We’ve been hearing a lot about global supply chain problems and major backups at American ports. Things are slowly improving, but not fast enough to avoid potential problems for the holiday shopping season. This isn’t just about empty shelves, but the backlog is driving up prices on nearly everything we buy. Last month, inflation hit a 30-year high, meaning more Americans are living paycheck to paycheck.
“What we saw earlier in the pandemic is that once people felt more comfortable in their financial position … a lot of people did shop. And part of that was just because the circumstances of life had changed, and people needed different stuff,” says Amanda Mull, author of The Atlantic’s “Material World” column. “And then I think over time, some of it began to happen just because people were bored, and couldn't spend money on all the things that they might normally. So they just started to order things because they were spending more time around the house and needed new diversions.
Now instead of physically going to a store, people can shop online and on their phones, so there’s a constant opportunity to spend money and see advertisements, she says.
“The internet has taken a lot of friction out of consumer life. It's very, very easy to buy things. You don't have to get up and go anywhere, or really even make a choice. Your credit card information is saved, your shipping information is saved. It takes usually one or two clicks.”
There’s an evolutionary drive for consumerism too. Mull explains that for much of human history, resources were scarce and acquiring them was a goal, and in times of insecurity or safety fears, people become more materialistic, but that impulse can be irrational.
She explains that the U.S. currently is importing more overseas goods than before the COVID-19 pandemic, and the main issue is an intense spike in demand, largely driven by affluent people who already have what they need. “[They are] using this extra money that they've accumulated over the pandemic to entertain themselves.”
The problem of online returns
Sometimes people buy two sizes of a clothing item online because they aren’t sure which one will fit, and then they’ll return the size that’s too big or too small. But stores don’t necessarily resell those returned items.
“The problem of online returns is both huge and it's hidden. … If you buy something in several sizes, you buy something you're not sure you're going to like but you want to see it in person, and then send back half of a particular order, a lot of times those returns are not just going to be restocked and then shipped to the next buyer,” Mull explains.
She says restocking and reselling an item isn’t cost-effective. “And 30 to 50% of online shopping purchases go back, which is a really huge amount. And all of that has to be … sorted by people in sorting centers. The sorting centers may be in a completely different state than that retailer’s forward logistics operation that sends stuff out to customers.”
She says 25% of returned items go to landfills, and some get exported to foreign countries, which may or may not be able to sell the items.
In contrast, she says physical in-store purchases have an 8% return rate. “If you're looking at 8% versus 30 to 50%, the scale of waste is just a lot different online.”
High-end brands tend to destroy, not donate
Mull explains that when you return brand-name items and luxuries, they get trashed rather than donated or sold at discounts.
She says marketers have a theory: “Giving things away to poor people that you would like to sell at a markup is going to make people who buy things at that markup feel like your product is not worth that money anymore. It's really saying the quiet part out loud — that the people who buy some of these high-end things don't want to buy things that poor people have access to.”
A simple solution: Buy less or not at all
Mull suggests people should step back and look at whether compulsive shopping is the best use of time, energy, and resources. She says psychological research suggests that especially around the holidays, if people can slow down and refocus energy away from buying/giving gifts, and toward spending time with family and creating experiences, they’ll end up happier in the long term.