Amazon's multi-billion dollar returns problem | Talk Radio WOSH Oshkosh, Wisconsin | 4/13/22

TL;DR

Amazon faces increasing returns, resulting in significant environmental and financial consequences for both the company and sellers.

Transcript

let's take our deep dive into the world of amazon and amazon returns let me set the table before i bring our guest on here because i want to learn along with you and him about this issue um i'm not full disclosure i'm not an amazon guy right i by now you know if you've been listening to me i gotta touch it i gotta feel it i gotta smell it i gotta t... Read More

Key Insights

• 🤒 The high rate of returns poses financial challenges for mom and pop sellers, as they still have to cover shipping costs and face potential damages caused by consumers.
• 🗑️ Amazon's efforts to make returns easy and convenient contribute to an increase in carbon emissions and landfill waste.
• 🧑‍⚕️ Items returned to Amazon mainly go through fulfillment centers, where workers decide whether to destroy or restock them.
• 🤒 Amazon's policies on destroying returned items vary depending on whether the item was sold by a mom and pop seller or directly by Amazon.
• 🔥 Burning some returned items for energy recoupment seems to be a questionable practice with limited effectiveness.
• ↩️ Amazon's environmental impact due to returns is significant and requires them to revisit certain policies.
• 🌥️ Stephen Pope, an Amazon expert, suggests that consumers' impact on the environment should be compared to that of large companies like Amazon.

Questions & Answers

Q: How much merchandise is estimated to be returned to Amazon in a year?

If we consider that the number of returns is $761 billion, and Amazon is a significant part of the economy, it can be estimated that nearly $400 billion worth of merchandise is returned to Amazon annually.

Q: Who is most affected by the high rates of returns?

The mom and pop sellers are most affected, as they face challenges and additional costs due to returns. Amazon's recent announcement of a 5% fuel charge on deliveries adds to the difficulties for these sellers.

Q: What happens to the returned items at Amazon's fulfillment centers?

Some items are destroyed, even if they are still in good condition for resale. Other items may go back into stock, but this results in consumers receiving previously returned items, leading to a poor experience.

Q: How does Amazon handle returns from mom and pop sellers?

Mom and pop sellers can choose to refurbish returned items and put them back in stock. Alternatively, if the items are unsalvageable, they may be liquidated or donated.

Summary & Key Takeaways

• A record $761 billion worth of merchandise was returned to retailers in general, with a significant portion applicable to Amazon.

• The average rate of return for online purchases was nearly 21% in 2020, resulting in a massive amount of carbon emissions and landfill waste.

• The return process often damages items, impacting both sellers and consumers adversely.