What Retailers Like Amazon Do With Unsold Inventory

Every year, retailers and manufacturers end
up with billions of pounds of excess unsold inventory that they’re
sending straight to landfills. And for apparel, they often burn it. And it’s creating more than five billion
pounds of waste a year in the U.S. and over fifteen million
metric tons of carbon dioxide. That’s equivalent to all of the trash
produced by five million Americans a year, or fifty six hundred
fully loaded Boeing 747s. In Germany, a recent study found that
10 to 20 percent of clothing goes unsold, an estimated 230 million
items there each year. And the amount of inventory waste is
only growing as Amazon leads the way in bringing more shoppers online, where the
rate of returns is 25 percent, compared to just 9
percent for in-store purchases. Returns are piling up as walls
of shame in warehouses everywhere. We wanted to find out, why is this
problem so big and what are major players like Amazon doing to cut back
on the wasted inventory clogging our landfills and our planet? We have spoken to over 120 retailers and
over half of them have said that they are disposing of over 25
percent of their customer returns. It’s actually cheaper for them
to just throw them away. To understand why, you have to look
at the complicated journey a return item takes, from the moment you bring
it back, potentially all the way to a landfill. It goes back through a
distribution center where goods can sit for a while, and then they end
up going to liquidators and vendors, and then they get passed down to
smaller regional wholesalers, and then they go from there to dollar stores,
pawn shops, thrift stores, eBay, mom-and-pops at flea markets, and then
they get to consumers in certain cases. And when when goods are cheaper
and used and have to go through that whole process, often it doesn’t make
economical sense, so they end up in landfills. And other types of items,
if it’s larger, items like a used TV, going through that process, it has
a high likelihood of being damaged and destroyed and ends up
in a landfill as well. It’s this expensive, complicated reverse
logistics that keep more products from being resold or recycled. Most organizations don’t really inspect every
single item and say, is this resellable, is it not? What level of effort would it take
to get this back into a resellable condition? And that’s why companies take kind
of the easy route out and just say, well, let’s
just destroy this. And that way we can do that in bulk. And it’s not taking up valuable
time and resources from the organization that has to do other things. And some types of products can’t
be resold, like open, over-the-counter medicines. And some simply have no resale
value, like DVDs sold on the international market. Any DVD, once it’s
returned, the resale value is negligible to zero. And so in those cases, you didn’t want
that to flood the market and become a a zero price point to
compete with your brand new product. But at the same time, you didn’t
want to pay for it to return. So in those cases, we had markets
where it was 100 percent in market destruction, meaning we didn’t take
a single unit back. Amazon and other retailers won’t publicly
disclose how much inventory they destroy. Let’s acknowledge just for a fact
that there’s a lot of product waste. Obviously, that’s true. We know that companies are getting rid
of a lot of products because they’re either out of date or
they don’t work, they’re unfixable. And that adds to landfill mass. So the question would be for organizations
is, well how do we reduce that? Amazon’s answer is that it launched
a program called Fulfilled by Amazon Donations in September. Donation is now the default option for
all sellers when they choose how to dispose of their unsold or unwanted
products stored in Amazon warehouses in the U.S. and the U.K. The donations program was launched after
CBS reported earlier this year that a single Amazon facility sent 293
thousand products to a garbage dump in just nine months. After a
French documentary found Amazon tossed three million TVs in 2018, the country vowed
to outlaw the destruction of unsold consumer products by 2023. And the E.U. has an overarching packaging waste
directive that sets guidelines for limiting waste for
manufacturers and retailers. But in the U.S., experts say
retailers are up against a relatively unregulated infrastructure around
waste and recycling. We have a waste infrastructure,
particularly in the U.S., that is not consistent. There are no national
recycling laws in place. There are some statewide initiatives, of
