Amid tsunami of holiday gift returns, retailers turn to tech for help

·3 min read

Christmas may be in the rearview mirror but now the country is moving into a post-holiday tradition: returning all those unwanted holiday gifts.

With online sales expected to hit a record this year, returns could reach new heights, too. But many retailers are not equipped to take their products back, with a big chunk of those returns ending up in landfills every year.

That is why some online retailers are now trying to help companies deal with a tsunami of returns — while making the business of returning products more sustainable.

One of those retailers is Optoro, whose CEO Tobin Moore said companies typically see their returns pile up in warehouses before getting rid of them quarterly or twice a year.

"They might liquidate them for pennies on the dollar or even potentially destroy them," he told CBS News correspondent Janet Shamlian, who visited a massive Optoro warehouse outside Nashville, Tennessee.

The amount of returned merchandise that ends up in landfills every year is enough to fill 23 million refrigerators or 6,400 Boeing 747s, according to Optoro and the Environmental Capital Group.

Optoro's Nashville-area facility is one of three dozen used by the company to process merchandise for sellers like American Eagle, Target, Bed Bath and Beyond and others. Workers use Optoro's software to check in the merchandise, ensuring a refund and relisting the product for a new sale.

"We're just here to grade it and make sure that it has a [bar code] and make sure that it has the correct description," employee Rocsana Pantaleo said.

Instead of being sent back to the retailer's warehouse, returned products are held by Optoro until they're sold again.

"They're housed here. It's the most efficient thing," Moore said. "Wherever that good comes back, if you can get it back to stock from there, it means less shipment, less touches, less waste."

And the process has to be efficient as 89% of online customers say they won't buy again if the return process is difficult, according to Optoro.

Online shopping has never been a bigger part of the holiday, with sales expected to hit a record $207 billion in the U.S., likely topping 25% of all sales nationwide, Adobe Analytics projects. But the e-commerce return rate is even more startling: 25%, meaning one of every four items purchased online is sent back, compared to about 8% for a physical store, according to Optoro.

In Houston, online shopper Abby McDonald used Happy Returns, a service that collects customers' unwanted goods for hundreds of companies that sold them. It's postage and box-free, requiring only a QR code. McDonald sent back a dress she bought online from the women's clothing company, Draper James.

"It's close to my office, which made it easy to pop out at lunch and drop it off here for free," she said.

The clothing store Everlane takes more than 70% of its unwanted items back through Happy Returns. Everlane's Katina Boutis said making returns seamless is critical not just for customers, but for the company's bottom line.

"So I think the speed and efficiency with which we can get the product back on the shelf and available for another customer is really integral to our overall business model," she said. "It obviously impacts our sales and our revenue."

Another winner is the environment. Almost 6 billion tons of return inventory will end up in landfills after the holiday season, Optoro says.

Minimizing shipments and getting the product back into stock quickly is a win for the buyer, the seller and the planet.

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