy 130,000 returned items that were in “good condition” every single week.

For the fashion industry (which is currently ranking highest in returned items), the re-sell rate is much lower. This is because the fashion industry is infamous for its destruction of returned items.

Famous brands like H&M and Burberry have openly admitted to burning millions of dollars worth of returned products each year. Why? Re-selling clothing especially those associated with “luxury brands”, at a cheaper “used” price, would decrease the overall “value” and “reputation” of said brands.

For example, Louis Vuitton burns every returned item in order to remain “scarce”, “desirable”, and “luxurious”. If you could pick up a used Louis Vuitton bag for $40 at Goodwill, suddenly waiting for that deal is more enticing than saving up and purchasing directly from the luxury brand itself.

Given this fact, what happens to the millions of articles of clothing that are returned every year? The answer is simple – it heads straight for landfills.

What happens at landfills? We’ll walk you through it.

Behind the Scenes of a Landfill

Step 1. Once a customer decides to return an item, there are several ways it ends up at a landfill. Sometimes, returned items skip all processes and head straight for a landfill. Other times, items are unnecessarily shipped around the world before ultimately ending up at a landfill.

Step 2. Returned items, along with millions of tons of everyday trash, are tightly packed under a heavy layer of dirt and lined with a layer of rubber and clay. Landfills are not meant to decompose trash, but rather to secure it as more and more is added, buried, and lined every day.

Step 3. Regardless, trash decomposes. Once the layers of trash begin to decompose, a toxic liquid known as leachate begins to form. A lack of oxygen within the layers of decomposing trash causes bacteria to slowly produce methane gas that rises through the artificial barriers – right into our atmosphere.

Step 4. In addition to the enormous amounts of methane being produced and released into our skies, the leachate begins to slowly leak out of the rubber and clay liners. Some of it is reclaimed, treated, and re-used as irrigation, or sometimes drinking water. The unclaimed leachate begins to produce ammonia and mercury, dead-zoning nearby ecosystems.

The Environmental Impact of Returns

Now that you know how landfills operate, let’s consider their overall impact and how much of a difference that one return is really making.

Third Largest Source of Methane Emissions

With agriculture and electricity coming in first and second place for the largest production of human-produced methane, landfills take third place. What quantifies a third-place position? Third-place consists of 5 billion pounds of landfill waste and 15 million metric tons of carbon emissions – every year.

This is the equivalent to the emissions of 3 million cars in one year.

On top of this number, the rate of carbon emissions is expected to increase 30% by 2030.

That’s 3,900,000 cars.

Biodiversity

The average landfill takes up 600 acres. That’s just shy of an entire mile of decomposing garbage.

This contributes to the loss of approximately 20 to 300 species per 100 acres. Animals feed on waste, then transfer toxins to subsequent species that feed on them.

The cycle percolates all the way down to invasive plant species and surrounding soil fertility.

Human Health

According to a study done by the International Journal of Epidemiology, for families living within 3.1 miles of a landfill, there was a strong correlation between Hydrogen Sulphide (a colorless, highly poisonous, flammable, and corrosive gas produced by rapidly decaying organic matter) and deaths caused by lung cancer and respiratory problems – especially in children.

Families living within one mile of a landfill have a 12% increased risk of congenital malformations in their children.

If that isn’t enough, consider drinking leachate (the liquid that leaks out of landfills). Why? Some of us already are.

In 2008, California approved the operation of the Advanced Water Purification Facility. It produces 70 million gallons of drinking water from sewage, every day.

This purified wastewater then supplies about 10% of the water demand for California’s 2.3 million residents.

Economic Effects

Because of the rising trend for purchasing multiple items with the intent to return all but one, companies are now over-producing for misleading demand. This contributes to a 10% loss of global sales and $11.4 billion dollars of possible revenue that’s buried in the dirt every single year.

How to Reduce the Environmental Impact of Returns

Our goal is to help e-commerce companies reduce their overall carbon footprint and motivate shoppers to do the same. Below are a few ways your e-commerce brand can minimize the environmental impact and also that of your customers.

Return Policy

Updating and clarifying your return policy is key when it comes to reducing overall returns. By making return policies prominent, easily accessible, and simple, customers have a higher chance of understanding what they can and cannot do when it comes to returns.

Learn how to create a clear return policy.

Eco-friendly Packaging

Sustainable packaging is big and it’s only going to get bigger. Over half of your customer base is now considering sustainable packaging when choosing a product and whether or not they will shop with a brand.

Greener packaging is a growing favorite amongst consumers, and it’s a simple way to reduce your company’s carbon footprint. Additionally, you can help your customers personally reduce their own carbon footprint by providing reusable packaging or appropriate steps to discard their orders.

If you’d like to learn more about sustainable packaging and how to make the transition for your e-commerce company, check out our guide on sustainable packaging.

Ditch Return Labels

Switch to a return portal instead of providing pre-printed return labels. This not only reduces paper waste but also simplifies customer experience while simultaneously reducing returns.

Once customers decide they want to return an item, using a return portal will help determine if an item is suitable for return and also promotes a longer consideration period for a customer before blindly sending an item back.

Exchange over Refund

If customers are able to purchase multiple items and send them all back for a full refund – what’s the point of selling those items in the first place? Make full or partial refunds harder to come by with stricter return regulations and an emphasis on exchanging.

Limiting full and partial refunds will deter customers from buying items with the sole intent of returning them, and will promote a more thoughtful and considerate shopping experience for customers.