course, but they are sporadic. Apparel has the biggest problem with
excess inventory, in part because of the current trend of fast fashion. Apparel’s a two trillion dollar market,
which is the largest consumer vertical. So it’s much bigger than
movies, bigger than music, bigger than books, although 30 percent of
it never gets sold. And a lot of that
ends up in landfills. In 2014 compared to 2010, the
average customer bought 60 percent more clothing, but kept each
garment half as long. H&M reported in 2018 that it had 4.3 billion dollars worth of unsold clothing,
up seven percent from the year before. It incinerates some
of those clothes. Much of this is because unsold inventory
is pulled to make way for the latest fashions. We’ve moved from a two
season fashion year to a 50 season fashion year. New clothes
coming out every week. You don’t want that prior season
product available, it’s going to really cannibalize your next wave of sales. Burberry famously revealed last year
that it incinerated unsold and returned products worth 28.6 million British pounds, a
practice it’s since stopped. So the reason that very often
these companies will incinerate products that are perfectly fine and good is
because they don’t want them out there in the marketplace. Right, they don’t want
the brand to be perceived as low cost. So an example is
a lot of luxury sellers. A lot of luxury sellers will not allow their
items to be in like a TJ Maxx or a Marshalls because they feel like,
right or wrong, that it degrades the quality of the brand or
the view of the brand. But in some cases, incineration can
actually be more sustainable than dumping clothes in a landfill. In H&M’s case, they have been
recovering energy from that incineration process. So there are power plants,
for example, that use energy from burning apparel products to input
into their power plant. Another useful end point for all
this apparel and other unused inventory is secondary markets. This includes foreign countries where unused
goods are often donated or sold at steep discounts. World Vision is a major non-profit
that helps retailers donate their excess inventory. It says it received
84 thousand pallets of goods and shipped them to 33
countries last year. Even in secondary markets though, the
waste can pile up, especially after China implemented its so-called “National
Sword” policy in 2018, limiting how much waste countries can
export to Chinese landfills. Southeast Asia in particular, has borne the
brunt of this, where waste is being shipped to these countries, and
you then start finding out that there are heaps of waste garments piling
up on islands in Southeast Asia, because they also didn’t have the
infrastructure to deal with this volume. Other secondary markets for unused goods
to go are discount retailers like TJ Maxx and outlet stores, where
returned and unsold merchandise is sent in bulk, marked down, and sold again. And the online equivalent of this. So you can go to some of these
third party companies and buy things that have been returned, kind of
almost like a salvage process. And the really fascinating thing is some
of that ends up back on the Amazon marketplace. Amazon even has
a separate program called Amazon Warehouse, which sells renewed goods
at a discounted rate. And some retailers, like Apple, even
include mandates about recycling and reusing in its contracts. Any of Apple’s products, which are
high value, and that’s often what drives that in the first place,
have to be returned to Apple. And they actually reuse as many
of the components as possible. It also makes sure that their brand
is not undermined by making its way onto a secondary black market. H&M and others, like Patagonia, have
also started programs to help more used clothing find a second home. They will take trade in Patagonia items,
give you credit for it, and then they’ll repost it for sale
on their Worn Wear site. And then there are other companies,
like Nike, that have really been innovating on designing their product for
circularity, so that it’s easier to recycle them and reuse them again. The take-back systems in retailers such
as H&M, where you are encouraged to take back your clothes, some of
those will be put towards insulation for carseats, for housing. Returns are a major reason why the
apparel industry struggles so much with wasted inventory. So in the apparel
industry, they probably have it the hardest, because it can be upwards of
more than 50 percent or even nearly 100 percent of purchases are returned,
because you’re buying two or three of the same item and then keeping the
