What happens to Amazon returns in reality

Never has it been simpler to cancel an online order. Many retailers provide free shipping and allow customers to keep the item while issuing a full refund.

Items can be dropped off at either or Whole Foods without needing to box them up or print a label.

The surge of returns after the holidays is causing problems in warehouses.

According to Optoro CEO Tobin Moore, the returns solution provider generates nearly 6 billion pounds of landfill waste annually and 16 million metric tons of carbon dioxide emissions. This is equivalent to the waste produced by 3.3 million Americans in a year.

According to a report from the National Retail Federation, online purchases were at least three times more likely to be returned in 2021, resulting in a record $761 billion of merchandise being returned.

Meanwhile, third-party Amazon sellers told CNBC that they throw away about a third of returned items. That report states that 10.3% of those returns were fraudulent.

Micah Clausen, the third-party seller on Amazon, stated that someone must pay for the cost of party supplies and home goods, which will either be covered by Amazon or the seller, ultimately leading to an increase in prices.

Online retailers will face higher expenses and more waste during the 2021 holiday season, as UPS predicts a 10% increase in returns compared to the previous year.

Amazon, the leader in e-commerce, is facing criticism over the destruction of millions of products. In response, the company is now aiming to eliminate product disposal and has introduced new programs to help sellers resell returns or sell them on the liquidation market.

Meredith Diggs, a consumer marketing manager, explains how e-commerce has influenced shopping habits, resulting in higher return rates.

"Wardrobing involves ordering the same item in three different sizes to determine which one fits, but often the other two sizes are not returned to the retailer's shelves," Diggs explained.

According to Raunak Nirmal, who previously worked at Amazon and now runs an Amazon aggregator, Acquco, with over 40 third-party brands, categories like apparel see really high return rates in the 10s of percents. However, his return rate is closer to 3%.

According to Nirmal, if a product is new, Amazon will permit it to be resold on the listing as new, but it must be in pristine condition, which is less common than expected, even if the customer hasn't used the product at all.

Amazon offers sellers four options for handling returns, each with a fee: Return to Seller, Disposal, Liquidation, or Fulfillment by Amazon Grade and Resell (invitation-only at present).

The Return to Seller option initiates a return process that involves several legs on a truck, plane, or cargo ship before reaching the seller for further processing. The item may then be sorted and repacked before being shipped to a new customer, who may also choose to return it.

Nirmal stated that you are often left with no choice but to decide whether to recall the inventory to your warehouse, which is an expensive process, repackage it yourself, and then ship it back to a warehouse to sell, which doesn't make sense 80% to 90% of the time, or dispose of it.

Amazon aims to eliminate product disposal by reselling, donating, or recycling unsold items, and only sends products to energy recovery as a last resort.

The conversion of nonrecyclable waste materials into usable heat, electricity, or fuel through various processes, including combustion, gasification, pyrolization, anaerobic digestion, and landfill gas recovery, is commonly referred to as energy recovery.

According to Shay Machen, a seasonal worker at an Amazon returns center in Mississippi, the most surprising thing was the items that the computer system instructed him to destroy. He shared an example of a children's book that was returned, which the customer claimed was smashed and bent upon arrival, but he knew it wasn't. Despite his efforts to explain the situation, the system insisted on destroying the item, which was a heart-wrenching experience.

The practice of disposing of unsold merchandise is common in e-commerce. Luxury brands like Burberry have faced criticism for burning millions of unsold items to protect their brand image, a practice that Burberry claims to have stopped in 2018. H&M has also been accused of burning 60 tons of new and unsold clothes since 2013, but an H&M spokesperson claims that this was due to mold or non-compliance with chemical restrictions. Other brands like Coach, Urban Outfitters, Michael Kors, Victoria's Secret, and J.C. Penney have also faced similar accusations.

Moore stated that it is the simplest task and some brands do it to safeguard their brand and prevent less valuable items from being released into the market.

Nike is one of the brands that has discovered innovative methods to transform returns into valuable products.

Moore stated that some unsold shoes may be ground up and transformed into tracks, which requires energy. He emphasized that selling items in their original form is the most environmentally friendly option.

Amazon offers various programs to recycle or trade in electronics, including its FBA Donations program which donates eligible overstock and returns to charity groups. Since 2019, over 67 million items have been donated through this program.

Last year, Amazon introduced two new re-homing programs following a report by British broadcaster ITV that the company was destroying millions of items, including TVs, laptops, drones, and hairdryers, at a U.K. warehouse.

Instead of disposal, Amazon now provides sellers with the option of liquidation.

Major retailers, including Amazon, collaborate with liquidation marketplaces such as Liquidity Services and B-Stock Solutions to sell off excess inventory to resellers in bulk quantities.

If your product can be liquidated, you may recover approximately 5% of your sale price, and it will eventually be owned by someone who can potentially utilize it.

Hope Allen, a YouTube creator, has gained a following by discovering online deals, and liquidation pallets are currently a popular trend. In the past year, she purchased a pallet of Amazon returns on Liquidation.com for $575, which was supposedly worth almost $10,000. She then unpacked it and shared the process on her channel, which she calls HopeScope.

Allen remarked that there were certainly trash items in the pallet, but also items like an UGG robe and heated winter gear that he found surprising, given their value, saying, 'Really? They didn't think this was worth restocking?'

B-Stock Solutions founder and CEO Howard Rosenberg stated that for one of their clients, they auctioned off approximately 42 truckloads of floor tiles in a single lot. Additionally, he mentioned that they have sold cellphones in the past that have reached over a million dollars in a single auction.

Allen sells or donates the items she doesn't keep on eBay, flea markets, or Craigslist.

Allen described it as a sophisticated form of dumpster diving, albeit with greater potential, safety, and legality.

Invitation-only until later this year, Amazon is providing sellers with an additional option.

Amazon's FBA Grade and Resell program assigns items grades such as New, Very Good, Good, or Acceptable before reselling them on specific sections of its website, including Warehouse Deals for used goods, Amazon Renewed for refurbished items, Amazon Outlet for overstock, and Woot!, a tongue-in-cheek daily deal site that sells a $10 "Bag of Crap" and describes itself as "a wild outpost on the fringes of the Amazon community."

Watch the video to learn more about where online returns really end up.