Additionally, clearly communicating why your company is moving away from returns and refunds may help bring the attention of shoppers to the direct impact their shopping habits are having on the current return crisis.

Upcycle and Recycle

Ensuring that returned products are not being destroyed or disposed of is the main goal here.

Consider repurposing returned items that do not qualify for re-sell or donation. For returned items that can’t be re-sold at full price but are still in good condition, consider partnering with a recycling program or donation center to ensure products are being repurposed or indefinitely re-sold and used.

A great example of this is Sheets and Giggle’s sheet donation program. For anyone who donates their used sheets to S&G will receive a 10% off code for their new set of sustainable sheets.

Donated items are then repurposed and skip landfills altogether. Creating a landfill alternative is a way to stand out to customers as an environmentally conscious company.

Re-sell Used Items & Donation

Instead of shipping returned items off to the landfill, incinerator, or selling them to companies to only re-sell them again, just double down and start reselling your own returned, used items.

Patagonia is a great example of utilizing the thrift world. Whenever a used item is returned in good condition, it’s re-sold on their own “used store”.

This allows customers to stay loyal to your brand, reduces the number of items going to landfills, and caters to customers who may not want to pay for brand-new products. Not to mention, your company will be profiting on what would otherwise be considered total losses.

In addition to re-selling used items, donating returned products that cannot be re-sold for a profit will continue to reduce product waste and allow even unsellable items to be used, enjoyed, and saved from contributing to pollution.

Incentivize Greener Shipping & BOPIS

Today, shoppers want their orders and they want them now. However, expedited shipping options play a major role in a negative environmental impact.

Encouraging customers with promotions, codes, and freebies to wait that extra day, pick up items from a physical store, or bundle with more products to save future driving trips, will not only help reduce our overall carbon footprint but will also help customers feel rewarded for participating in cleaner acts.

Anti Fraud Tags

It’s more than normal to buy a dress for a certain occasion and then return it the next day. Unfortunately, this is a bad habit that is only growing in popularity.

Investing in security or anti-fraud tags, such as the 360 ID Tag, will help your business send products to customers without shoppers returning them once they’ve been used. Security tags allow customers to try items on and even wear them around town (although the prominent security tag won’t be very attractive).

However, returnability is strongly affected once the tag is broken or tarnished. This will deter customers from making a purchase without the intent of keeping the item – both online and in-store.

Avoid Returns Altogether

The best way to create green returns for your business is to avoid returns altogether. We understand this is easier said than done, but with a big enough effort and a desire to become better, returns can be exceptionally reduced while still providing customers with a satisfying shopping experience.

To learn more about avoiding returns, check out our blog article where we go over exactly that.

Reduce the Environmental Impact of Returns with Falcon Fulfillment

Fulfillment is challenging enough without worrying about your impact on the planet. Follow along with Falcon to learn tips and tricks on successful fulfillment, happy customers, and most importantly – reducing environmental impact.

How Has Falcon Reduced Their Own Environmental Impact?

Reduced plastic usage by over 80%
Right-size shipping containers
Carbon-neutral shipping partners
Skylights & motion-activated LEDs

Beginner’s Guide to Third-Party Logistics (3PL)

The world of e-commerce is always changing, therefore understanding the roll of Third-Party Logistics is integral to keeping up. In light of this our beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.

Our clients are important to us and so is the planet. Contact us today and see how Falcon can make a difference for your company, your customers, and your planet.

Let’s Talk!

Connect with us!

by Jamie C. Winters

The Oceanic Effects of E-commerce

We’ve talked about the environmental impact of e-commerce in other articles. We have also discussed what ways businesses can reduce their own negative impact on the earth. Today, we’ll be discussing the effect that e-commerce has on the world’s oceans and water supply.

Oceanic Pollution

Human activities on land are responsible for over 80% of oceanic pollution. While the majority of it is attributable to non-point source pollution, which is pollutants that fall into rivers and inevitably end up in oceans, river-borne litter and plastic account for a significant fraction of the pollution in our seas. Excessive packaging, tags, plastics, textiles, and microplastics from e-commerce retailers often end up in waterways and the open sea.

This debris not only pollutes our water but also grinds together to form microplastics and micropollutants that marine life consumes. When this occurs, aquatic species become vulnerable to fatality and other serious health issues. Some contaminants, such as microplastic, cannot be digested by other creatures which leads to contaminated marine food. These contaminated food sources ultimately make their way to us and other animals.

Ocean Acidification Caused by Emissions

The ocean provides one of the most significant benefits to the earth in terms of climate change. It absorbs 30-50% of all CO2 created by fossil fuels each year, keeping our environment healthier for longer. The three major sources of greenhouse gas emissions are electricity, transportation, and landfills. Together they contribute almost 36,000 billion tons of emissions per year.

This becomes problematic when roughly half of these emissions are absorbed by plankton, algae, and other marine plants through atmospheric diffusion and photosynthesis. This alters the total pH of the ocean’s surface water, accelerating acidification. The more waste we generate, the more emissions are released, the more the ocean absorbs, and the more acidic it becomes.

With the ocean acidifying quicker than it has in millions of years, species with calcium carbonate shells and skeletons are dissolving. As a result, organisms attempting to adapt to increasing acidity levels have a very narrow window of opportunity. Adaptation in such a short period of time causes slower reproduction as well as fewer and smaller offspring. Causing significant disruption across the ocean’s food chain.

