- Retailers often throw returned items in the trash because it's the cheapest and fastest option.
- Companies like Optoro and B-Stock Solutions offer a more sustainable solution, like reselling.
- The resale market also circumvents supply-chain issues since the item can be delivered right away.
Holiday shopping was expected to break records in 2021 — and now that all the gifts have been unwrapped, the returns are flooding in.
UPS estimates that it will process more than 60 million return packages by the end of January, 10% more than last year. But not all returned products will be restocked and resold. Instead, many will end up getting thrown away.
Returned inventory accounted for 5.8 billion pounds of landfill waste in 2020, according to reverse logistics company Optoro and Environmental Capital Group. This happens mainly because processing returns, especially e-commerce returns, is time-consuming and labor- and resource-intensive, Meagan Knowlton, Optoro's director of sustainability, told Insider.
"You get all of these packages back to a warehouse and have to open every single box to inspect each item and then determine what to do with those items," she said. If a product is opened or used, it often can't be restocked, so throwing it away is the easiest, least expensive option, she added.
Utilizing the resale market and e-commerce return tools
Optoro is one of several companies offering solutions to keep returns out of landfills, including helping retailers and brands process returns more efficiently and selling returned items on the growing resale market.
Working with brands like IKEA, Best Buy, and Target, Optoro reported it has helped its clients keep 96% of their returns and excess inventory out of landfills through its e-commerce returns portal and returns-management software, which identifies what should happen to returned products based on their condition. Options include restocking, donating, recycling, or reselling items in the secondary market, including its own marketplace Bulq.com.
"Among retailers who landfill returns, they generally believe that it's the economically sensible thing to do," Howard Rosenberg, CEO of B-Stock Solutions, told Insider. "However, companies who think this way typically don't understand or appreciate the value those products have in the secondary market."
Consumer behavior in the secondhand market
B-Stock operates a liquidation marketplace to sell returns and excess inventory on the B2B secondary market, which features a network of buyers worldwide who make a living reselling merchandise. In 2021, Rosenberg said B-Stock sold 145 million items across its "recommerce platform," which kept 500 million pounds of merchandise in use and 5 million items out of landfills.
"Consumers are far more open to secondhand goods than ever before, entrepreneurs are building businesses reselling secondary market goods, and retailers and brands are also launching their own recommerce initiatives," Rosenberg said.
Ninety-two percent of shoppers have purchased a resale item online, and 95% would buy a resale item that's discounted, according to a survey by FloorFound, a company that helps brands manage the return and resale of oversized items, including furniture, appliances, and fitness equipment. About 10 million tons of furniture and furnishings end up in landfills each year, according to the US Environmental Protection Agency, and this is mostly because the cost of picking up, transporting, and processing oversized items is costly, FloorFound CEO Chris Richter told Insider.
FloorFound works with furniture brands like Joybird and Floyd, picking up returned items and delivering them to one of its 25 warehouses. Then, its software determines the item's condition, and the company runs the resale sites for brands where items are sold at a discount of 35% to 40%. Richter said about 90% of its clients' returns have become resale.
Seizing responsible business opportunities
"By not being in the resale business, you're both losing out on opportunity and contributing to the waste problem, not the solution," Richter said. Along with the lower prices, shopping on the secondary market means items are available and delivered quickly, easing some of the supply-chain issues affecting the retail sector recently.
Plus, consumers, especially younger demographics, are showing a preference for brands that are sustainability-minded, Knowlton added.
"We have more of our clients coming to us saying, 'How can you help us lean into making our business more responsible, reducing our waste to landfill, and engaging in that circular commerce that's growing?'" she said.