Here’s Where The Gifts You Return To The Store Will End Up

Are you planning to return a gift this holiday season? The odds are good that you’re returning something: as many as 15% of all items bought online are returned to the retailer, and the number is even higher for items where fit and color can vary, like clothing. When an item has been opened or is otherwise unfit to go back on the store shelf, where does it end up? It goes to a growing industry of specialized liquidators.

An executive at the logistics company Genco told the Wall Street Journal that this industry is called “re-commerce,” which doesn’t make us cringe as much as industry terms like that normally do. Often, items that you send back to a retailer go straight to a logistics warehouse, which in turn sells it to a liquidator. The retailer gets back maybe 10-20% of the value of these items, which end up in closeout stores, dollar stores, or with flea market vendors or in pawn shops.

As more of our shopping shifts online, where return rates are higher, how can retailers get more back from these returns? The current system pretty much means accepting a small amount of money in exchange for someone taking the items away. Most big e-commerce outfits don’t handle their own returned merchandise, but selling their unwanted returns in smaller batches helps: instead of selling by the truckload, they perhaps sell only by the pallet.

One company, Shorewood Liquidators, sells on its own auction site as well as on eBay, with final prices usually ending up at maybe half of the original retail price.

Where Your Unwanted Christmas Gifts Get a Second Life [Wall Street Journal]