Ocean Noise

Sound travels faster and farther under the ocean’s surface than land or in the sky. Many marine species rely on sound for communication, navigation, and other survival purposes. With an ever-increasing number of shipping containers transporting the world’s e-commerce goods from shore to shore, the ocean has become a cacophony of sound, interfering with marine life’s habitats and welfare. The incessant noise created by cargo containers, boats, ships, and other sea-bearing machines generates an auditory “smog” that reverberates throughout the ocean. This has a knock-on effect of limiting marine life’s sensory range. This has been related to a large number of whale strandings, aquatic species abandoning their habitats, and the death of various invertebrates such as scallops, crabs, and squid.

Beginner’s Guide to Third-Party Logistics (3PL)

Follow Falcon for the most current information about e-commerce, the environment, and how you can help.

Let’s Talk!

Connect with us!

by Jamie C. Winters

Combating the Environmental Impacts of E-commerce: Part 2

Missed part one? Read it here!

Key Points from Part One:

E-commerce Returns Account for 5 Billion Pounds of Landfill Waste Every Year
Learn how to reduce carbon emissions caused by E-commerce returns
E-commerce Sales Contribute to 20-50 Million Metric Tons of E-waste Every Year
Learn how to reduce the amount of e-waste going to landfills

In part 2 of The Environmental Impacts of E-commerce, we’ll be touching on two final impacts of e-commerce and in what ways you can specifically start reducing your carbon footprint and making a positive impact for your shoppers and the earth you share.

PROBLEM

E-commerce Returns Account for 5 Billion Pounds of Landfill Waste Every Year

In 2020, the e-commerce sector saw over $428 billion in returns. Notably, the average return rate for online purchases was 30%, while brick-and-mortar stores experienced a lower rate of between 8% and 10%. Furthermore, with a quarter of all consumers returning between 5% and 15% of all online purchases, this trend results in over 5 billion pounds of returned products. Consequently, these returns produce 15 million metric tons of carbon emissions every year.

Learn more about the environmental impact of e-commerce returns.

SOLUTION

Reduce Your Contribution to the Carbon Emissions Caused by E-commerce Returns

Making your return policy prominent and easy to read for customers is key when reducing overall returns. Help your buyers locate, read, and understand your return policy before making a purchase and blindly returning items. Include important information like return shipping and restocking fees (if any) and define the acceptable conditions of returns. Be clear about what is and isn’t returnable.

Additionally, prioritizing exchanges over returns will help your e-commerce lower its return rate AND its carbon footprint. Making exchanges the preferred option helps direct customers to an eco-friendly choice while still giving them the freedom to decide.

Learn more tips and tricks about avoiding returns altogether.

PROBLEM

Growing E-commerce Sales Contribute to 20 – 50 Million Metric Tons of E-waste Every Year.

As the world of technology grows in popularity, so does the global e-commerce sales of electronics. Every year, 20-50 million metric tons of e-waste is produced by mass disposing of items like

Cellphones
Laptops
Keyboards
Televisions

Which have created the fastest growing waste stream in America. E-waste is not limited to consumers; companies also contribute industrial e-waste, such as

Vehicle batteries
Refrigeration systems
Automated equipment
IT equipment

One of the biggest environmental impacts of e-waste is the toxic chemicals it releases. When exposed to heat, e-waste emits chemical substances that damage the atmosphere, toxify groundwater, and dead-zone nearby ecosystems. In a study conducted by the United Nations Environmental Programme, out of 300 school children living near Dandora, the biggest dumpsite in East Africa, half the children tested positive for respiratory problems, and 30% had blood abnormalities. Both are indicators of heavy-metal poisoning caused by the toxicity of discarded electronics. Moreover, these findings highlight the severe health impacts of improper electronic waste disposal on vulnerable populations.

SOLUTION

Reduce the Amount of E-waste Being Sent to Landfills

As an e-commerce company, it’s important to take a holistic approach to minimize your impact on the planet. By partnering with electronic recycling programs or joining the Sustainable Materials Management (SMM) Electronics Challenge, you can responsibly recycle electronics, from in-house tech equipment to industrial batteries. This proactive approach not only helps reduce e-waste but also contributes to a sustainable future.

Additionally, by repairing devices once they’re damaged or outdated instead of replacing them, you can reduce additional waste and save money. Those laptops you plan on throwing away for lagging problems could need a simple hardware update and they’ll be ready to tackle the next round of staff.

Beginner’s Guide to Third-Party Logistics (3PL)

Reduce your carbon footprint, appeal to growing eco-trends, and show the world how much you love the planet by consistently delivering a green experience time and time again.

Let’s Talk!

Connect with us!

by Jamie C. Winters

The Environmental Impact of E-commerce: Part 1

Ready for part two? Read it here!

Key Points from Part Two:

E-commerce transportation contributes to the largest cause of greenhouse gas emissions
Learn how to reduce GHG emissions caused by e-commerce transportation
E-commerce shipping materials account for more than 30% of annual waste
Learn how eliminate unnecessary materials and reduce package waste

As e-commerce becomes the new normal for what was once primarily traditional brick-and-mortar experiences, rising e-commerce concerns are capturing the attention of shoppers and businesses alike. Although there are many concerns, we will focus on four environmental impacts of e-commerce that have emerged in recent years and what steps you can take to reduce these impacts.

PROBLEM

E-commerce Pays Significant Contribution to the Largest Cause of GHG Emissions

Together, FedEx and UPS deliver over 34 million packages every single day. Combine that with thousands of private truckers, shipping carriers, planes, ships, and freights. This makes up a considerable amount of the 29% of GHG emissions attributed to the transportation sector.

