Throughout the United States non-durable goods industries there is excess capacity and inventory driven by liberal return policies, inaccurate forecasting, lack of demand, or obsolescence. According to the National Retail Federation, apparel retailers experience an average return rate of 10% of retail sales and E-Commerce companies average of 15% of retail sales. Retail product returns are up 66% over the past 5 years to an estimated $400 billion.
What happens to these products?
In a survey conducted by the retail industry the average disposition practices included:
- Resell the product (to a 3rd party liquidator) – 37.93%
- Landfill – 29.31%
- Re-stock – 24.14%
- Donate – 8.62%
Liberal returns policies are adding to landfill tonnage at an alarming rate. A recent New York Times article quoted that “…as much as two million tons or returned merchandise – much of it undamaged – are landfilled each year.”
CONTROLLED DONATION SOLUTION
A Triple Bottom Line solution (Economical, Social, and Environmental) may be available to both the retailer and 3rd party liquidators. Utilizing non-profit organizations can offer measurable cost savings by allowing companies to take up to 200% of the product cost as a tax deduction.
Non-profit organizations can be used as viable solutions for product recycle, repurpose, or re-manufacturing which can eliminate products from going into the landfill provided the necessary financial paperwork is managed and audit traceable. Managing the branding and operational issues with the non-profit organizations is critical in order to ensure the eventual use of the donated product is consistent with legal and ethical standards.