Returning a holiday gift? It could end up in a warehouse auction.
Rather than get reshelved, many returned items enter the booming “reverse supply chain” market, where liquidators sell off unwanted items by the pallet.
Retailers are now in the throes of processing billions of dollars in returned holiday gifts, but many of those items aren’t going back on shelves. Instead, they’ll be bundled off to warehouses and sold in auctions for a fraction of their sticker prices.
More than 15% of the $966 billion in purchases nationwide this past holiday season will be returned, the National Retail Federation estimates. Many of those goods will be scooped up by liquidators in the “reverse supply chain” business, an industry that has been growing thanks to the e-commerce era’s generous return policies.
The reverse logistics market, which includes all players involved in processing in-store or online returns, was valued at $939 billion in 2022 and projected to grow at a 12% compounded annual rate through 2032, according to a Polaris Market Research estimate in August.
Many big brands have tried to make returns as free and painless as possible, and consumers haven’t hesitated to take advantage. Insider Intelligence projected in October that $627 billion in merchandise would be returned over the course of 2023, up more than 26% from 2020’s volumes and comprising 8.5% of total retail sales. The share of returns attributed to e-commerce was expected to rise from 33.7% to 34.3% over that period.
Returns can be costly for retailers. Many already eat the expense of return shipping by providing prepaid labels or envelopes. For certain items, some retailers “just find that it’s not worth it to take it back,” shopping expert Trae Bodge said.
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