Where Online Returns Really End Up And What Amazon Is Doing About It

Sending back an online order has never been easier. It’s often free for the customer, with some retailers even allowing customers to keep the item while offering a full refund.

Amazon returns can be dropped off at Kohl’s, UPS or Whole Foods without boxing it up or even printing a label.

But there’s a darker side to the record number of returns flooding warehouses after the holidays.

“From all those returns, there’s now nearly 6 billion pounds of landfill waste generated a year and 16 million metric tons of carbon dioxide emissions as well,” said Tobin Moore, CEO of returns solution provider Optoro. “That’s the equivalent of the waste produced by 3.3 million Americans in a year.”

Moore says online purchases are at least three times more likely to be returned than items bought in a store. In 2021, a record $761 billion of merchandise was returned, according to estimates in a new report from the National Retail Federation.

That report says 10.3% of those returns were fraudulent. Meanwhile, Amazon third-party sellers told CNBC they end up throwing away about a third of returned items.

“Somebody has to pay for that,” said Micah Clausen, who sells party supplies and home goods on Amazon under a third-party store named Iconikal. “It’s falling back on either Amazon or the third-party seller. It comes out of their bottom line and inevitably makes prices go higher.”

UPS predicts the 2021 holiday season will see a 10% increase in returns compared to the year-earlier period, which translates into more waste — and expense — for all online retailers.

At the head of the pack, Amazon has received mounting criticism over the destruction of millions of items. Now the e-commerce giant says it’s “working toward a goal of zero product disposal.” Last year, it launched new programs to give sellers like Clausen new options to resell returns, or send them to be auctioned off on the liquidation market.

Liquidity Services consumer marketing manager Meredith Diggs explains one way e-commerce has normalized shopping habits that lead to more returns.

“Wardrobing [is] where people will order the same thing in three different sizes to see which one fits and then they return the other two, not realizing that those other two most of the time don’t go back on that retailer’s shelves,” Diggs said.

“Categories like apparel see really, really high return rates in the 10s of percents,” added Raunak Nirmal, who used to work at Amazon and now runs an Amazon aggregator, Acquco, with more than 40 third-party brands. His return rate is closer to 3%.

“If it’s a new product, Amazon would allow that product to get resold on the listing as new, but it really needs to be in pristine condition for that to happen and that’s more rare than you would expect, even if the customer hasn’t used the product at all,” Nirmal said.

When an item can’t be sold as new, Amazon gives the seller up to four options for what to do with returns: each with a fee: Return to Seller, Disposal, Liquidation, or (by invitation only for now) Fulfillment by Amazon Grade and Resell.

With the Return to Seller option, the return leaves the Amazon warehouse for several more legs on a truck, plane or cargo ship. It heads back to the seller for further processing, then it could go off to another Amazon warehouse for sorting and repacking, then on to a new customer, who could always choose to return the item again.

“You’re essentially forced to decide if you want to recall that inventory to your warehouse — which is an expensive process — repackage it yourself, and then ship it back into a warehouse to sell, which doesn’t make sense I would say 80% to 90% of the time. Or you could choose to dispose it,” Nirmal said.

Disposal is an all-too-common fate for 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 resell, donate to charitable organizations or recycle any unsold products. As a last resort, we will send items to energy recovery, but we’re working hard to drive the number of times this happens down to zero.”

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Where Online Returns Really End Up And What Amazon Is Doing About It

[Lovely_gall]

Amazon should open a few return stores everywhere like a second chance store ! Where you can walk in and buy items and have a feel for the items

[lesliefranklin]

A big problem with online retailers who sell clothing is that there is no real standardization in sizing. A "medium" size can vary greatly. They should instead measure in standard units, like inches or centimeters.

[fourlittlebirds]

This is heartbreaking because you know there are people out there that don’t have a winter coat or supplies for their baby And these items are just getting trashed, when they could go to people who need them. I volunteer at a non profit that helps families with small children, and it’s incredible all the little things that we take for granted each day -they don’t have them.

