Now that the holidays are over, Americans are now coddling in an even more popular pastime: returning unwanted gifts. A lot of shoppers have given it some thought, and those ill-fitting sweaters and unused gadgets just need to go back into the stores.
Holiday returns are an increasing problem for several retailers, technology companies, and discount sellers dedicated to knowing what to do with all the returned items.
But for companies like Michael Ringelsten, post-holiday returns are the very reason why they look forward to the holidays. Ringelsten is the brain behind the Shorewood Liquidators, a company that collects post-holiday returns and sells them to new buyers at a lower cost.
“Most of it is just customer returns or buyer’s remorse.”Michael Ringelsten, Founder, Shorewood Liquidators
Most people believe that all returned items are put back in the stores, but it’s a different case for the items at Shorewood Liquidators. He stocks all the returned items on his warehouse and auctions them off at a cheaper price once the items have been thoroughly tested.
Companies like Optoro.com assist stores to process the returns since it’s much more expensive if they restock all the returned items.
“So often retailers end up just liquidating them for pennies on the dollar or in some cases throw them away in a landfill… because it’s more cost-effective.”Tobin Moore, CEO, Optoro
Facts Behind Returns
Returned merchandise will always be a problem each season. According to Optoro, at least $90 billion worth of gifts is expected to be sent back to the retailers. To make it worse, only half of the returned items will turn back to the shelves.
The rest of the items will likely get thrown away rather than repackaged and sold. At least 5 million pounds of waste are generated from all the returned items every year. With retailers spending a lot of money in returns, it is important to find a way to ensure that they won’t lose any more money in the process.
Also, most people return purchased items because they are defective. Retailers can’t deal with suppliers immediately, especially during the holiday season.
Ringelsten believes that it will be more expensive for companies to handle returns. Moreover, he says that manufacturers usually sign a deal with retailers like Amazon where it’s laid out that items that may be returned will only be exchanged.
Shorewood Liquidators processed at least 180,000 items when it first started back in 2011. In 2015, the company processed at least 2 million returned items. All items are auctioned online and usually sell pallet lots as well.
How do they profit from returned items?
Ringelsten says that Shorewood pays companies like Home Depot and Amazon between 5 and 20 percent of the item’s full retail price. Shorewood earns money from auctions, getting as much as it can for the item.
If an item was not sold, then it will be auctioned again or simply added to a wholesale pallet. Anything that has recycling value or has zero monetary is sent to the landfill.
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