What Happens to All the Stuff We Return?

What Happens to All the Stuff We Return?

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The twentysomething daughter of a friend of mine recently ordered half a dozen new dresses. She wasn’t planning to keep the lot; she’d been invited to the wedding of a college classmate and knew in advance that she was going to send back all but the one she liked best. “Swimsuits and dresses for weddings—you never buy just one,” Joanie Demer, a co-founder of the Krazy Coupon Lady, a shopping-strategy Web site, told me. For some online apparel retailers, returns now average forty per cent of sales.

Steady growth in Internet shopping has been accompanied by steady growth in returns of all kinds. A forest’s worth of artificial Christmas trees goes back every January. Bags of green plastic Easter grass go back every spring. Returns of large-screen TVs surge immediately following the Super Bowl. People who buy portable generators during weather emergencies use them until the emergencies have ended, and then those go back, too. A friend of mine returned so many digital books to Audible that the company now makes her call or e-mail if she wants to return another. People who’ve been invited to fancy parties sometimes buy expensive outfits or accessories, then return them the next day, caviar stains and all—a practice known as “wardrobing.” Brick-and-mortar shoppers also return purchases. “Petco takes back dead fish,” Demer said. “Home Depot and Lowe’s let you return dead plants, for a year. You just have to be shameless enough to stand in line with the thing you killed.” It almost goes without saying that Americans are the world’s leading refund seekers; consumers in Japan seldom return anything.

Earlier this year, I attended a three-day conference, in Las Vegas, conducted by the Reverse Logistics Association, a trade group whose members deal in various ways with product returns, unsold inventories, and other capitalist jetsam. The field is large and growing. Dale Rogers, a business professor at Arizona State, gave a joint presentation with his son Zachary, a business professor at Colorado State, during which they said that winter-holiday returns in the United States are now worth more than three hundred billion dollars a year. Zachary said, “So one and a half per cent of U.S. G.D.P.—which would be bigger than the G.D.P. of many countries around the world—is just the stuff that people got for Christmas and said, ‘Nah, do they have blue?’ ” The annual retail value of returned goods in the U.S. is said to be approaching a trillion dollars.

Most online shoppers assume that items they return go back into regular inventory, to be sold again at full price. That rarely happens. On the last day of the R.L.A. conference, I joined a “champagne roundtable” led by Nikos Papaioannou, who manages returns of Amazon’s house-brand electronic devices, including Kindles, Echos, and Blink home-security systems. He said that every item that’s returned to Amazon is subjected to what’s referred to in the reverse-logistics world as triage, beginning with an analysis of its condition. I asked what proportion of triaged products are resold as new.

“It’s minimal,” he said. “I’m not going to give you a specific number, because it’s so dependent on the product category. But our approach with this question is that, if the seal has been broken, if the wrap is not intact, then it’s not going back to the shelf.” Even though Papaioannou understands this fact as well as anyone, he said, he often shops the way the rest of us do. When he buys shoes, for example, he typically orders two pairs, a half size apart. In brick-and-mortar stores, a pair of tried-on shoes will be re-boxed and reshelved. “From an Amazon viewpoint, the moment the box opens, you’ve lost the opportunity,” he said.

For a long time, a shocking percentage of online returns were simply junked. The industry term is D.I.F., for “destroy in field.” (The Web site of Patriot Shredding, based in Maryland, says, “Product destruction allows you to protect your organization’s reputation and focus on the future.”) This still happens with cheap clothes, defective gadgets, and luxury items whose brand owners don’t want a presence at Ocean State Job Lot, but, in most product categories, it’s less common than it used to be. Almost all the attendees at the R.L.A. conference, of whom there were more than eight hundred, are involved, in one way or another, in seeking profitable, efficient, and (to the extent possible) environmentally conscionable ways of managing the detritus of unfettered consumerism. “Returns are inherently entrepreneurial,” Fara Alexander, the director of brand marketing at goTRG, a returns-management company based in Miami, told me. She and many thousands of people like her are active participants in the rapidly evolving but still only semi-visible economic universe known as the reverse supply chain.

