As the Internet has stolen your walk-in customers, the payback is that they have a real problem on their hands – unsaleable returns. And, the problem is getting bigger and bigger as those ecommerce companies take over what has been traditional retail shopping.
The problem is so dire that Amazon is telling people with exchanges and returns to “just keep it” as the cost to them is just not worth what they can get for the returned item. Other national chains are known to heap clothing into dumpsters destined for the local landfill.
According to the National Retail Federation, depending upon the type of merchandise, returns are running as high as 50%. Less than 10% can be returned to “the shelves” to be resold and the cost of what must happen to that other 90% of merchandise is worked into the price you originally paid. So, while it may not seem to be a problem you and I should care about, we pay for all our indecision, mind-changing and wrong size choices.
A company that started in a dorm room in 2004 has taken advantage of all our discards. Optoro founder Tobin Moore developed software to help find destinations for unwanted merchandise to maximize the loss for retailers and manufacturers. Optoro’s revenue estimate for 2017 is more than $50 million from their cut of the eventual resale through countless channels they’ve developed.
Brick and mortar stores’ returns are a fraction of the online problem since customers have touched or tried on the purchase before leaving. Restocking is also much more likely. The exception is Christmas, of course, when we all do our best to select the perfect gift for our loved ones but miss the mark. The boxer shorts with Santa on them will be in the After Christmas Sale.