[ColemanJRimer]

The inability to try clothing on, fake reviews (huge problem on Amazon), and poor quality control equals enormous return rates.

[TheKiltyONeal]

I stopped buying gifts on Amazon because they have become so unreliable. I returned about 1/3 of the items I bought for gifts this past holiday season because the items were clearly used. All of these items were sold by Amazon (not 3rd party sellers) and sold as new. If they're giving their employees less than a minute to check over returned items and penalizing employees for marking too many items as used/damaged, I can understand why this happens so much.

[muzikae]

It is appalling that so many of these companies would rather destroy their products to "protect their brand image" than donate or resell them at lower prices.

[tibedog]

Amazon and other online merchants should crack down on trash merchants who sell garbage items which lead to the majority of the returns

[ArcAiN]

My advice, instead of side-ways shifting the blame to consumers, is focus more on those online retailers misrepresenting their goods, selling faulty, defective, rejected, fakes and knockoffs. Let's not even get started on the tons of merchandise coming from china that are flooding the online markets. While not all of them are bad, a pretty large majority of them fall far short of the keyword spam used to get them listed favorably.

At the end of the day, if your product lives up to how you advertise it, is of good quality, and doesn't fall apart in 1 week, then returns will be mcuh much lower. Getting the sale by any means is the issue here, not the customers returning bad, faulty, cheap, fake, hazardous items.

[gonebefore]

Amazon should crack down on fake reviews and misrepresentation to reduce the amount of returns.

[brucekm]

As usual, consumers are expected to feel guilty for the failings of corporations. I agree that returns cause waste, but the accountability for that does not lie with individual consumers. The overarching problem continues to be corporate greed and negligence.

[joonkim]

THE ONLY "SUSTAINABLE" SOLUTION IS TO STOP BUYING SO MUCH CRAP YOU DON'T NEED!

[Dats_Mark]

As someone thats a 3rd party seller on Amazon... Yeah, just this week I had a guy swap out an expensive item for an entirely different model that they sent back and amazon forced a refund even though they fraudulently returned a different item. I'm now awaiting an appeal Safe-T case hoping I'll get my money back (I'm not holding my breath). The return fraud is getting pretty bad

[laurenconrad]

I think the tricky thing with appliances is that you don’t know if they work well until you’ve opened them and used them. I returned a rice cooker that just did not cook rice very well, but I only knew that after taking it out of the box and using it.

[RainDropps]

I'm not going to get a guilt trip for returning items that were described inaccurately or cheaply made. Amazon should have had a plan for returns in the first place.

[Gunhip]

If sellers on amazon stopped making false claims about their products then people would be more happy about their purchase actually getting what they wanted.

[thebigbadwulf]

My father recently retired from a warehouse building company. He said numerous times that companies he dealt with were struggling with where to put all the returns.

[johnblaze]

I worked at Marks & Spencer, a somewhat high end grocery store, when I was younger. The amount of pointless waste was eye opening. We had a multipack of Maltesers packet rip open and because of that threw the entire thing away. So ironic as the first thing the customer is going to do when they open it is rip it open.

There was also a time when we had to throw away (again, not give away or sell at a discount) entire bags of potatoes. Why? Because they said "British Potatoes" on the packet when they were actually grown in the REPUBLIC of Ireland.

[andreyd]

I frequently buy stuff from Amazon warehouse deals. It’s usually a bargain, especially for auto parts. Last summer I bought a set of “used” Bosch rotors and quality pads for 70% off that came new with torn packaging. Also bought wall bike rack for 50% off. Turns out it was returned because one of the bolt holes didn’t line up, so it needed some drilling. Still a bargain and saved it from scrap yard, I guess.

[Kevin_geekgineering]

before shaming customers for their return, first ask why they returned it, most of my returns was because seller on amazon (or from anywhere else) send me defected, unfit or simply junk and because online shopping means you don't directly see the product until you receive it. so what a surprise when something you ordered is not what you expected (in any way) so you return it, what do you expect to keep that because too many returns is happening? what the ****

[thomasnorris]

The major fortunes in World have been made in Real estate, crypto, NFTs and stock.