Image credit to EPA

For each gallon of fuel used by a common delivery van, about 22 pounds (10 kilograms) of CO2 is released into the atmosphere. Therefore, a delivery carrier traveling over 5,100 miles a year to fulfill next-day orders results in an annual 8 metric tons of CO2 for an average delivery van.

Photo credit to GlobalCurrent.com

The impact of e-commerce transportation will continue to expand. With consumer demand steadily increasing, e-commerce is expected to reach over $6 trillion in sales by 2024. This means we will likely see increased energy consumption, expanded infrastructure, and additional traffic due to delivery providers and fulfillment agencies.

SOLUTION

Combat Greenhouse Gas Emissions by Utilizing Alternative Delivery Options

Use Multiple Fulfillment Center Locations

Whether you’re investing or you choose to partner with a 3PL provider, utilizing multiple fulfillment locations helps your e-commerce reach customers faster, regardless of their location. When your e-commerce has multiple distribution centers, the time it takes for orders to reach customers is reduced and pick-up options become more convenient for shoppers.

Pick-up Points

Pick-up points range from storefront locations and public parcel lockers to picking up from participating partners like the local grocery store. These options allow customers to choose locations based on their needs, schedule and reduce the need for commercial product delivery.

Sustainable Carrier Programs

Popular shipping carriers like UPS and FedEx are now offering low-emission delivery vehicles, bicycle deliveries, and other efforts toward carbon offsetting and reducing GHG emissions. By partnering with carriers who have a focus on sustainability, you gain eco-friendly credibility for your e-commerce company not just in the eyes of shoppers but for the planet too.

Purchase Carbon Offsets

Carbon offsets are great options for reducing vehicle GHG emissions – or any kind of pollution for that matter. Firstly, by determining how much CO2 your company emits a year, you can become carbon neutral by purchasing carbon offsets. Straightaway, these programs reduce your carbon footprint without making drastic changes to your company’s operations or structure.

PROBLEM

The E-commerce Industry is Creating a Massive Cardboard Footprint

During a 2018 EPA study, out of 82,000 tons of containers, packaging, and shipping materials, only half were recycled, resulting in over 30,000 tons of landfill waste. This accounts for over 30% of the total annual waste in the US.

Image credit to EPA

Learn what happens to returned items and other e-commerce waste when they’re sent to a landfill.

A noticeable amount of e-commerce packaging waste comes from:

A lack of space efficiency
Poor vehicle consolidation
Impulse shopping habits from consumers
Excessive packaging
Non-recyclable material

By using right-size boxes, bundling orders, and filling up all available space in delivery carriers, your e-commerce can reduce transportation emissions. Consequently, this approach decreases travel time and the number of trips needed to fulfill orders.

SOLUTION

Improve Packaging Procedures and Switch to Sustainable Materials

Reduce Unnecessary Packaging

Right-size packaging is important when reducing your package and material waste. Undoubtedly, by utilizing the right-size shipping containers according to individual product sizes, you eliminate unnecessary room and the need for extra packaging filler. With less room to move around, items are tightly secured and have a lower chance of being damaged, while safely making it to your customers without the extra wasteful material.

Make Packaging Recyclable, Reusable, or Biodegradable

Investing in recyclable materials helps your e-commerce make a greener impact even after orders have left your hands. Providing customers with less packaging and recyclable material, shoppers are able to contribute to a positive environmental impact by following the recycling directions.

For companies looking to deliver a more creative approach, integrating reusable purposes into product packaging reduces waste while also providing your customers with additional ways to enjoy your brand. Consider reusable packaging ideas like:

Packaging that can be re-purposed into product holders.
Shipping boxes that can be re-purposed into a cardboard castle for cats.
Packaging that can be re-purposed as hangers or for product organization.

Another great option is to make your e-commerce and shipping packaging biodegradable. In this case, whatever material does make it to your customer, you won’t have to rely on them to recycle or reuse. Shoppers can dispose of packaging and waste will take less than 180 days to fully decompose when appropriately sent to an industrial facility.

Take Sustainability Seriously

From GHG emissions to a massive cardboard footprint, the environmental impacts of e-commerce are real and important for consumers and businesses alike to consider. Furthermore, knowing that e-commerce transportation contributes to the highest cause of GHG emissions and is responsible for 5 billion pounds of annual landfill waste underscores the urgency to shift to sustainable practices. Fortunately, we can reduce the global environmental impacts of e-commerce by utilizing alternative delivery options such as delivery pickup points and 3PL partners, as well as combat landfill waste by switching to smaller boxes and sustainable packaging materials.

Eliminate Waste

Say goodbye to small items being shipped out in enormous packaging. At Falcon Fulfillment, we reduce waste by designing custom boxes that exactly fit your products. Consequently, this approach minimizes and, in many cases, eliminates the need for plastics and fillers.

Eliminate up to 80% of waste with customers packaging
Remove the need for plastic with boxes made for your product
Combined orders to one package for reduced carbon footprint and waste

Beginner’s Guide to Third-Party Logistics (3PL)

The world of e-commerce is always changing, therefore understanding the roll of Third-Party Logistics is needed to keeping up. In light of this our beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.

Make sure your customers know the planet is important to you and partner with Falcon today!

Let’s Talk!

