After the unwrapping of millions of gifts around the world, and the season of giving coming to an end, begins the work of a start-up company that aims to reduce the financial and environmental cost of another great holiday tradition, "the returns".
For Optoro, opportunity comes from the $260 billion in merchandise Americans returned last year, 66% higher from five years ago according to the National Retail Federation. A quarter of these returns happened during the holiday season.
Shoppers are set to return even more this year due to the e-commerce sales surge and the free return shipping becoming a norm. This cycle was observed to have started Monday, the first weekday after Christmas.
What shoppers know little about is that a majority of these returned goods never make it back to the shelves of retailers. What happens is that these items will wind up in liquidators, wholesalers and resellers, where many of the purchases ending up in landfills. An estimate of two million tons of returned items, where most are supposedly undamaged merchandise, are disposed of each year, an equivalent of filling up 200,000 garbage trucks.
Returns prove to be a big loss for retailers and they are a growing environmental burden. Tobin Moore, chief executive of Optoro says, "The way we consumer right now isn't sustainable." Optoro offers retailers alternative ways to resell, recycle or donate returned merchandise. Moore added, "We can't keep throwing stuff away, there is a better way."
Optoro has proved to be a player in "reverse logistics" industry handling returns, one that is growing with the sprout of online sales.
Genco, one of the biggest operators, processing about 600 million returned items a year and ranking in about 1.6 billion in sales, is also looking at Optoro and possibly a potential investor for the future.
To get shopper to buy online, retailers have offered generous return policies. Almost half of e-commerce sellers including Zappos, Macy's, Target, Gap and Saks offer free return shipping in many categories, surveyed by the retail federation.
These generous return policies make it easier to return the skateboard that is slightly bent or a drone that does not seem to work as advertised. 15% of e-commerce sales end up as returns, according to industry estimates compared to an 8% from buying in a physical store. Electronics also hold a huge chunk in returns annually.
The approach Optoro is taking is by offering retailer more direct and cost-efficient ways to sell returned goods through a software platform that tracks returns. For undamaged products that have high resale value, Optoro's software can instantly direct these products to its own discount site, Blinq.com, which sells open-box goods at discounts. For over excess returns that are available in bulk, products are routed to Bulq.com, where discount stores and other off-price retailers can purchase merchandise wholesale.
Mr. Moore says, "There always will be returns, but there will always be someone who wants them."
