on the flip side of amazon's
skyrocketing e-commerce growth there's a
mounting pile of e-commerce returns
hitting record numbers and record costs
for retailers and the planet
we're talking about billions and
billions and billions of waste that is a
byproduct of consumerism
run amok one survey found a record 761
billion dollars of merchandise was
returned in 2021 which would mean
returns cost more than what the u.s
government spent on all national defense
last year and amazon sellers told us
they simply throw away about a third of
returns meanwhile amazon is making
returns easier and easier for its 200
million plus prime members customers can
go to kohl's and ups store as well as
whole foods market and by scanning a qr
code they can leave their return without
the packaging and label that was
previously required so it's all about
making it easy for the customer and
making it convenient as well and
sometimes amazon just tells shoppers to
keep the item the reverse logistics are
always going to be nasty because the
merchandise in most cases cannot be
resold as it was originally the most
expedient pathway is into a dumpster
into a landfill but amazon now says it's
working toward a goal of zero product
disposal what motivated you to set that
goal i believe it's just our you know
who we are and our size i mean i think
amazon has done some amazing things to
be on the front lines of innovation and
there's some responsibility that comes
along with that so now amazon has
launched programs for reselling
liquidating and donating returns to try
and get there we expect that these
programs will help to give a second life
to more than 300 million units a year we
wanted to figure out amazon's strategy
for fixing returns so we sat down with
charisse armour amazon's head of returns
in north america for her first ever
public interview it seems like a lofty
goal are you daunted by the task ahead i
wouldn't say daunted i think i'm excited
by the task ahead
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armor first joined amazon 12 years ago i
actually started in our indianapolis
fulfillment center as an ops manager on
a night shift as she rose through the
ranks she often heard about the goal of
zero product disposal it was definitely
something that we talked about for many
years but at the same time researchers
were finding that making returns easy is
good business an often cited 2018 survey
of 300 online shoppers found 96 would
come back to a retailer if they had a
good returns experience and 69 were
deterred from buying if they knew they'd
have to pay for return shipping so in
2019 amazon expanded free easy returns
to millions of items
amazon has really been a game changer in
the reverse logistics world because of
how easy their returns are and so now
you have your more traditional retailers
like walmart or target implementing
similar policies because that's a really
big piece of how you compete on the
retail side of it zach rogers ran
returns for an amazon subsidiary called
quidsee from 2010 to 2012 before he
started teaching at colorado state i had
a student in my class last year and she
said oh yeah you know i was going to my
brother's wedding and i ordered nine
dresses knowing i was just gonna keep
one and for amazon
they're fine with that because their
opinion is yeah we have to deal with the
return and that's going to be a hassle
for guys like me who are returns manager
in a warehouse but in general what that
does is it creates loyalty to the brand
makes you more likely to sign up for
prime and prime is really the thing that
drives the flywheel despite better sales
on the front end there's a high back end
cost of so-called free and easy returns
u.s returns generate an estimated 16
million metric tons of carbon emissions
and create up to 5.8 billion pounds of
landfill waste each year how do you
answer
those numbers what is amazon doing to
try to cut back on how much waste is
created by returns at amazon we
encourage a second life on all of the
products that you know we receive back
and that comes in the form of selling
the majority of the items that we do
receive they are resold as new and used
or they go back to the seller or
supplier or we donated them
there are a number of items that we
can't recover or are not recyclable and
for reasons such as legal reasons or
hygienic reasons or even product damage
and in those cases we do pursue energy
recovery for those items energy recovery
means you burn something to produce heat
to produce energy and you rationalize
disposal of goods
as a conversion from one form of matter
to another to the degree they're doing
that i don't think they fully reveal it
is our absolute last resort both
economically as fair as well as um
environmentally and why is that because
of the fact that i i believe that we
have so many other opportunities i mean
we are expanding programs all the time
to not just enable amazon owned product
but as well as our sellers the ability
to provide a second life when i think
about some of the investments we've made
over the last couple of years i'm super
proud of what we've done
some examples in 2019 we launched a
program where we allowed our fba sellers