Connect with us!

by Jamie C. Winters

How Inflation is Impacting E-commerce

Inflation is on the rise, and e-commerce businesses are feeling the uncertainty. According to Pew Research, inflation is 8.6%, the highest since 1981. American consumers haven’t seen this kind of inflation increase in four decades. With the fed raising interest rates, capital investments and consumer spending are drying up. This unsteady economic climate is causing more panic than preparation. The main contributors to the inflationary period are continued supply chain issues, the Russian/Ukrainian crisis, and new COVID-19 lockdowns in China. Knowing how inflation impacts e-commerce can help determine strategies to maintain profits and minimize spending.

Russian/Ukrainian Conflict

When Russia invaded Ukraine on February 24, 2022, inflation was already up 7.5%. However, a few critical events pushed that number higher and directly affected gas prices. Russia is one of the world’s largest producers of gas and oil. Therefore the conflict alone would have had a direct impact on fuel. President Biden banned imports of Russian oil shortly after the invasion, which increased fuel costs for American consumers. The knock-on effect of high-fuel costs is evident not just at the pump, but we are starting to see it directly impacting e-commerce.

Amazon added a 5% fuel inflation charge for its fulfillment clients in April of 2022. Subsequently, every consumer good that Amazon fulfills has a 5% upcharge based on the sustained high-fuel costs. There doesn’t appear to be relief either. E-commerce business owners will likely have to absorb the increased fuel surcharges or pass them along to consumers.

Supply Chain Pains

Thanks to the COVID-19 pandemic, we experienced a massive increase in demand for online goods. The rise in demand aligned perfectly with a supply chain bottleneck caused by a lack of laborers in the transportation and fulfillment network. Truck driver shortages are at an all-time high. The shortages have remained even with an increase in wages in America and Europe.

This labor shortage is also being seen in the ports and other transportation-focused industries. Goods are being held for longer because there aren’t people to move them to their final destination. Recent relief in the bottleneck is primarily attributed to lower demand. However, industries like household goods, food, and vehicle-related products are still experiencing high demand and slow fulfillment. The supply chain is recovering but at a snail’s pace.

COVID-19 Lockdowns in China

Chinese imports account for 18.6% of the overall imported goods consumed in the United States. The impact of recent lockdowns and stay-at-home orders sweeping across the Shanghai region of China will have a negative effect on inflation. The shipping container backlog will continue, and the pressure to get goods and component parts out of China.

Inflation is impacting e-commerce. What to do?

Clearly, inflation is harming e-commerce. With a very dismal forecast for inflationary change, what can be done? The first thing is to save more capital investment. While you can still generate capital investment, do it. As the FED threatens to raise rates, it is critical to have as much revenue in savings as possible. This gives your e-commerce flexibility in an uncertain market.

The second is to stockpile goods. Inflation is projected to continue rising, so the more raw materials and goods you can stock and store, the better your position will be in the near future. Lastly, Be prepared for continued changes in the inflationary climate.

Beginner’s Guide to Third-Party Logistics (3PL)

Regardless of how your business addresses high inflation, Falcon Fulfillment can help streamline your fulfillment process and ensure your company is best positioned to endure this economic storm. Reach out to an agent today.

Let’s Talk!

Connect with us!

by Jamie C. Winters

Beginners Guide to 3PL Fulfillment

To help you evaluate whether or not a 3PL partnership is right for you, we have developed this beginners guide to 3PL fulfillment. We will discuss what a 3PL is, the pros and cons of using a 3PL, and questions you should ask before selecting a partner.

What is a 3PL

Third-party logistics, or 3PL for short, is a company that offers outsourced logistics services. 3PL services encompass everything from procurement to last-mile delivery. A 3PL provides the staff, space, and transportation network required for order fulfillment. They can manage receiving, inventory warehousing, packaging, and shipping services, letting businesses focus on other essential areas of their company. Some 3PL businesses offer additional logistics services known as value-added services. These include inventory management, kitting and assembly, and more. Furthermore, some 3PL companies specialize in specific product types such as:

B2B
Ecommerce
Retail
Apparel
Health & Beauty
Frozen Foods
Nutraceuticals
Beer & Wine

Pros of Working with a 3PL

In this beginners guide to 3PL fulfillment, we will focus on the most relevant benefits, although there are many more.

Industry Expertise

Streamlining and managing supply chains, transportation, and new market compliance can be overwhelming. When partnering with a 3PL, you gain the advantage of industry experts with insider knowledge. They can help facilitate imports, exports, international shipping compliance, and economic regulations. This is incredibly valuable as you consider launching new markets or expanding overseas.

Cost Savings

Businesses often partner with 3PLs to save money and boost profitability. 3PLs consistently improve efficiency in the order fulfillment process. They reduce shipping costs by leveraging their collective order volumes to negotiate better rates. Furthermore, they typically provide faster delivery times.

Scalability

Another benefit is the ability to scale your business with a 3PL. It is easier to navigate sales peaks and valleys when warehousing, staffing, and transportation needs rise and fall in step with demand. 3PL fulfillment companies give their clients the ability to scale quickly without significant capital investment in fulfillment infrastructure.

Customer Satisfaction

Working with a 3PL can significantly improve your overall customer satisfaction. They help provide quicker delivery options with more consistent results. The inventory management technology used by most 3PLs allows for fewer stock-out situations. Lastly, many 3PL companies handle reverse logistics, or returns and refunds. All of these create happy customers.

Cons of Working with a 3PL

There are clear advantages of working with a 3PL. However, you should also know the common drawbacks you might encounter. Here are a few complications you should consider especially if you are trying to determine whether to continue dropshipping or transition to 3PL fulfillment.

