Australia’s $20 billion online returns problem prompts doorstep pick-up solution
Australia’s rapid shift to online shopping has created a growing problem in the backend of retail – a returns system now linked to an estimated $20 billion in activity each year – and new services are now emerging to address the challenge.
Approximately one-third of all online purchases in Australia are returned, and industry estimates suggest return rates range from 19 per cent to 30 per cent.
The trend has grown alongside record e-commerce spending, reaching $69 billion by 2024, including $9.6 billion in fashion sales alone.
Despite this growth, the process of returning items remains largely unchanged.
Many customers still need to print labels, repackage products and go to post offices, while others reject this option altogether.
More than 7.3 million Australians reported not returning their products because the process was too difficult, with an average of $590 worth of products left unused at home.
This equates to approximately $4.3 billion in unreturned products nationwide.
As return volumes increase, environmental impacts also increase.
Online retail produces 4.8 times more packaging waste than in-store shopping, with additional materials created through reverse logistics.
An estimated 13,000 to 32,000 tonnes of soft plastics are attributed to online returns in Australia each year.
One company trying a different approach is ReSmart, which is in the final stages of testing a door-to-door collection service that combines product returns with packaging recycling in a single pickup operation.
Under the system, customers place unwanted products and packaging in a doorstep bag for collection, where they are sorted and processed through a consolidated reverse logistics network before being returned to retailers.
Giorgio Baracchi, founder and CEO of ReSmart, said the current returns process has not kept pace with the growth in online retail.
“Online shopping has evolved rapidly, but returns are still a thing of the past,” Ms. Baracchi said.
“People are printing labels, finding boxes and queuing at the post office, so millions of Australians don’t bother returning items.
“What most people don’t realize is that every return also creates more packaging and waste, much of which is not properly recycled.
“For customers, it eliminates hassle and saves time. For retailers, it reduces the cost of processing returns and improves recovery outcomes.”
Industry comparisons show retailers currently spend about $22 per returned item in processing.
Consolidated logistics models such as the one being tested are expected to reduce these costs by approximately 50 percent.
ReSmart currently operates a national collection and recycling network which it claims has completed more than 440,000 collections and diverted over two million kilograms of waste from landfill.
The system is currently used by more than 44,000 customers and is supported by 29 councils across Australia, with organizations including Canva, Westpac, Qantas and The Iconic among existing users of the wider platform.
Existing infrastructure is being used to support the roll-out of the return service in major cities such as Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra and Hobart.
The announcement coincides with the launch of an equity crowdfunding raise on the OnMarket platform, with funds aimed at supporting expansion, logistics optimization and national distribution of the service.
“Millions of returns flow through retail every year, but the infrastructure to properly deal with them does not yet exist,” Ms. Baracchi said. “We’ve already built the network. The next phase is about unlocking a whole new layer of this network and making returns as simple as dropping off a bag at your front door.”
The funds raised will be directed towards scaling operations and expanding logistics systems as the company moves towards broader deployment.