to do direct donations to local
charities instead of returning excess
and returned product in 2020 we launched
a liquidation program which gives our
sellers an opportunity to recoup some of
the costs that are associated with
excess inventory as well as returns and
then also in 2020 we launched a grade
and sell program that gives our sellers
for the first time an opportunity to
sell their return product
when a return comes in and a seller
chooses to resell it as used amazon
gives it a grade like new very good good
or acceptable then resells it on a
special section of its site there's
warehouse deals for used goods amazon
renewed for refurbished items amazon
outlet for overstock and a
tongue-in-cheek daily deal site called
woot that sells a 10 bag of crap and
describes itself as a wild outpost on
the fringes of the amazon community it
does prevent them to have to take in
excess inventory receive product back
and having to you know manage the
storage on their own so it truly is a
opportunity to remove waste from a
process
more than ever before offering a good
choice to re-home returns is also a
necessary choice for the bottom line
amazon wouldn't share its returns
numbers but in 2021 more than 16 percent
of all merchandise sold during the
holiday season was returned up more than
56 from the year before for online
purchases the average rate of return was
even higher at 20.8 percent up from 18
in 2020. with 469 billion dollars of net
sales revenue last year amazon's likely
returns numbers are staggering let's
assume a 20 return rate that's 93.8
billion dollars of returns coming in
if instead of getting pennies on the
dollar from a salvage dealer you could
get maybe 30 cents on the dollar from
strategic targeted disposition that
bumps us up to 28 billion dollars and so
at 28 billion dollars having
woot or amazon outlet now that makes a
lot more sense because we're really
starting to get a return for our
investment before we are at a small
scale it's like this is trash get rid of
it now when we get bigger they're
scaling to the point where monetizing
those returns
would actually be it'd be irresponsible
not to
and amazon is not alone there's a boom
in the secondary market thanks to
mounting pressure from younger shoppers
who want sustainable shopping options
and a supply chain backlog causing a
shortage of new goods we just finished
calculating the 2021 secondary market
which was 688 billion dollars in 2021 so
it's up fairly significantly as
secondhand items go from a losing
proposition to a potential moneymaker
amazon is even offering customers gift
cards to trade in their used amazon
devices for the chance to refurbish and
resell them amazon also partners with
major third-party liquidators like
liquidity services which takes returns
off amazon's hands and auctions them off
on the secondary market the liquidation
option
why does that option make sense well
there's some products that we just can't
donate and we can't give a second life
to
some of those items are due to hygienic
reasons legal reasons or just they're
just too damaged in addition to that
there are some items that we cannot sell
to third-party customers but we can sell
them to liquidators that can sell to
their customer and that's where it makes
sense
another avenue for amazon to make its
way towards zero product disposal is
donations
in 2021 we received just over 56 million
items through the donation channel from
amazon alone and that was three times
what we did in 2020. amazon partners
with non-profit network good 360 to
handle us donations so we work with
about 400 companies who have excess
product or consumer returns and then we
also help those companies keep those
goods out of landfills good360 says
amazon is its biggest corporate donor
sellers can opt in to automatically
donate eligible overstock and returns to
good360's network of more than a hundred
thousand non-profits who get access to
amazon donations after paying a freight
cost and agreeing to certain rules
they're not going to be
reselling those items putting them on
online auction sites taking them to
local flea markets or that sort of thing
so protecting that brand integrity of
our donors is really central to what
good 360 does and then there's the
potential tax write-offs that can come
with donating to a non-profit amazon has
gotten heat for not paying a lot of
taxes in the past are they able to write
off the value of all of the goods that
are channeled through good 360. the
short answer is no probably not but we
encourage our donors to explore that and
understand with their tax experts what
is possible because there are some
programs that that are available i don't
have any visibility into what the amazon
team is taking advantage of if anything
by liquidating or donating returns
locally amazon also saves big on
transportation costs as gas prices hit
record highs
good360 says it connects more than 230
amazon facilities with a non-profit in
their area that nonprofit is picking up
goods on a regular basis and then what
they're able to do is sort the goods
themselves and distribute it within
their community keeping the impact local
also keeping the carbon footprint down
because we're not transporting those