Loss of Inventory Control

Many business owners want to maintain a high level of control over their inventory. Rightfully so, your business can suffer if products are not packaged and shipped correctly. Releasing inventory management and fulfillment to a 3PL can be unsettling and detrimental if the right partner isn’t chosen. Finding a logistics partner you can trust is a process.

Higher Up-Front Costs

Saving money with a 3PL is a long game. Setting up your 3PL warehousing and distribution requires an initial investment. Your storage needs and order volumes will determine the necessary upfront cost. Companies with high order volumes and flexible storage space will benefit most from a 3PL partnership. An excellent 3PL will tailor costs around actual needs.

Loss of Control over Customer Experience

When you entrust a 3PL to fulfill your orders, you have to give up some control about how and when those products will be delivered. When a 3PL performs or handles a customer poorly, that reflects on your business directly. This is why choosing a trustworthy and competent 3PL is crucial.

Questions to Ask Before Choosing a 3PL

Will your technology integrate with your sales channels and inventory management platforms? (Omnichannel technology)
How does your pricing model work? I.e., do you charge separate fees for receiving, picking/packing, and warehousing, or do you provide an all-inclusive option?
What types of products are your specialty? If your product is outside of their wheelhouse, how will they accommodate it?
What is their experience with peak seasons? Can they handle fluctuations in order demand easily?
Do they provide same-day order fulfillment, and can they offer competitive 2-day shipping for most of your customers?

Beginner’s Guide to Third-Party Logistics (3PL)

Chat with one of our specialists today to find out how Falcon Fulfillment can help.

Let’s Talk!

Connect with us!

by Jamie C. Winters

The Pros and Cons of Dropshipping for E-commerce

What is Dropshipping?

Dropshipping involves an e-commerce fulfillment method where online retailers source products from third-party suppliers upon customer orders. This model effectively delegates inventory management, shipping, and fulfillment responsibilities to external vendors, alleviating merchants from these operational tasks. When orders are received, dropshipping suppliers take charge of product manufacturing and shipping, acting on behalf of the seller. However, it’s important to weigh the pros and cons of dropshipping.

What is a Dropshipper?

A dropshipper, typically a manufacturer or supplier, assumes responsibility for overseeing a retail merchant’s inventory and order distribution. Given that most business operations are overseen by the dropshipper, the primary duties of the merchant include brand marketing, customer attraction, and pricing strategies aimed at ensuring a healthy profit margin.

How Does Dropshipping Work?

Dropshipping is relatively simple and consists of two steps.

In dropshipping, an e-commerce model, inventory, warehousing, packaging, and shipping tasks are managed by a third-party on behalf of the seller.
When a shopper places an order, the order is relayed back to a seller’s dropshipper. Subsequently, the seller will purchase the product(s) in the order, and the dropshipper will proceed to manufacture/create the order, package it, and ship it directly to the customer.

LEARN HOW DROPSHIPPING COMPARES TO A 3PL

The Advantages of Dropshipping

It’s likely that start-ups and first-time business owners are interested in the dropshipping business model because of the seemingly off-the-bat benefits. Let’s take a closer look at the pros and cons of dropshipping.

No In-house Inventory

Managing your own inventory is stressful. Fulfilling orders, managing returns, and overseeing customer service consume a lot of time and focus. With a dropshipping business model, the inventory of a seller is directly managed by the dropshipper’s warehousing facility, along with order returns and basic packaging needs. This reduces overall costs by eliminating personal fulfillment expenses, the need for employees, and the need for inventory space.

Little Start-up Costs

A significant advantage of start-up e-commerce is that dropshipping facilitates minimal initial investment. Essentially, you only need to select your products, integrate them into your store, and pay when a product is purchased. Consequently, without the burden of fulfillment processes or inventory management, start-up expenses are minimal, enabling a swift launch of your business.

No Fulfillment Responsibilities

Compared to other e-commerce, sellers who are using a dropshipping business model do not have to worry about other areas of fulfillment. With no inventory or packaging to manage, sellers can focus on creating products and advertising them to the right audience while their dropshipper does most of the work. This appeals to first-time sellers, new entrepreneurs, and those wanting to sell with minimal responsibility.

The Disadvantages of Dropshipping

While there are many benefits to dropshipping, it has its equal share of disadvantages. Let’s consider a few examples and how they compare to the upside of dropshipping.

Loss of Control

One of the disadvantages of dropshipping is the seller’s lack of control. Since brands do not have to manage their own inventory, fulfillment, and order shipping, they lack the means to customize the customer’s shopping experience. This often results in generic packaging, average or extended delivery times, and possible quality control issues.

Quality Control

Without control, there’s a potential drop in quality. Furthermore, if sellers are unaware of their dropshipper’s product quality, they may face customer complaints they weren’t expecting. Moreover, sellers lack the ability to inspect inventory prior to sale, potentially leading to damaged items, packaging issues, and customer dissatisfaction.

Branded Shopping Experience

Yet another downside of loss of control over certain areas of your business, is missing out on providing a branded shopping experience to your customers. Although some dropshippers allow for some package customization, there are few options when compared to fulfilling on your own or with a 3PL. Restricting branding narrows the perception your customers hold of your company. Without a distinct brand identity, how will you differentiate yourself from the multitude of Amazon sellers?

Beginner’s Guide to Third-Party Logistics (3PL)

If you’ve surpassed the limitations of your dropshipping model, seek to expand your operations, or wish to explore the benefits of partnering with a third-party logistics provider (3PL), reach out to one of our agents today.