one that fits or looks best on you. 65, 70 percent of what we return
is because of fit and/or style-related things. Boston based True Fit is trying
to help with just that, by using data and machine learning to better
match a customer’s fit and preferences, so they order
and return fewer items. Our role in this was to organize
billions of dollars of transactions from the retailers, and you know thousands
and thousands of brands feeding us their product data, and
consumers creating this profile. We have 130 million registered True Fit
users now who have shared with us like, here’s what I care about. True Fit works with major
retailers like Walmart and Target. Returns are going to go down and people
are going to keep what they love because we’re going to figure
that out better, right? And the combination of both of those
two things should make the production more efficient and so you have
less going into a landfill. Nike has a feature on its app that
uses your phone’s camera to scan your feet with 13 data points to
suggest the right shoe size. MTailor uses a similar concept, the
custom clothing fit app uses your phone’s camera to measure 17 different body
points that it claims are 20 percent more accurate than
a professional tailor. And there’s in-person options like
Formcut, where customers get clothing size measurements after stepping into
a 3D body scanner. Amazon is also tackling high apparel
returns with Prime Wardrobe, a program launched in 2018 that lets you
try up to eight items before you buy them. A similar program is
Rent the Runway, which eliminates returns by renting out clothing. And H&M just unveiled a line
of conscious exclusive dresses and skirts available for rent. Google is also
leveraging its massive amount of data to help its retail partners like
Macy’s, Target and Kohl’s understand what online shoppers want and cut
down on returns and waste. Google, on an aggregate level, has an
understanding in a country or a geography what people
are looking for. So getting that forecast right, how
much product do you need? What should you be buying? What stores should you
be allocating it to? Now, a handful of small companies have
sprung up to help with the waste and help retailers save money. Optoro is one of them. It collects data on why returns come
back, then optimizes next steps for its retail partners like Best
Buy, IKEA, Target and Staples. Real time, it captures the value of
that product in those markets, and then it captures the data on how much
it would cost to get the good to each specific channel. And making sure that each item is connected
to its next best home and not a landfill. Some smaller companies have even
made a business out of taking wasted inventory off bigger company’s hands
and disposing of it for them. One such company, Stericycle, estimates
it’s destroyed or recycled 80 million pounds of unsold items
for manufacturers and retailers. And some big names, like
Nordstrom, are experimenting with end-to-end automatic sorting and inventory distribution,
which it hopes will mean more efficient reselling of returned
items, cutting down on wasted inventory. Historically, you may find
that solutions are very much segmented for fulfillment, as distinct
from sortation as distinct from returns. And here at Nordstrom, we’re
taking a holistic approach for end-to-end solutions and we’re really excited
to be the first retailer to adopt this combined technology. Amazon is also using robots to
increase the efficiency of its distribution centers and eventually reduce waste. It also has a massive amount
of data on customer behavior. Amazon says its systems are constantly
evaluating what its customers will want to buy, placing orders with vendors
to ensure it stocks the proper amount of inventory. Their technology
can make predictions that says, “Hey, this product, there’s going to
be others that want it. There is demand for it. So if we get
it back, and we get it back in the region where it was shipped, we actually
think were going to be able to ship it to a buyer
in that same spot.”. From automation to algorithms, the good
news is big tools are being developed to help retailers and
suppliers find more efficiency. And hopefully, one day, send fewer
of their excess goods to landfills. The trends are going
in the right direction. There’s great brands that are helping
to lead the way, and there’s regulations in certain cases, which we’ve
seen more so in Europe, that have also helped guide people
in the right direction. If we can provide, as consumers,
a demand for those more sustainable products, it becomes easier for them to
do those jobs in improving those systems.

