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’Tis the season for ‘re-commerce’

Dec. 28, 2015

Perhaps you’re returning a gift you don’t want, or perhaps you’re returning something you bought for yourself but regret the purchase. In the Wall Street Journal, Serena Ng and Laura Stevens write, “This holiday season, goods with an original retail value of $19.4 billion—nearly one-quarter of e-commerce sales—are expected to be returned, according to Shorr Packaging….”

They add, “Total returns for 2015 are expected to be $260.5 billion, or around 8% of all retail sales, according to trade group National Retail Federation.” Physical store returns tend to be just slightly less than e-retailer returns.

Most returned merchandise won’t be resold by the original e-retailer or physical store. Instead, write Ng and Stevens, “…little-known companies collect, process and often resell piles of unwanted gifts, flawed merchandise and other items….”

They quote Ryan Kelly of Genco as saying, “We call that ‘re-commerce,’ where products get a second life.” Popular categories for re-commerce include toys, sporting goods, housewares, and consumer electronics. Re-commerce fetches about 10 to 20 cents on the dollar.

Shan Li at the Los Angeles Times notes that returns are becoming an increasing headache for retailers, who are turning to companies like Optoro. That company’s software determines whether it’s most advantageous to resell, fix, or scrap returned merchandise. She quotes Tobin Moore, Optoro’s chief executive, as saying retailers can recover about 70% of the initial price by connecting with frugal shoppers.

The traditional celebrants of Boxing Day never faced such logistical challenges.

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