Let’s Talk!

Connect with us!

by Jamie C. Winters

2PL vs 3PL - Which Fulfillment Partner is Best?

3PL vs 2PL – Which Fulfillment Partner is Best?

If you are a growing e-commerce business that has been handling your fulfillment needs in-house, you may be considering how to scale effectively. Understanding your requirements, time constraints, and growth trajectory is crucial in deciding whether a 2PL or a 3PL is more suitable for your business. The ideal fulfillment partner will align with the needs of your business and your customers. In this article, we will define and outline the advantages and disadvantages of using a 2PL versus a 3PL partner. Ultimately, which fulfillment partner is optimal for your e-commerce venture?

What is a 2PL

2PLs, known as second-party logistics providers, are asset-based carriers responsible for transportation methods. This category encompasses shipping lines, air freight providers, and van lines, among others. Essentially, 2PLs own the transportation assets responsible for product delivery. In other words, they include airlines, sea-faring cargo ships, and rail transport companies contracted for delivery services. Often referred to as “forwarders,” they primarily control one leg of the transportation journey. The extent of their involvement in the delivery process varies depending on the company and its resources. For instance, larger shipping lines like Maersk mainly handle large, heavy, or wholesale deliveries. On the other hand, global 2PLs like FedEx can manage larger shipments and everything in between.

Pros

They provide lower overhead than shipping the product(s) yourself.
They offer simple contracts
It is easy to track goods
You have the freedom to choose the mode of transportation

Cons

Provides a basic level of delivery
Harder to scale
Relationship is transactional
Is not invested in your e-commerce success

What is a 3PL

3PLs, or third-party logistics providers, are organizations specializing in integrated fulfillment. E-commerce businesses often opt to outsource their supply chain and order fulfillment through these entities. 3PLs offer a range of services, including warehousing, receiving, storage, and shipping. Additionally, some 3PL companies offer value-added services such as inventory management, kitting, assembly, and custom packaging options. E-commerce as an industry and been growing steadily over the past decade and so has the rise in 3PLs. In fact, most fortune 500 (86%) and 100 (96%) companies use a 3PL fulfillment partner. Here are a few reasons why.

Pros:

They help simplify the fulfillment process
Faster delivery, fewer mistakes
Greater scalability
Relatively low capital investment required
Save money and time in the long run

Cons:

You give up more control of the supply chain and fulfillment process
Businesses can become dependent on their 3PL partners
Higher upfront costs initially

Opting for a 3PL over a 2PL offers several distinct advantages for growing e-commerce businesses. With a 3PL, businesses can simplify their fulfillment process and enjoy faster delivery with fewer mistakes. The scalability provided by 3PLs is crucial for accommodating business growth efficiently, while the relatively low capital investment required makes it a cost-effective solution in the long run. Despite some drawbacks such as giving up control of the supply chain and facing higher upfront costs initially, the benefits of using a 3PL, including time and money savings, often outweigh these concerns. Moreover, the widespread adoption of 3PLs by both Fortune 500 and Fortune 100 companies underscores their effectiveness in meeting the evolving needs of modern e-commerce ventures.

Beginner’s Guide to Third-Party Logistics (3PL)

Don’t hesitate to reach out to an agent today to discuss how we can assist you.

Let’s Talk!

Connect with us!

by Jamie C. Winters

6 Causes of E-commerce Shipping Damage and How to Prevent It

6 Main Causes of E-commerce Shipping Damage and How to Prevent It

Except for ordering or receiving the wrong size item, a damaged or defective product is the number one reason a customer will return an item. Unfortunately, damaged goods are all part of doing business as an e-commerce. Online returns cost retailers an average of 21% of the overall order value. You can reduce returns and improve customer service scores by focusing on minimizing shipping damage. There are a few practical and cost-effective ways to increase the chances your package arrives in excellent condition. Here are six main causes of e-commerce shipping damage and how to prevent it.

6 Main Causes for E-commerce Shipping Damage

Improper Packaging

Suppose the package selected to ship your product is too big or too small, the probability of damage increases. When a box is too large, the product has more room to shift and move in transit. If it is not shock-proof, the likelihood of damage goes up. Similarly, if a package is too small, the product has limited cushioning and is more easily crushed, scratched, or dented. There is a “Goldilocks” size for every product. A box or bag that is not too big and not too small; it’s “just right.”

Incorrect or Inadequate Filler

Failing to wrap or insulate the package with enough filler will result in more movement during transit. Furthermore, selecting a protective filler that isn’t appropriate can also increase the likelihood of damage. For example, shipping a bone china tea cup unwrapped and tucked into loose packing peanuts is a recipe for disaster.

Poor Handling

Your product will be jostled, tossed, stacked, shoved, and moved in ways you never could imagine. Products travel through various machines, conveyors, delivery vehicles, and people before they reach their final destination. Even when e-commerce fulfillment teams do their absolute best to package a product, it can still absorb shipping damage due to a lack of proper handling. Whether your delivery driver is just having a bad day or they had to make a hairpin turn last minute to avoid a stray dog, your package can take a tumble.

Mislabeled or Improperly Sealed

Not every transportation employee will heed the “Fragile” stickers affixed to packaging, but many do. Not adding a label at all can mean the difference between someone tossing your package on the front porch and carrying it there. Another common cause of e-commerce shipping damage is poor sealing. When the adhesive cannot hold the weight or has lost its ability to keep a box closed damage is bound to occur.