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100 thoughts on “What Retailers Like Amazon Do With Unsold Inventory

  1. You all can thank the industrial movement for this one. It was the beginning of mass production and cause for wasted goods.

  2. Watch what would happen if there was an international rule that prevented people from literally buying several clothing combinations with the intention to return the least nice combination.. or at least not without light financial consequences.

  3. I don’t even know where to begin.. and it is going to be a story to long for even a YT comment…
    so i put it in one sentence


  4. None of these "solutions" tackle the underlying problem which is that we simply need to consume less. None of these greedy companies with new products every week will tell you that, but that's the truth.

  5. I'm really surprised that these thrown away clothes don't end up on the black market some how. Criminals are slippin big time.

  6. Millions of pounds of clothes end up in India, where they remake threads from them to sew and make clothes again. Basically, each item can be transformed into a new material that can be recycled and recreated into a brand new product.

  7. When someone pays $600 for a H&M dress they’re paying for all the unpopular H&M investments to be burnt. Why? Because they want to buy a dress that’s $600 that nobody else has.

    Meanwhile all the workers and cotton farmers are getting paid for their hard work. Should they cut their output and therefor their labor force?

    The rich celebrity is only going to wear that $600 a few times. Why do they care if their work was worn or burnt.

  8. Idea! I have a couple of tons of the cheap crap that made it through a single wash in tact! I'll box it all up along with the rest of the junk with so called high end labels (brand selling) with shoulders made to fit a very poorly fed human worker for them. The amazon can send their crappy drones to the end do the street and pick it all uo for burning! Be cautious, half the dyes in the clothes smell funny. God knows what country has legal toxic dyes. Smh. The propaganda they spew amazes me! Doesn't he have planet to colonize so his vision of this planet can be achieved. Ya know, "residential only?" People don't know enough nor care who suffers by buying monopolized clown goods, nor care who suffers worldwide. May be a good way to get it right. Don't pawn off the junk on homeless! Offer them something you touched or had made. Hell give them a meal, warm hat, or don't. The brand new giant churches and monopolized hospitals, and high rise sardine cans with no doors are getting ready for them.

  9. You'll always have unsold inventory if the prices are extremely high. If billionaires sold products at their REAL price there wouldn't be any unsold item, and they'd kept having the same profit margin. They're just stupid.

  10. Our slice of time, our geological layer is going to be marked by fossils of woven textiles and plastic. The plasticene era, like the jurrassic era…

  11. We create artificial scarcity, to keep profits high at the expense of humanity. We ought to be ashamed of ourselves.

  12. THEY BURN EVERYTHING WHILE SOME THIRD WORLD COUNTRIES ARE SUFFERING COULD USE ALL THOSE CLOTHES AND HAVE BUSINESSES JUST SELLING THEM even used but putting in landfill just ridiculous completley wrong way going about its a shame got to be better way and sooner then later.

  13. So Apple is charging ridiculous prices for their phones and their other junk. Then they use used or old parts, in their products 🤔 glad I have never been fan of Apple.

  14. Why don't they send the clothing to these countries that are not as fortunate. Where people don't have shoes, clothes, toys etc etc etc. Create tax programs for these multibillon dollar greedy corporation's to donate to other countries, instead of filling up our landfills.

  15. It just shows how years ago stuff was produced, but now it mass produced till all is used or gone for any reason. i mean like movies on dvd i have learned become out of print since to start they was not made like crazy as they are now. i can see it a nice score if find stuff from a dumpster if not locked, but to know amazon allows it to be part the inventory some how then u dont know if what u get is really new so to speak or if it was saved from dumpster by chance. it just shocking to know that if u try third party sellers that now u can chance and hope it not from a dumpster by chance. or just pay extra to get direct from amazon to know it was never in dumpster . i may be wrong but just how i see things.

  16. "Billions of pounds"? Why not say "millions of tonnes"? It sounds weird to put numbers over 1000 with units smaller than a tonne (which is the largest everyday unit of mass).

  17. I never buy online. And I can't remember the last time I returned anything. I did buy one laptop online, totally glitchy, didn't bother returning it because I needed to have one.

  18. There are so many people in need around the world and we through things away instead of giving it to them. 🤦‍♀️ when I worked at a Harmons Bakery, I was appalled with the fact that we had to throw away unsold breaded goods every night. That could be given to homeless shelters!
    However, I worked at a health food store and they would donate to a company that provided food to homeless shelters. Wish companies were more like that place.

  19. I can’t believe they destroy all this stuff when there are plenty of people that could use this stuff. Burn the clothes when their are children and adults that need them that’s ridiculous. What would it hurt to donate it. It wouldn’t hurt nothing they are greedy.

  20. can't sellers give away goods to the homeless people if they are literally destroying the goods which gives out no profit at all

  21. I know alot of people that work for alot of companies and these employers don't in poverty and can't afford to do anything more then put food on the table or should I say food on their lap because they dont even own a table. Just like McDonald's. They have homeless starving employees and they throw tons of food away daily.

  22. We live in a near post-scarcity society. OK, we do it plundering the natural resources and enslaving entire countries with cheap job rates, but we produce more food, more clothes, more goods that we need. We do not starve, do not wear rags, and our kids do not play with dead frogs. The Western world rocks !

  23. I have been saying this for years. Companies like Starbucks or Amazon or so bad for the environment. These companies create mounds of garbage. It’s funny how Bezos or Shultz pretend like they are doing good with their liberal let’s say the environment attitude on the front but the biggest cause of destruction to the environment in the back.

  24. i want to mention the hp renew program – i just think it is an amazing step in the right direction – inspecting devices, that got sent back, fix them if it's economical and sell them again at a discount WITH FULL NEW WARRANTY

  25. I would be interested in taking a look at some of that inventory and negotiate on some items, if I knew where the return sites were in Ohio or how to contact them.
    Must be less than full price.

