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Retailers are now in the throes of processing billions of dollars in returned holiday gifts, but many of those items aren’t going back on shelves. Instead, they’ll be bundled off to warehouses and sold in auctions for a fraction of their sticker prices.
More than 15% of the $966 billion in purchases nationwide this past holiday season will be returned, the National Retail Federation estimates. Many of those goods will be scooped up by liquidators in the “reverse supply chain” business, an industry that has been growing thanks to the e-commerce era’s generous return policies.
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Returns can be costly for retailers. Many already eat the expense of return shipping by providing prepaid labels or envelopes. For certain items, some retailers “just find that it’s not worth it to take it back,” shopping expert Trae Bodge said.
About 59% of retailers reported offering returnless refunds over this holiday season, according to returns management provider goTRG. While those “keep it” policies typically apply to cheaper purchases, Bodge said she has begun seeing some brands, such as Wayfair, allowing customers to keep higher-cost items like furniture.
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Consumer brands have long faced criticism that many returned goods wind up in garbage heaps or incinerators, and reverse logistics providers say they’re trying to reduce how much gets destroyed. “It’s a good way to keep items out of landfills and be part of the circular economy,” Rechtzigel said.
Many unwanted products are in perfectly fine condition, he said, suggesting that 70% to 80% of returns are the result of simple remorse. But there’s still value even in the minority of items that are broken or defective. Toolboxes with massive dents or even televisions that don’t turn on can be resold as damaged and in need of refurbishment, or just for scrap parts.
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Liquidity Services’ consumer-facing business is part of the growing ecosystem of “bargain bin” resellers, which includes outlets popular on TikTok that sell overstocked and returned items, often to people looking to flip them for a profit.
Stacey Adam said she makes the trip to Liquidity Services’ Pittston warehouse just about every week. She buys home products by the pallet, purchasing items at up to 90% off and reselling them to her community on Facebook at around 50% off, pocketing the difference.
“They’re getting a deal, we’re all getting a deal,” she said.
Related: The Ins and Outs of Returns
