Are returned goods becoming the “code for wealth”?

For cross-border sellers, the return issue is always a pain point. Due to the cost constraints of cross-border logistics, sellers can only reluctantly give up on those returned products that cannot be resold. So, where do those returned products abandoned by sellers eventually go?

Where do returned items go?

According to CNBC , a warehouse with an area of ​​15,000 square meters in Texas is filled with returned goods from companies such as Amazon, Target, Home Depot, Sony and Wayfair. It is understood that there will be a special company responsible for recycling these goods and repackaging them. These returned goods will eventually be sent to second-hand trading websites such as eBay or Poshmark for sale.

Previously, collecting returned goods and reselling them was just a small industry that no one paid attention to. However, according to statistics from Colorado State University, the value of returned goods in the United States more than doubled from 2008 to 2020, reaching a staggering $644 billion. These returned goods that give sellers headaches are becoming the "wealth code" for some people, and thousands of companies are entering this field.

But not all returned goods can be resold. Those that can’t be resold are usually incinerated or sent to landfills. According to Optoro, a return solutions company , returns in the United States increase carbon emissions by about 16 million tons each year and generate up to 5.8 billion pounds of landfill waste.

Last year, the media revealed that Amazon destroyed millions of unsold inventory products in one of its warehouses in the UK every year, including smart TVs, laptops, drones and hair dryers. Amazon was also sharply criticized by the British government and environmentalists for this.

E-commerce returns are frequent, and the rising return rate cannot be ignored

According to the 2021 U.S. Retail Market Returns Report released by the National Retail Federation ( NRF), U.S. retail sales reached $4.583 trillion in 2021. Among them, the value of goods returned to retailers was $761 billion, accounting for about 16.6% of the total value of goods. In 2020, this figure was only 10.6%.

At the same time, online sales in the U.S. retail industry totaled $1.05 trillion in 2021, accounting for about 23% of total retail sales. The value of goods returned to retailers was $218 billion, accounting for about 20.8% of total online sales, up from 18% in 2020.

As for the holidays, there is no doubt that they have become a peak period for frequent returns. Relevant data show that the total holiday sales in the United States in 2021 was 887 billion US dollars. Among them, the value of returned goods was 158 billion US dollars, accounting for 17.8% of the total holiday sales.

Although the epidemic has promoted the development of e-commerce and brought considerable income to many businesses, anyone facing such a serious return problem will be overwhelmed, because along with the return, it is likely that the buyer will leave a bad review in the comment section.

In response to this problem, some e-commerce platforms have racked their brains and launched a series of measures to protect the interests of the platform. Some large retailers including Amazon, Target and Walmart have launched a just-keep-it refund and no return policy.

Of course, these policies are not only for fear of bad reviews, but also for the cost involved in the return process. Take Amazon, for example, its orders usually only need one shipping label to ship them from the fulfillment center to the customer's door, but once the goods are returned, it usually takes three shipments to send the goods back to the distribution center again.

The returned goods need to be stored again , and the warehouse staff need to check the goods and confirm whether they can be sold again. The labor and storage costs of the whole process are also very high. Some retailers said that the cost of returning goods may be higher than the selling price of the goods , and returns may cause merchants to lose up to 66% of the original price of the goods .

However, along with the refund without return policy comes another problem - fraudulent returns. According to data from AlixPartners, during the holiday shopping season last year alone, sellers incurred losses of up to $4.4 billion due to the refund without return policy! Among the returns mentioned above, fraudulent returns accounted for more than 10%.

Some industry experts believe that the high return rate has also led to rising prices and inflation. Due to the large number of returns, merchants are in a loss-making state. In order to maintain profitability, merchants will choose to increase product prices. The costs incurred by consumer returns will eventually be passed on to consumers again.

In this context, selling returned goods on second-hand platforms such as eBay has become an increasingly popular choice among consumers, and to a certain extent it has also responded to the call for sustainable development.

Sustainable shopping is in fashion, and resale is on the rise

For some young shoppers, sustainable shopping options are becoming increasingly important to them. According to a survey report by First Insight, 73% of Generation Z consumers surveyed are willing to pay more for sustainable products, a higher proportion than any other generation. Moreover, although most of these young consumer groups are not financially strong, 54% of them are willing to pay more than 10% price increase for sustainable products.

According to CNBC, more than a quarter of millennials and Generation Z worldwide say they consider a company’s impact on the environment when purchasing products. As younger generations place more emphasis on sustainable shopping, many companies are also beginning to consider sustainability as a factor in product production.

Changes in consumer shopping habits are also driving the rapid growth of the resale market. As the COVID-19 pandemic continues to hit the global economy, consumers are prioritizing the value of goods when shopping, which is driving a shift in consumer habits toward frugality , and the demand for second-hand goods is also growing.

It is reported that consumers' demand for resale goods is not limited to luxury goods and clothing. Electronic products, household items, collectibles and other goods all have great potential in the resale market. Resale platform Liquidity Services said that due to the shortage of new goods caused by the supply chain, refurbished electronic products are becoming more and more popular, and consumers' demand for refurbished noise-canceling headphones and TVs is increasing.

Resale products are not only popular among consumers, but also favored by many e-commerce platforms. Amazon, the e-commerce leader, has some websites dedicated to selling these products, such as Warehouse Deals , which sells some second-hand products, Amazon Renewed , which sells refurbished products, Amazon Outlet , which sells overstock products, and Woot, a daily transaction website on the edge of the Amazon community , which sells $10 blind box products .

In short, sustainable shopping is becoming a current shopping trend among young consumers, and resale platforms also have great development potential, which sellers can also take into consideration when developing new markets.

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