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Where Do Returned Items Go?

July 29, 2020 Published by

sign representing product returns

Returning items can be a headache, but trust that retailers are feeling the burn even more so. Consumers returned a total $309 billion worth of merchandise from retailers in 2019 with online purchase returns accounting for $41 billion. However, we know unwanted orders don’t just magically disappear, leaving an important question: Where do all these returned items go? We’ll explain.

Secondary Retailers to the Rescue

Selling returns is much harder than you’d think. Returns are a long and expensive ordeal for retailers, most of whom won’t be able to sell their returned items at full price. Of those items, returned electronics are a notorious loss leader that can lose a most of their value in less than a year.

A great deal of returns are sold at a significantly reduced cost to secondary retailers like liquidators and discounters. They try to get as much as they can for their items while looking to maximize their margin. By selling at a high enough volume, liquidators are able to profit.

Retailers pay for item assessment, repackaging and even shipping for those items that are returned. Sometimes, an item will be more costly to resell, leaving only the option of trashing it. This hasn’t been good for the environment, with 5 billion pounds of waste produced through returns each year. Brand image can also suffer if a company trashes significant amounts of its products, as was the case for Burberry whose image suffered after it admitted to burning 90 million pounds (about 115 million U.S. dollars) of unsold products in 2018. Returned items are occasionally taken apart for extraction of recyclable components, but there is still a long way to go in terms of reducing return waste.

Solutions

Cost-free steps can be taken to avoid returns completely. It is estimated that 15 to 30 percent of items purchased online will be returned. Therefore, it is recommended that retailers represent their items accurately to cut down on returns.

Returns are extremely important to consumers. 80 percent of online shoppers don’t do business with ecommerce sites that have a complicated returns policy. Improving your returns policy is a great way to avoid losing sales and create a great customer experience.