  26. My favorite part of cleaning used cars was going through all the junk left behind, maybe a career in recycling is where I should be looking

  27. I’ve shopped on Amazon weekly for over 10 years and I distinctly remember the one item that I returned because it was defective. This is absolutely ridiculous WASTE of product that can be given to the homeless or recycled.

  28. We are all having more than enough things. We are overindulged. Nobody needs anything anymore. Thats why many merchandise doesn't get sold.

  29. Yes put an end to designer clothes, and make more shirts with made to order prints. Mass manufacturing of the same item is the problem. The only reason an item should be returned is if it is defective or the wrong item. Returns should not be so easy either. Buying on Amazon is like going on a blind date. The pictures often aren't the real product being sold and if it is used the real condition is often unknown. Amazon should go out of business for all I care.

  30. Think before you buy !!! Reuse-recycle now more than ever! This madness has to stop 🛑! No one NEEDS constantly the latest gadget or fashion . We, the consumers, can help large companies to shift from over production to smart production by applying a drastic change in our purchasing behaviour. Unfortunately the Insta-Hipsters and dumbed down screen staring youths might not get the message. Narcissistic behaviour has increased beyond a comprehension, we certain,y have our work cut out here…

  31. This is sick… You know how many people will be glad to have some of these things?? Especially the shelters and salvation army and vets…

  32. They did this with food during the last depression. They burned it or trashed it rather than gave it away. If they gave it away then the profit margin would sink and people would get lazy waiting for handouts. People who couldn't afford the item at the time either starved or worked harder to get it. Sink or swim theory.
    I can see how this applies to clothing and unnecessary products, if its affordable and unlimited, we turn gluttonous. By keeping product prices high and limited in quantity most of us are buying on a need it standard and not a want standard.
    Now if they would just work on quality instead of quantity……..

  33. Interesting…..I tend to resale my old clothing on the many apps and website available these days and hardly shop online because I hate having to go to the return process just to get the correct size of 1 item

  34. The US don’t regulate because we aren’t communist. People can throw away whatever we want. If it made sense not to-they wouldn’t. The funny thing is- people that are concerned about this are the problem, in general the 18 to 35 age are extremely high on poor research purchases and returns and extremely high on fraud purchases aka a tv for the Super Bowl then a return after.

  35. I’m so mad at these things, governments are telling people to recycle, but they are doing nothing about these big companies who are actually the ones polluting the world, what they think they gonna do with landfills ?!? Is not like they disappear over time, there won’t be anymore space to put all this waste in, we are just doomed I swear we will end up like in the cartoon wallee. The other day I was sorting out my recycling bin separating plastic from pet and a lot of the things I’ve found where plastic but not recyclable such as food containers for Daly meat, like wtf, we as the consumers are asked to do the hard work when they could simply increment some rules for these companies to make at least fully recyclable containers so we won’t have as much waste as we do, but no too hard to ask let’s just make the consumer worry and do all the hard work for us

  36. Per capita, how does this compare to yesteryear when items sold in a given country were predominantly made in that very same country? Yeah, it is one more reason not to buy Asian made items – particularly if you're headed for a climate change rally in the US.

  37. Anyone seen The True Cost on Netflix? It shows the exploitation taking place in sweat shops to make our clothes. It's a very good doco

  38. Nice to know That those Designer Clothing Manufacturers care about the Poor who may not have any clothes. Sustaunable burn your rotten threads Americans won't buy your junk anylonger.

  39. The numbers of waste is shocking. Think how much good it can do if they ship it to the poorest countries on the planet, like Santa Claus…

  40. Anyone else see the amazing waste of labor here? Too many jobs and workers. Industrialization is disgusting. Industrialization leads to industrialized wars like in Iraq and Afghanistan. The amount of overwork keeps the slaves ( working class ) too busy to understand.

  41. in 1980 and 1990s, one jean cost more than $60, I can't afford any pants that years but dormmate sold me used jean for $20, I wore few time still not comfortable then gave away to friend. he wore until it wore. right now i bought from Ross and Marshall under $20.

    Why fast fashion giants are fooling everyone. All these clothes can be turned back into threads and are great thing. In India we are already doing it with imported clothes.
    The manufacturers must comply to eco friendly conducts.

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