[WOW] What Happens To Amazon Returns?
Easy, no-hassle returns of merchandise have been critical to Amazon’s success. The e-commerce giant does not publish returns figures, but analysts estimate the MSRP value of returns runs into billions of dollars annually. What happens to all that returned merchandise? The answers may surprise you... read on!
Return to Sender… Then What?
I can remember when I was very young, my mother explained to me why she preferred to shop at the Lloyd's department store in our town, and not at the newer store that had recently opened nearby. It was all about the return policy, she said. If a store makes it easy to return an item, you shop there with confidence. According to a Deloitte Retail Survey, 60 percent of shoppers consider easy returns a major factor when shopping online. So Mom was right!
Perhaps Jeff Bezos, the CEO of Amazon, received similar advice from his mother. I should have asked him that when I interviewed him for Boardwatch Magazine, back in 1996. Back then, Amazon was still "Earth's biggest bookstore," and would not begin to expand into clothing, toys, gadgets and groceries for several years. But the no-hassle return policy has been a bedrock of the company since its inception in 1994.
Amazon says "You may return most new, unopened items sold and fulfilled by Amazon within 30 days of delivery for a full refund." Most returns are free, and refunds are completed in 3-5 days after the return is received. And from what I've read, they'll take back even opened items if you decide you didn't like or want it. If you received a damaged or defective item, they will provide a replacement of that item.
And that's where things get a little sticky. Returned items may go back on the warehouse shelf to be sold again, if it is still in its original packaging and undamaged. But opened, defective, or damaged merchandise may face several different fates. Some used merchandise ends up on the Amazon Warehouse site, where used goods from third-party sellers are offered at steep discounts.
There’s also an Amazon Renewed section for electronics and appliances that have been tested and certified to “look and work like new;” a 90-day warranty is included. Only selected sellers with high satisfaction ratings are allowed to offer “Amazon Renewed” goods. In some cases, the goods are refurbished by their manufacturers; on others, the seller refurbishes things.
Some prices are lower than MSRP but don’t seem like anything to write home about. This HP 14-inch laptop is $285.99, for instance. But there are some good deals. This refurbished Dyson Ball Multi Floor 2 Upright Vacuum which has an MSRP of $399, is offered for just $269. And this Blendtec Total Classic Original Blender (MSRP $449) is available for $269.
Liquidate: Not Just a Setting on Your Blender
Liquidation is another path that returned goods may follow. Here, Amazon disposes of used goods that third-party sellers don’t want back. Huge quantities of returned goods, unsorted and uninspected, are sold for pennies on the dollar to companies like Liquidity Services, which last year reported buying $33.7 million worth of Amazon returns.
At companies like Liquidity Services, items are loosely sorted into broad categories such as “electronics,” “home décor,” “health & beauty,” with no testing or close inspection. A pallet full of such items is shrink-wrapped and auctioned off to hopeful resellers. Each pallet’s online listing includes a manifest of its contents and the MSRP of each item, which is utterly meaningless as a measure of value. A pallet with $4,000 MSRP value may sell for a bid of $200. Huge warehouses around the country exist solely for processing and reselling returned items. Here's a video of that in action.
Pallet buyers have to be as patient and optimistic as gold-panners. It’s common for up to half of a pallet to be unsellable trash that has to be thrown out, according to experienced liquidation seller Walter Blake Knoblock. He has some good advice for would-be liquidation resellers in his live-streamed video preserved on YouTube. But hardly anyone takes it, because it’s not what they want to hear.
Liquidity Services says it has 3,357,000 registered buyers who spent $626.4 million last year on returned or surplus stuff, including but not limited to Amazon returns. These millions of small resellers are the gold panners of what Liquidity Services calls the “reverse supply chain.”
A lot of returned items end up on eBay in auctions that may start with a 1-cent bid. They may or may not come with a return option. In many cases, eBay’s Buyer Protection program will help buyers recover their money even if the seller’s policy is “no returns.” But often the price paid for an item is not worth the expense or hassle of returning it, so buyers just toss their “bargains” in the trash.
My Own Liquidation Story Had an Unhappy Ending
I've learned personally that some of that damaged merchandise is sold on Ebay and other outlets as "New" when it's clearly not. A few weeks ago, I tried to buy a replacement controller for an electric blanket. One seller on Ebay had the exact model I needed for $30, which was the best price I could find. The item arrived in a few days, but there was a surprise. The power cord was cut in half! I knew from a previous return experience of my own that vendors often require customers to cut the power cord before returning, so the item cannot be resold.
Clearly this was a defective, previously returned item being passed off as new merchandise. I had to fight a few rounds with the seller, who accused me of the dirty deed, before he agreed to refund me in full. To make things worse, I ordered the controller again (from a different Ebay seller) and that item was also dead on arrival. Ebay does have a strong refund policy as well, so at least it didn't cost me anything, except my time and frustration.
Buying used, returned merchandise is a gamble unless the goods come with a dependable company’s warranty. The lower price of such an item may not be worth the risk, especially if the price is dozens or hundreds of dollars. But sometimes it’s fun to drop $10 to $20 on an “amazing deal” just to see what you get. Even more fun (and free) is to search YouTube for “unboxing Amazon returns” and watching Millennials take the risk for you. Many “unboxing” videos get millions of views. Huh.
Your thoughts on this topic are welcome. Tell me about your experience when returning items you purchased at Amazon or other online sellers. Post your comment or question below...
This article was posted by Bob Rankin on 29 Jan 2019
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