Executive Summary
Returns are a multi-billion dollar problem for retailers who much prefer to allocate resources to profits through forward reaching sales. In fact, consumers are returning 95% more than they did five years ago¹. Less than half of returned items are resold at full price² and billions head straight to landfills, eliminating any chance to recover profits. Adding insult to injury, online retailers often pay the cost of return shipping.
With return rates and management costs accelerating, retailers are scrambling to find options to reduce the damage. In some cases, returned merchandise is in mint condition and can head straight back to shelves to sell at full price. In other cases, the items show signs of wear and tear or malfunction, which leaves the retailer with three options: Throw them away, liquidate them at pennies on the dollar, or recondition and refurbish the items to recover profits and promote sustainability.
Now more than ever, retailers are looking for new ways to make returns profitable–and they're doing it by outsourcing refurbishment. It’s a complex process. While they recognize thevalue of refurbishment, most retailers do not have the resources to tackle this initiative independently. That’s why a number of new businesses are forming to take on the responsibility–offering retailers higher margins while promoting sustainability by keeping distressed items out of landfills. But not all refurbishers are created equal and choosing the wrong pa ner can cost retailers more than they can recover.