goods so yet another leg that might be
unnecessary
to understand how much fuel returns eats
up let's look at the complex reverse
logistics journey first a return has to
get from your home or the coals where
you dropped it off back to one of
amazon's growing number of return
centers they are amazon workers like
shea mahon have about a minute to give
it an initial inspection computer will
go through a series of questions that
you have to answer about the item it
could be looking at it it could be
looking for factory seals or damages
spills leaks all that kind of stuff and
then dependent on what it comes up with
with those questions the computer will
determine where this item needs to go if
amazon's algorithms determine it can't
be sold as new the return leaves the
amazon warehouse for several more legs
on a truck plane or cargo ship it heads
back to the seller for further
processing then it could head back to
another amazon warehouse for sorting and
repacking then on to a new customer who
could always choose to return the item
again they're going to do it for their
own self-interests although they'll
couch it in the name of saving the
planet but at the end of the day their
action is going to be based upon the
economics of what we're seeing
processing a return can cost retailers
up to 66 of an item's original price
amazon spent nearly 152 billion dollars
on logistics in 2021 nearly a third of
all net sales that's up from 119 billion
in 2020 so it's trying to offset this in
a couple ways in february amazon raised
the annual price of prime membership for
the first time since 2018 from 119 to
139 it also increased fulfillment
services fees for its millions of
third-party sellers in january
and it started telling customers to keep
some returns rather than shipping them
back
if i tell you to keep the product
instead of
counting the cost and the carbon effect
of taking it back i look better as the
company don't i let's let the people
keep it and then it doesn't count
against us but now you as a consumer
what do i do with this thing right
there's also bad actors who take
advantage of the increasingly lenient
returns policy the national retail
federation estimates more than 10
percent of returns are fraudulent
something america martinez has seen
during her return center shifts at
amazon where she's worked every holiday
season since 2017.
i had some beats headphones somebody
said those are expensive
and it looks like the
box was not open
but if you look closely
the factory seal had actually been
opened up
and so i just opened it up i looked
inside the box and there was just a
cheap
set of headphones inside we take action
on bad actors that abuse our customer
friendly programs
and sometimes that means denying a
refund
and a return and sometimes it means
closing accounts
the convenience of shopping on amazon
has also normalized other customer
behaviors that lead to more returns
i don't want to have to go to a store
and try something on
so i'll have the retailer amazon or
someone else send it all to me in a
variety of sizes colors and silhouettes
and i'll in the comfort of my home check
out what looks best what feels best send
the rest back maybe send it all back
amazon even has a prime try before you
buy program specifically designed to
make this exact process known as
wardrobing even easier we try to make
returns as easy as possible for our
customers by providing return labels
right in the packaging when they receive
the product but reverse logistics
experts say this is working in
opposition to the long-term answer to
returns people are focused on how to
process them with them what to do with
them as opposed to how to prevent them
we just don't do enough of that there's
going to have to be
a concerted effort to slow this train
down and to a provide consumers with far
better information so they make more
successful choices at the outset and b
and this is never going to be popular
and i don't know who's going to be the
first one to uh to raise the flag but
but create disincentives
to returning goods armor says amazon
does try to prevent returns but remains
committed to making them easy when they
do happen we want to make sure that our
customers have all the information that
they need to make the right shopping
decision for themselves but on the other
side of that when those decisions don't
line up with the customer expectation we
want to make sure that we remove all
barriers into making it right if the
process wasn't free and easy returns
would drop but so would amazon's
customer numbers at least at first the
industry at large would bow down to
amazon in a heartbeat if amazon were to
start to charge for returns because it
would give them air cover to do the same
but that won't come easily for a company
that describes itself as customer
obsessed which means amazon's goal of
zero returns disposals remains elusive
for now too amazon has said there's a
goal for zero product disposal can you
tell me when you hope to reach that goal
we're constantly evaluating what we need
to do and how to get there but so for
myself i don't have any information on
that right now
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you