Failing to Track or Inspect Shipments

Many e-commerce businesses get so busy they fail to implement inspections along the fulfillment journey. Your product is passed along and if there are not quality control inspections along the way it is difficult to narrow down where the most shipping damages occur.

Infestation

Pests can ruin everything. While beetles, cockroaches, and birds are typical varmints found in warehouses the main perpetrator are rats. Rodents can chew through almost any variety of materials and use many types of packing materials to build their nests. They damage boxes, plastic and fiber tie downs and more. Weak, chewed up, and damaged corrugated packaging cannot withstand the same weight or transit stress as a perfect one.

6 Main Solutions for E-commerce Shipping Damage

Right-size Packaging

Packaging at the right size involves utilizing suitable materials, quantity, and dimensions to safeguard a product and effectively present a brand. This approach guarantees the optimal dimensions to reduce shipping damage while also cutting down on shipping expenses. Given that carriers calculate charges based on weight and dimensions, striking the right balance to protect the product without incurring additional costs for unused space is crucial. Discover four ways in which adopting right-size packaging can enhance profitability. Carriers charge based on weight and dimensions so getting the balance between protecting the product without paying for extra airspace is vital. Here are 4 ways that right-size packaging can boost profitability.

Correct Type and Amount of Filler

After getting the package size correct, the next tip to reduce e-commerce shipping damage is to select the right type and amount of dunnage. Dunnage is any packing material used to protect goods during shipping. There is a plethora of void fill and protective packaging materials to choose from. Many e-commerce companies are shifting their packing materials to sustainable choices. Our sustainable packaging guide can help you select the most eco-friendly materials to limit shipping damage.

Test Your Packaging Before Shipping

It might seem silly to package a product and then drop it off a 4ft cliff, but that is precisely what can make the difference between a refund and a 5-star review. Put your packaging to the test by shaking it, dropping it, banging it, rolling it, vibrating it, and torturing it as many ways as possible. If your product maintains pristine quality after rigorous trials, you can be assured your product should arrive with minimal shipping damage.

Use Quality Sealing Tape or Adhesive

Select high-quality sealing tape that is rated to hold the weight of your product. Also, ensure all edges are aligned and sealed fully to prevent snags.

Inspect Regularly

From the receiving dock to the final mile delivery it is important to document damage and shortages. Keeping a record of manufacturing damage can help you work with your vendor to modify shipping or packaging to minimize damage. Furthermore, if you are using a carrier that consistently delivers packages that are sustaining damage it can tell you it’s time to change. Track damage sustained including images of damage through the entire fulfillment process.

Extermination

Keeping a regular schedule of extermination in your storage and warehousing facility is crucial to keep pests away. Limiting access points and sealing all food items well will also keep from attracting bugs, beetles, and flies. It isn’t possible to keep pests from entering an open door but you can minimize shipping damage from them by ensuring you exterminate regularly and seal boxes fully.

Beginner’s Guide to Third-Party Logistics (3PL)

Get in touch today to see how we can help save you money on shipping damage returns.

Let’s Talk!

Connect with us!

by Jamie C. Winters

Expanding Your Network with a 3PL

3PL partners offer logistics services and supply chain management. They are logistics experts, specifically; warehousing, picking and packing, inventory management, transportation, fulfillment, packaging, and returns management. Because of the focused nature of a 3PL, they typically have a broad network of partners related to all aspects of the logistics industry. How can you expand your network with a 3PL?

Transportation Network

3PLs boast relationships with multiple carriers spanning the transportation industry. These partnerships extend to various van lines, shipping companies, freight carriers, and rail lines. While an individual e-commerce business might maintain personal connections with one or two carriers, a 3PL cultivates relationships with numerous providers. The significance for your business lies in the immediate access to this expansive transportation network. This accessibility proves invaluable in scenarios such as unexpected disruptions, like flooding in Missouri, which may impede travel through vital interchanges. In such instances, your 3PL can swiftly pivot to alternative providers and routes, ensuring minimal delays.

Legal

A viable rats nest of legal concerns surround logistics, especially when you involve international shipments. This includes complicated issues like documentation, import and export regulations, as well as economic regulations. Hiring or investigating the nuances of international logistic law is time-consuming and expensive. One of the most cost-effective ways to expand your legal network is through partnering with a 3PL. A 3PL already has the expertise and relationships to comply with local, federal, and international laws. Your 3PL will have a pulse on the ever-changing legal fulfillment battles—especially those tricky wine and beer fulfillment issues.

Expand to New Locations

Expanding your e-commerce reach to new locations is daunting when you don’t have an on-the-ground expert helping you. When you consider trying to expand to new locations, you start by evaluating the market, estimating inventory needs, training staff, and sourcing suppliers and distributors. It is a very involved process. A 3PL expands your network by aiding in providing staff, multi-site distribution space, and flexible warehousing space as your reach grows. Not only that, but 3PL companies have a broad network of suppliers they work with and can make mutually beneficial introductions.

Returns Management

One of the greatest deterrents to gaining loyal customers is a lack of responsive customer service or a complex returns process. While most businesses would like to avoid returns altogether, having a solid return management process is crucial. Some of the best 3PL partnerships help manage the returns process, including receiving, returning items to the inventory management system, and disposing of damaged goods. 3PLs are experts in streamlining the returns process and ensuring a good customer experience.

Beginner’s Guide to Third-Party Logistics (3PL)

We are poised and ready to help you expand your network and business! Get in touch with one of our agents today.

Let’s Talk!

Connect with us!

by Jamie C. Winters