People who weren’t born yesterday, but almost, often assume that easy refunds and exchanges began with the online shoe store Zappos, which was founded in 1999. Tony Hsieh, the company’s legendary late C.E.O., offered free returns for up to a year after purchase and encouraged people to order items in multiple styles and sizes. That policy, which was backed by intensely personal customer service, was so popular that the company’s revenues grew more than sixfold in four years. Amazon started a similar shoes-and-accessories site, called Endless, but it eventually gave up trying to compete, having bought Zappos for $1.2 billion.

America’s true refund pioneer was born a century before Hsieh, on a farm in northwestern Missouri. He moved to Kemmerer, Wyoming, in 1902, in order to become a one-third owner of a general store that was part of a small chain, called Golden Rule. Within a few years, he had bought out his partners and opened more stores, and in 1913 he consolidated his holdings under his own name: J. C. Penney. (The initials stand for James Cash.) Among his innovations was allowing customers to return anything, no questions asked. That approach made a permanent impression on Sam Walton, who went to work at a Penney’s store, in Des Moines, in 1940, immediately after graduating from the University of Missouri. Twenty-two years later, Walton founded his own chain, Walmart, and adopted a similarly generous return policy, which is still in effect. “Sam Walton was very, very customer-centric,” Chuck Johnston, who served as Walmart’s senior director of returns between 2005 and 2012 and is now the chief strategy officer at goTRG, told me. “People would bring in stuff that was clearly from Sears, and we would take it back, because we wanted a happy customer.” (Homer Simpson: “The customer’s always right; that’s why everyone likes us.”)

A century ago, the average return rate at Penney’s was probably something like two per cent; before Internet shopping truly took hold, retail returns had risen to more like eight or ten per cent. Returns to online retailers now average close to twenty per cent, and returns of apparel are often double that. Among the many reasons: products often look nothing like their online images—such as a crocheted bikini top that was barely big enough for the purchaser’s cat—and colors and fabrics appear different on different screens.

The pandemic accelerated growth in online shopping, and therefore in returns, by several years. Quarantined lawyers bought fewer neckties but more sweatpants and bedroom slippers. People who were suddenly forced to work from home ordered desks, chairs, and computers. In 2021, UPS delivered a huge unassembled storage unit to my house. It was actually meant for a neighbor, but I opened the box because I, too, had ordered a huge unassembled storage unit. (Like many people, my neighbor and I had decided that COVID had given us an opportunity to organize our swelling hoard of household crap, including household crap we’d bought because of COVID. I texted my neighbor, and he drove over and picked up his box—no return necessary.) Pre-pandemic, a common shopping strategy was to study possible purchases in a regular store, then save a few dollars by ordering from Amazon. When in-person shopping became difficult, the best way to compare products was to order multiples and send back the rejects.

Cartoon by Roz Chast

Returns are expensive for sellers, since shipping alone often costs more than the items can be resold for. Many retailers have responded by shrinking their refund windows or by imposing fees for postage or so-called restocking. Some sellers offer store credit only. Amazon now adds a “frequently returned item” label to listings of problematic offerings and encourages potential purchasers to double-check descriptions and customer reviews of those items before ordering. The online business model of the eyeglasses seller Warby Parker is based on easy returns: customers can order as many as five frames, at no risk, to try on at home. The company still offers that option but has reduced return costs by employing an increasingly sophisticated online tool that allows customers to try on glasses virtually. (It also has physical stores, which have mirrors.) Back in the mail-order era, L. L. Bean suggested that shoe customers include a tracing of their foot in the envelope with their order form—an effective way to reduce returns, but more troublesome than ordering multiple pairs.

Despite the cost, retailers worry that discouraging returns discourages buying in the first place, driving revenues down. Easy returns are like free shipping: they can be a dealmaker or a deal-breaker when a consumer is deciding where to shop, even though in both cases the cost is ultimately borne by the consumer. Most online mattress sellers offer free returns, in some cases for up to a year; used mattresses can’t be resold, so the loss, usually some eight or nine per cent of sales, is folded into prices. Johnston said, “You’ve got to tread carefully, if you try to ratchet back ease of returns, so that you don’t drive your customer to your competitor.”

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