The holiday season is over, and retailers are now facing the daunting task of processing billions of dollars in returned gifts. But here’s the twist: most of these items won’t find their way back onto store shelves. Instead, they will be sent off to warehouses and sold in auctions for a fraction of their original prices.
According to the National Retail Federation, more than 15% of the $966 billion spent during the holiday season will be returned. This has given rise to the “reverse supply chain” business, where liquidators snap up these returned items thanks to the generous return policies of the e-commerce era.
The reverse logistics market, which encompasses all players involved in processing returns, was valued at a staggering $939 billion in 2022. And it’s projected to grow even further, with estimates suggesting a compounded annual growth rate of 12% through 2032.
Major brands have made returns as easy as possible, and consumers have eagerly taken advantage of it. In fact, it was projected that over $627 billion worth of merchandise would be returned in 2023, accounting for 8.5% of total retail sales. E-commerce returns were also expected to increase, comprising 34.3% of all returns.
Returns can be a costly affair for retailers. Many already cover the expense of return shipping by providing prepaid labels or envelopes. However, for certain items, retailers find that it’s simply not worth it to take them back. As shopping expert Trae Bodge puts it, “they just find that it’s not worth it to take it back.”
To handle the influx of returned items, retailers are turning to companies like Liquidity Services. With their massive warehouse in Pennsylvania, they sort through countless returned goods and resell them to other businesses and consumers at a fraction of their original prices. In fact, some items are sold for as little as 20% of their sticker prices.
Reverse logistics providers are actively trying to reduce waste. They aim to keep items out of landfills and promote a circular economy. While the majority of returns are simply due to buyer’s remorse, even broken or defective items still hold value. For example, damaged toolboxes and nonfunctional televisions can be resold as damaged or for scrap parts.
Liquidity Services lists these products online for people to bid on, and winners can collect their items from nearby warehouses. Some listings even offer entire pallets of similar items, which appeals to retailers who need assistance in stocking their shelves.
Liquidity Services’ consumer-facing business is just one part of the growing ecosystem of “bargain bin” resellers. These resellers, popular on platforms like TikTok, offer overstocked and returned items at discounted prices, attracting people looking for bargains or hoping to flip these items for a profit.
One such buyer is Stacey Adam, who visits Liquidity Services’ warehouse in Pennsylvania every week. She purchases home products by the pallet at up to 90% off, reselling them to her community on Facebook at around 50% off. It’s a win-win situation, as buyers get a deal and Stacey earns a profit.
So, if you find yourself returning a holiday gift this year, remember that it might just end up in a bargain bin auction. Who knows? You might be the lucky bidder who gets an incredible deal on a perfectly good item. After all, one person’s return can be another person’s treasure.
To learn more about this topic, check out the source article by F5 Magazine.