In an attempt to lure customers to shop online and offer the ultimate hassle-free experience, many retailers are becoming more and more laid back with their returns policy. Gone are the days when we would carefully guard the receipt, keep the item in pristine condition and return the item to the shop within 14 days for a full refund. With free postage returns, ready-made returns packaging and returns dates extended up to one year, it’s starting to play huge toll on retailers’ profits.
A toll the size of $400 billion a year, in fact.
So what keen retailers do now that they have opened Pandora’s box of rebounding products? There’s no way of backtracking now, but the spikes of returns post-holiday sprees are too big to just refurbish, return to source or process back on the shelf.
One way retailers are balancing the books is by selling their returned items in private, online-auction liquidation marketplaces. Through these auctions the retailer is able to sell the goods across all product categories and conditions to thousands of approved business buyers. The combo of an online auction dynamic with a large buyer pool creates competition and helps to push up the pricing.
And who does the buying? Whether a warehouse full of womenswear, a pallet of designer hand bags, or a crate of kitchen crockery, chances are there is a buyer somewhere in the world who wants to sell it through there own, smaller scale channel. That includes discount store owners, exporters, flea market sellers, marketplace sellers (eBay, Amazon), and smaller retail chain stores, all contributing to a fastly growing ecosystem known as the secondary market.
The National Retail Federation estimates that 11-13 percent of all holiday purchases will be returned this holiday season. That means around $90-95 billion in merchandise will be heading back to stores starting December 26. Best to pick your presents wisely, unless you want to join the back of a very long queue.