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How Amazon plans to fix its massive returns problem


AmazonHow are you handling? rapidly growing number of returnsThis is a major problem for both the giant e-commerce company and for the entire planet.

According to a survey by the National Retail Federation, there was a decline in sales. record $761 billion of merchandise was returned to retailers in 2021. This amount is more than what $741 billion was spent by the U.S. on its national defense in 2021. 

Amazon would not share its total returns figures, however, in 2021 the National Retail Federation estimated that it will. 16.6% of all merchandiseThe holiday season saw a 56% increase in returns for products sold, compared to the previous year. The following is the online shopping guide. average rate of return was even higher, at nearly 21%Up to 18% in 2020. With $469 billion of net salesAmazon had a record year in revenue, and its returns figures are most likely to be staggering. 

According to a returns provider, U.S. Returns generate 16. million metric tonnes of carbon dioxide during the complicated reverse process and as much as 5.8 billion pounds annually of landfill waste. Optoro

“We are talking billions, billions and even billions.” [dollars of]”Waste is a side effect of consumerism,” stated Mark Cohen, former CEO of Sears Canada and director of retail studies at Columbia Business School. 

Cohen stated that “The reverse logistics will always be nasty since the merchandise can’t be resold in most cases as it was originally.” The fastest route is to dump the merchandise into a dumpster or into a trashcan.

CNBC was informed by Amazon that it does not send items to landfills, but uses “energy recovery” for last resort.

Energy recovery is when you use heat to make energy. Cohen stated that you can rationalize goods being disposed of as a conversion of one type of matter. They don’t fully share the extent that they do this, I think.

Amazon stated that it was working towards zero product disposal, but it didn’t give a date.

Cherris Arour, Amazon’s North American head for returns, said that “We encourage second lives on all of our products that we receive back” in an exclusive interview to CNBC.

We sell the vast majority of what we get. Armour explained that the items are sold as used and resold, returned to the supplier or seller, or given away.

Armour explained that energy recovery is for items “that we cannot recover or aren’t recyclable” because of legal, hygienic, or product damage.

Armour started her Amazon career 12 years ago as a nightshift operations manager in a fulfillment center near Indianapolis. Armour said that the Amazon goal of zero product disposing was something they had been discussing for years. 

Cherris Armour is Amazon’s North American head for reverse logistics. She poses alongside two Amazon employees in Phoenix in November 2021.


It’s good to make quick returns, but what about the rest?

Research has shown that customers love quick returns.

The most cited 2018 survey of 1,300 online shoppersThe return experience was good enough for 96% of customers, while 69% would be deterred by the fact that they would have to pay shipping costs. Amazon is 2019 expanded free, easy returnsTo millions of products.

Zac Rogers said that Amazon has been “a game-changer in reverse logistics because of their easy returns.” He was the head of returns at Quidsi, an Amazon subsidiary. This happened before he joined Colorado State University as an assistant professor of supply chains management.

Now you’ve got your traditional retailers such as Walmart and TargetHe suggested that similar policies be implemented because it’s an important part of your retail strategy. It builds loyalty and makes it more attractive to customers. [Amazon’s]Prime. Prime is the driving force behind that company’s flywheel.

Amazon allows you to return items at over 18,000 locations. You can also drop your item off without having to use a label or box. Kohl’s, UPSSome and others Whole Foods stores. It’s possible to order online. Try Before You BuyPrime Members can now return clothes with ease using a program that includes labels in every box. Amazon allows customers to retain some of their “returned” merchandise while still transferring the money.

It’s better for me as an individual to tell you that the product should be kept, rather than counting the costs and carbon impact of having it taken back. Tony Sciarrotta is the executive director at Reverse Logistics Association. Let’s allow the people to keep it, and it won’t be counted against us. Now, you as the consumer are left to decide what to do with it.

Amazon has now to address the question of how to handle returns from the back.

Amazon spent nearly $152 billion on logistics in 2021 — nearly a third of all net sales. This is an increase of $119 billion from 2020. These costs include returns, and Amazon will do everything it can to reduce those costs.

Cohen explained that while they will do this for their self-interests and disguise the cause of protecting the planet, Cohen claimed it was in their best interests. Their actions will be driven by the economics and what they’re seeing.

In 2019, Amazon created a program to allow sellers in the United States to donate surplus and returned products to local charities. This partnership was made with nonprofit networks. Good360. This organization has a relationship with approximately 400 businesses, which includes giants like Walmart, CVS NikeBut, Amazon says it is the largest corporate donor.

Good360 claims it works with local charities to arrange pickups at over 230 Amazon locations. This helps Amazon reduce transportation costs and gas prices. record highs. Good360 receives a small fee from nonprofits to pay freight cost coverage.

Prior to Amazon donation access, the recipients must also accept certain terms.

They won’t be selling those items or putting them up on auction websites, or taking them to flea markets, etc. Shari Rudolph, Good360’s chief development officer/CMO said that protecting the brand integrity of donors is a key part of what Good360 does.

Donating to nonprofits can also result in tax deductions.

Rudolph stated that there are programs available. “I have no idea what Amazon’s team is doing, if at all.”

Regina Freeman is the Good360 program operations manager and will handle Amazon returns in Baltimore, Maryland in September 2020

Jim Halling Photography

Secondary market

A boom in secondary markets is making it possible to make more money with secondhand products. There are many opportunities to make money on secondhand items. mounting pressure from younger shoppers who want sustainable shopping optionsAnd a supply chain backlogRogers, Colorado State, calculated that the 2021 secondary markets would be $688 billion. This is an increase of $649 billion from 2020.

Amazon’s new rehome return programs were launched in 2020 as secondhand products became more lucrative. Now, sellers can use the Amazon rehome returns program. option of liquidating returnsSend them to third-party liquidators like Liquidity ServicesTo sell them on the secondary markets.

Amazon began offering a Grade & Resell option to sellers for returns in 2020. With this option, Amazon evaluates the returned item and gives it a grade — Like New, Very Good, Good or Acceptable — then resells it on special sections of its site. There’s Warehouse DealsFor used goods Amazon RenewedFor refurbished goods, Amazon OutletFor overstock and tongue in cheek daily deal siteSo-called Woot!This is a sale of a $10Bag of Crap.” Amazon offers gift cards for customers. trade in their used Amazon devicesIt can also try to renovate and resell the property.

Amazon’s Armour explained that the programs would help “give a second life” to more than 300,000,000 units each year.

Rogers explained that this is smart business.

Let’s say that there is a 20 percent return rate. That’s 93.8 billion in returns. Rogers stated that instead of receiving pennies per dollar from salvage dealers, strategic targeted disposition could give you 30 cents per dollar. That would bring us to $28 billion.

His statement was, “At $28Billion, having Woot, or Amazon Outlet makes more sense, because we’re actually starting to get an investment return.” Before, we used to say, “This trash is gone, this is what it was.” It’s now that they are growing and scaling up to the point when it makes sense to monetize those returns.

Reverse logistics specialists say that the best way reduce waste and lower the cost of returns is to avoid them in the first instance and to make it less likely for goods to be returned.

Cohen claimed that Amazon charging for returns would make the entire industry bow to Amazon.