Amazon fulfillment center in Germany

This week, British broadcaster ITV News aired a story of an undercover investigation into how Amazon handles returns and unsold stock, claiming the company was throwing away millions of products every year in the U.K. alone.

The report included a video taken inside the Amazon’s Dunfermline (Scotland) fulfillment center showing items that were marked to be destroyed, everything from hairdryers to laptops to Smart TVs.

In addition, ITV cited a leaked internal document suggesting that in April, Amazon destroyed 124,000 items in one week at this facility.

Amazon responded to the ITV investigative report by saying, “We are working towards a goal of zero product disposal and our priority is to resell, donate to charitable organizations or recycle any unsold products. No items are sent to landfill in the U.K. As a last resort, we will send items to energy recovery, but we’re working hard to drive the number of times this happens down to zero.”

This ITV News report was picked up by many major news organizations globally, including landing on the front pages of many online news outlets here in the U.S. Certainly, it outraged many consumers as it dominated the newsfeed for at least 24 hours.

However, the charge that Amazon is destroying thousands and thousands of items that could be donated or sold at a discount is not new and begs the question, why hasn’t Amazon addressed this problem sooner.

How Hard is Amazon Trying to Solve This Problem?

In 2018, the leading German business magazine WirtschaftWoche, in cooperation with German broadcaster ZDF, alleged in a Frontal 21 investigational broadcast that Amazon was destroying tens of thousands of Euros worth of new and returned products daily at German fulfillment centers.

Back then, Amazon did not dispute it destroyed goods but said the company tries to minimize the number of destroyed products and “when products can’t be sold, resold or donated, we turn to wholesale buyers who can use these products.”

This statement three years ago, it similar to what Amazon told ITV this year, again claiming it was working to find better solutions to this problem.

The 2018 German report brought strong condemnation and questions from German government officials and Greenpeace demanding better accountability and solutions to the waste problem. Per WirtschaftWoche:

Jochen Flasbarth, undersecretary in Germany’s Federal Ministry of the Environment, has urged Amazon to clarify these allegations. “This is a huge scandal, we are consuming these resources despite all the problems in the world. This approach is not in step with our times.” He added: “I strongly believe that many consumers are appalled by this behavior and will not go along with it.” The former Federal Minister of the Environment, Klaus Töpfer, described Amazon’s procedure as “irresponsible.” Environmental organization Greenpeace called for repercussions: “We need to implement a law on banning the waste and destruction of first-hand and usable goods,” said Greenpeace expert Kirsten Brodde.

But since then, apparently, not much has changed despite Germany even passing a new law that aimed to prevent resellable returned goods from being thrown out.

In May of this year, Greenpeace again claimed Amazon in Germany was continuing to destroy products at a large scale, claiming that at least one truckload of products was being destroyed at the Amazon Winson fulfillment center every week.

Amazon – ‘The Climate Pledge’ Question

For years Amazon has been touting “green projects,” which are an integral part of its The Climate Pledge, a commitment to achieve net-zero carbon across its business by 2040, 10 years ahead of the Paris Agreement.

But The Climate Pledge only addresses operations, from using renewable energy to power offices and fulfillment centers, making shipments net-zero carbon, including the use of electric delivery vehicles, and investing in reforestation projects and climate mitigation solutions.

There is no mention of how the company plans to deal with returns – as it has made returning products easier than almost anyone else in online commerce – and handle old and unsold stock that needs to make room for new inventory.

On the surface, it appears Amazon is ignoring the problem in its Climate Pledge, and it is not entirely clear if the company even considers dealing with return and old inventory waste in its pledge.

But is It All On Amazon?

While the 2018 report pinpointed the issue as an Amazon issue, German lawmakers apparently saw it as an industry-wide problem as they passed a law requiring online commerce retailers to deal with returns in a more sustainable way.

Yet, despite this new law and a promise by Amazon in 2018 to do better, the new report in May by Greenpeace suggests the problem of excessive product waste continued in Germany.

As more and more consumers rely on Amazon today, especially over the last year due to the pandemic, the number of returns also mounted. Seemingly one goes hand in hand with the other, but Amazon apparently didn’t really worry too much about the return and old inventory issue.

While the company does operate an “open-box” or B-Stock marketplace (Amazon Warehouse) to sell returned and overstock items, it clearly is not enough to minimize the sheer number of surplus inventory it has to manage. Is this a marketing problem? Maybe! How many shoppers know of Amazon Warehouse? This program needs better visibility on the site.

Many people may think excessive waste is just a returns problem, but it goes much deeper, making this issue more problematic than it appears at first glance.

Brands and manufacturers often release new models of existing products regularly, requiring that Amazon has to do something with the “old” models to make room in their warehouses.

The company could send the products back to the manufacturer, but likely they will only destroy the items themselves. This would only shift the waste issue to another location. But it would “look” better for Amazon.

In some cases, Amazon may need to destroy third-party marketplace seller products if the seller doesn’t approve the removal of the products that have been too long in their warehouses or if the items have been deemed counterfeit or dangerous.

There is no good other option in this case as Amazon can’t offer these products for sale through its B-stock Warehouse program. Also, these products cannot be donated for legal or safety reasons.

Just to show how big of a problem this can become, last year, one seller claimed Amazon destroyed $800,000 of inventory, claiming the products were fake. While the seller denied the allegation, Amazon felt compelled for legal reasons to destroy the products.

There are already too many shoppers complaining about too many fake products on the marketplace, so when the company decides to act, it’s protecting consumers, but also creating waste. Maybe a more rigorous vetting process for sellers selling brand-name products could help reduce this waste?

And what about consumers? Do they play a role in this waste as well? How many shoppers buy products without doing enough due-diligent research before purchasing a product to find out it doesn’t work for them? Convenient ordering, quick delivery, and easy returns add to this dilemma. But convenience wins every time and that is what made Amazon successful.

It’s easy to blame Amazon and say the entire issue is their fault, but the problem is not new to retail and far more complex.

Previously, eliminating returned stock or overstock happened outside most people’s view, in a back alley of a retail store at a much smaller scale. Now it happens in the tens of thousands per week at one location because of the sheer size and order volume at the average Amazon fulfillment center.

There is no doubt Amazon can do much better to solve this problem. Unfortunately, the scale at which it is destroying products seems to suggest it has not put enough thought into better solutions to this problem, despite multiple media reports of significant product waste at their fulfillment centers.

Maybe after this uproar that appeared to gain much wider media coverage globally than the German report in 2018, Amazon will take another serious look at finding real solutions to the problem. It can never reduce all the waste, but it can do better to reduce the waste.

Subscribe to Our Newsletter Today

Stay in touch with the latest business insights for your online business

We do not share your information and you can unsubscribe anytime

Connect With Us And Other Small Business Owners

Please head over to our Facebook Group for Small Business Sellers and interact with other small business owners.

Follow us on FacebookTwitter, and LinkedIn to stay up to date with relevant news and business insights for your online business.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *