Executive Briefings

What Stores Do With $90Bn in Merchandise Returns

Retailers still celebrating their strongest holiday sales in years now face the less-pleasant task of disposing of billions of dollars in returned merchandise.

Often, retailers offload rejected clothes, appliances and toys for pennies on the dollar through a vast ecosystem of resellers, ranging from outlet stores and online auctions to flea markets and salvage dealers.

On one online auction site last week, 49 washing machines and dryers that had recently been returned to Best Buy Co. sold at a 68-percent discount for $13,300. Sears Holding Corp. recouped even less the same day when it accepted a 93-percent markdown on four pallets of sportswear, intimate apparel and accessories, selling them for $5,825. A spokesman for Sears declined to comment. Best Buy didn’t respond to a request for comment.

Retailing’s secondary market saw volume surge this year, reflecting both the strongest growth in holiday sales since 2011 and the rise of online shopping, where purchases are more likely to be returned.

These post-retail sales, including both returns and overstocked items, totaled $554bn in 2016, and have been growing at about 7.5 percent a year, according to Zac Rogers, an operations and supply-chain professor at Colorado State University’s business school.

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Often, retailers offload rejected clothes, appliances and toys for pennies on the dollar through a vast ecosystem of resellers, ranging from outlet stores and online auctions to flea markets and salvage dealers.

On one online auction site last week, 49 washing machines and dryers that had recently been returned to Best Buy Co. sold at a 68-percent discount for $13,300. Sears Holding Corp. recouped even less the same day when it accepted a 93-percent markdown on four pallets of sportswear, intimate apparel and accessories, selling them for $5,825. A spokesman for Sears declined to comment. Best Buy didn’t respond to a request for comment.

Retailing’s secondary market saw volume surge this year, reflecting both the strongest growth in holiday sales since 2011 and the rise of online shopping, where purchases are more likely to be returned.

These post-retail sales, including both returns and overstocked items, totaled $554bn in 2016, and have been growing at about 7.5 percent a year, according to Zac Rogers, an operations and supply-chain professor at Colorado State University’s business school.

Read full article