“I returned another Amazon package today.. Just ordered a size up for the new sports shoes!”
Don’t we all love doing this?
Amazon has a fairly generous return policy, as its millions of loyal customers would know. The company allows you to return orders within 30 days of receipt; as long as they’re unopened, customers get a full refund processed within a week or so.
You just have to sign up the package for return, wait for a delivery guy to pick it up and wait for their refund. Well, that’s where the process ends for you when you return items.
But for Amazon, the liquidation process is just starting.
While you might love to think that the shoes that you returned for a bad fit will be sold to someone with a smaller shoe size, that’s not a cake walk for Amazon!
Yes! It is not as easy to just return the items into the inventory and resell it.
Infact, the returned stuff is never returned to the Amazon inventory.
Yep! Spoiler Alert!
Amazon’s team liquidates this stuff either by selling the goods themselves on Amazon Warehouse, or by selling it to e-commerce liquidation websites. On these websites, customers can bid on mystery “pallets” of returned merchandise, which most buyers then try to resell.
What does liquidation mean?
Warehouse liquidation is actually an old sales process, in which warehouse owners basically throw open the doors and sell items at rock-bottom discounts. Now that process has evolved into digital.
Amazon sells returned inventory to e-commerce liquidation websites, like Liquidation.com and Direct Liquidation. Those sites sell them to pretty much anyone who will buy them — mostly to hustling e-commerce entrepreneurs who think they can buy low and sell high to treasure hunters hoping for one great find!
Unfortunately, many of the items in these pallets are in imperfect condition, & if the buyers cannot resell them, they’ll just wind up throwing the products away.
Another way of liquidating the stuff is through Amazon Warehouse – a discounted sales arm of Amazon. (Pro Tip: Try typing “Amazon Warehouse deals India” in your Amazon app. Thank us later!)
Why does Amazon do that?
When you buy items on Amazon, they are shipped from impeccably organized warehouses, dominated by algorithms and fully optimized staff. But when you return those items, they end up loosely categorized, thrown in boxes with items in the same broad categories — appliances, electronics, or apparel, for example. Those boxes are then sold in pallets to online liquidators.
Returned items are a costly affair for Amazon. Even sitting in warehouses, those boxes cost Amazon money, in the form of labor and space. So, it’s cheaper, in the long run, to unload them rather than keep them around.
Also, it’s sometimes cheaper to throw away merchandise rather than bother repackaging it, adding it back to inventory, storing it, and shipping it out again! Ah!
However, the above processes do not take place if sellers maintain their own warehouses. In this case, the package is just returned to the seller and seller has to absorb the to & fro shipping costs. Seller can then repackage and resell the product. Considering a large number of return cases, it is cheaper even for the sellers to throw away the product rather than getting it returned.
As per a report by a Forrestor Research, the volume of returns in 2019 was worth $207 Billion! A 2019 documentary by CNBC uncovered that almost 5 billion pounds (~22 lakh tonnes) of wastes is generated because of these returns that can’t be resold. To put that in perspective, that’s 2,50,000 garbage trucks full of goods that people bought ultimately had to be thrown away because it could not be resold.
So, while Amazon may consider the price of shipping items to Prime customers and back “free,” the environmental price is something we tend to miss. Many would argue that it is the onus of the customers to make better decisions while purchasing items. Others would say that companies like Amazon should come up with better technology to help customers make better decisions about size, fit, color, etc.
For those readers of ours, Jeff Bezos has pledged to make Amazon carbon neutral by 2040. So the companies are doing their bit. Amazon also started certain programs like FBS Donations in 2019 – a program where donations become default option for sellers when they choose on how to dispose of their returned items stored in Amazon warehouses in US & UK. The program is yet struggling in other countries due to lack of proper infrastructure. Also, if you have noticed lately, Amazon has replaced most of its cardboard boxes with more lightweight plastic mailers – reducing packaging wastes by 16%!
So, it will be fair to say that companies are taking some steps to reduce the environment impact. But are we doing our bit to solve this problem?
Shocked as we were when we got to know this? Are you going to rethink before returning another package? Let us know in the comments!