Welcome back to the last part of our series regarding an article from The New Yorker. We’ve already talked about the history of refunds, modern-day refunds, and some specific examples. Now, let’s talk about what happens to that shirt that doesn’t fit quite right.
When you make a return, what happens to it? Your first answer is probably that the merchandise goes back to the warehouse and is resold. In reality… not quite. And here’s how we know.
Marketplace
In 2020, a Canadian TV show called “Marketplace” decided to figure out what happens when you make a return. The producers ordered a bunch of merchandise from Amazon, including a printer, diapers, boots, and a coffee maker. They added GPS trackers to the returns and followed the paths of the items. Items ended up at liquidation centers and warehouses; a brand-new backpack ended up at a waste-processing center, aka a landfill. Interesting, isn’t it?
So, instead of your stuff going back to the warehouses, one of four things probably happens:
- Destruction
- Liquidation
- Refurbishment/Repairs
- Sent to overstock
1) Destruction
This is so common, there’s an industry term for it: “D.I.F.”, or “destroy in field”. A shredding website called Patriot Shredding states that “Product destruction allows you to protect your organization’s reputation and focus on the future.” Last year, Amazon told CNBC that they don’t send anything to landfills, but they will do “energy recovery”. AKA incinerating that pair of shoes that didn’t fit you right.
2) Liquidation
Basically, liquidation is a B2B process in which items are sold in bulk for dirt cheap to distributors. Tons of companies do this, like Amazon, Home Depot, Neiman Marcus, PepsiCo, and more. Items are repaired, wiped, and sorted before being sent off. Once these masses of stuff are sold, they’re typically thrown into a warehouse and resold from there. Owens pointed out that online shopping has been great for construction companies that build structures like loading docks and warehouses for that reason.
3) Overstock
If you’ve been to an outlet mall, then you’ve seen overstock goods. In the words of Ed Mascolo, “Apparel is almost like vegetables. Things can lose value quickly.” The predictability of this means that channels like outlets will have a constant inflow of older unsold goods. This is why you’ll find outlets to be way cheaper than the “real” stores.
4) Repair/Refurbish
This is the “reuse, reduce, recycle” equivalent of returned goods. America’s Remanufacturing Company, or ARC, contracts with brand owners Amazon to receive returns, repair, or refurbish them. The company’s CRO Paul Adamson said, “We never want to just buy returns; there’s a lack of value.” With that said, ARC focuses on defective products, which they can repair and resell. They’re so legit that companies will actually send products to ARC so they can test them before they hit the market.
Once, they found a defective valve in a frequently returned coffee maker, so ARC got in contact with the manufacturer in China to address it. Another time, they realized wireless printers were being returned due to confusion; ARC started reselling them with a printer cable attached. David Owens, the writer of the article, said that the technicians “are members of a rapidly vanishing species: people who know how to repair stuff.” Can’t argue with that. ARC employees are also aware of the opportunity cost of repairs; if a product isn’t cost-effective to fix, they’ll recycle the parts.
Once the products are fixed, ARC slaps a new label on them indicating that they’re refurb’d, then they get shipped off to discount stores like Ollie’s.
The issue is that new products are made cheaply and quickly. We can get our stuff fast, but it also falls into disrepair just as fast.
In the words of David Owen, “If you leave money lying around, someone will pick it up.”
Yours truly,
The Instant Refund Expert™
Follow me on X @instantrefunds
The Refunds Blog 