What happens with the returned items to Amazon?

August 01, 2022

Returning an online order has never been easier.

This is often free to the customer, with some retailers allowing customers to keep the item and offering a full refund. Amazon returns can be delivered to Kohl's, UPS or Whole Foods without a box or even a label printed. But the record number of returns that flooded warehouses after the holidays also has its dark side. "All returned products now generate nearly 6 billion pounds of landfill waste annually, as well as 16 million metric tons of carbon dioxide emissions," said Tobin Moore, CEO of returns solutions provider Optoro.
"That's the equivalent of the waste produced by 3.3 million Americans annually." Moore says online purchases are at least three times more likely to be returned than items purchased in-store. A record $761 billion in sales will return by 2021, according to estimates in a new report from the National Retail Federation. This report says that 10.3% of returns are fraudulent. Meanwhile, Amazon's third-party sellers told CNBC that they throw away nearly a third of returned goods. "Somebody has to pay for it," said Micah Clausen, who sells party supplies and home goods on Amazon through a third-party store called Iconikal.
"It comes down to Amazon or third-party sellers. It comes out of their bottom line, and the price is inevitably higher. UPS reported that the 2021 season saw a 10% increase in revenue compared to the previous year, which will translate into more waste – and costs – for all online retailers. At the head of the pack, Amazon faced growing criticism for destroying millions of items.
Now, the e-commerce giant says it is

"working on a goal of no product removal."

Last year, it launched new programs to give sellers like Clausen new options to resell or consign to auction on the liquidation market. Liquidity Services consumer marketing manager Meredith Diggs explains one way e-commerce is normalizing shopping habits, leading to higher returns. "A walk-in closet [is] where people order the same item in three different sizes to see which one fits, and then return the other two, not knowing that the other two usually never make it back to store shelves," Diggs said .
"Categories like apparel are really showing, very strong returns in the top 10 percent," added Raunak Nirmal, who used to work at Amazon and now owns Amazon aggregator Acquco with more than 40 third-party brands. Its return is close to 3%. “If it's a new product, Amazon will allow the resold product to be listed as new, but it really has to be in perfect condition for that to happen, and that's rarer than you'd expect, even if the customer doesn't. . to actually use the product,” said Nirmal.
If the item doesn't sell as new, Amazon gives the seller up to four options for what to do with the return: each with a fee:
  • Return to Seller
  • Throw Out
  • Dispose
  • Fulfillment by Amazon Sort and Sell
With the Return to Seller option, the return leaves the Amazon warehouse for multi-leg freight, air or ship shipments. It goes back to the seller for further processing, then it can go to another Amazon warehouse to be sorted and repackaged, then to a new customer who can always choose to return the item. . “You're forced to decide if you want to keep that stock in your warehouse – which is an expensive process – repackage it yourself and then send it back to the warehouse to sell, which is not reasonable, I'd say 80% to 90% of the time.
Or you can choose to sell,” said Nirmal.
Discarding is very common; lot of returns from many of the biggest online retailers. In a statement, Amazon told CNBC: "No items are sent to landfill. We are working towards a goal of zero product disposal, and our priority is to sell, donate to this charity or recycle any unsold products. As a last resort, we send items for energy recovery, but we are working hard to by reducing the number of times this happens to zero. "Re-energizing" usually means that it has been burned. In the words of the U.S. Environmental Protection Agency, it is "the conversion of non-recyclable waste materials into usable heat, electricity, or fuel through a variety of processes, including incineration, gasification, pyrolysis, anaerobic digestion, and landfill gas utilization." "The thing that really surprised me is the things that the computer system tells you to destroy," said Shay Machen, a seasonal worker at an Amazon return center in Mississippi. “I had a book back, it was a children's book and the customer said it was broken and bent when it arrived and it wasn't. And no matter what I put into the system it says destroy the thing. And that is something heartbreaking. " Skipping returns is a widespread practice in e-commerce. Luxury retailers like Burberry have been criticized in the past for burning millions of unsold goods to protect their brands, which Burberry told CNBC it stopped in 2018.
A Danish TV station reported that since 2013, H&M has sold 60 tonnes of new goods and burned unsold clothing, a claim H&M told CNBC was a misunderstanding. A spokesperson for H&M said: "The products mentioned in the media were affected by mold or did not meet our chemical restrictions." Similar claims have been made by Coach, Urban Outfitters, Michael Kors, Victoria's Secret and JC Penney. "It's the easiest thing and sometimes some brands do it because, you know, they want to protect their brand and they don't want things on the market that aren't very expensive," he said.
Some brands, like Nike, have found creative ways to repurpose revenue and turn it into new value items. "Some of the shoes they can't sell end up on the ground and turned into ruts," Moore said. "It takes energy to grind things up and turn them into something else. I think, first of all, if you can sell it in its original form, that's the best scenario for the environment. Amazon has a number of programs designed to do just that.
For some electronics, such as Amazon devices, phones and video games, it gives customers the option to send them to a certified recycler or exchange them for Amazon gift cards. And as of 2019, their FBA donation program allows sellers to automatically offer qualified restocks and returns to charitable groups through a nonprofit network called Good360.
Amazon says more than 67 million items have been donated so far. Amazon also announced two new diversion programs last year after British broadcaster ITV reported that the company destroyed millions of items such as TVs, laptops, drones and hairdryers in a UK warehouse. First, there's Liquidation, which Amazon now offers sellers as an option instead of dumping. Amazon and other major retailers partner with liquidation marketplaces such as Toffa Wholesale and B-Stock Solutions, which auction off unwanted inventory to sellers by the pallet or even the load. “If your product can be scrapped, you get back about 5% of your selling price,” says Nirmal. “And at the end of the day, it ends up in the hands of someone who will hopefully take advantage of it. YouTube creators like Hope Allen have built a following by finding deals online, and sale palettes have become a popular trend. Last year, he paid $575 for a pallet of nearly $10,000 worth of Amazon returns on Liquidation.com and unboxed them on his channel, where they go to HopeScope.

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