Amazon and other Large Retailers Grapple With What to Do with Mountains of Returns

Amazon and other Large Retailers Grapple With What to Do with Mountains of Returns

 By Yehudit Garmaise

Americans love retailers that make returns easy, however, retail giants like Amazon then must solve the problem of what to do when they receive back as returns: up to 18% of the goods they sell, according to the National Retail Federation.

The journeys unwanted goods take back to warehouses generate 16 million metric tons of carbon emissions during their complicated reverse journeys and create up to 5.8 billion pounds of landfill waste each year, according to Optoro, a returns solution provider.

“We’re talking about billions, billions, and billions of [dollars of] waste that’s a byproduct of consumerism run amok,” Mark Cohen, director of retail studies at Columbia Business School and former CEO of Sears Canada, told CNBC.

“The reverse logistics are always going to be nasty because the merchandise, in most cases, cannot be resold as it was originally,” Cohen said. “The most expedient pathway is into a dumpster, [and then] into a landfill.”

“We encourage a second life on all of the products that we receive back,” Cherris Armour, Amazon’s head of North American returns told CNBC. “And that comes in the form of selling the majority of the items that we do receive. They are resold as new and used, or they go back to the seller or supplier, or we donate them.”

Amazon, which accepts most returns at no charge, said it sends no items to landfills but, as a "last resort" relies on “energy recovery," a burning process that produce heats to produce energy.

"They rationalize the disposal of goods as a conversion from one form of matter to another,"  explained Mark Cohen, director of retail studies at Columbia Business School. “To the degree they’re doing that, I don’t think they fully reveal."

Energy recovery, Armour added, is only for “items that we can’t recover or are not recyclable” due to legal or hygienic reasons or product damage.

Amazon has said it is “working towards a goal of zero product disposal,” although it did not set a target date for reaching that goal.

But reverse logistics experts say the best way to reduce waste, and cut the expense of returns, is to prevent so many from happening in the first place by charging for returns.

“The industry at large would bow down to Amazon in a heartbeat if Amazon were to start to charge for returns because it would give them air cover to do the same,” Cohen said.

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