This is a general problem with third party logistics - if you’re paying someone a rental fee to store your inventory, as well as paying them to pack and ship it, there comes a point where unsold stock turns a loss from just sitting there.
Amazon may be somewhat of an egregious case though - their fees and policies are very aggressive toward the vendor - not through any explicitly malicious motive really - just capitalism on a large scale.
Let’s see some numbers. “Millions” of items are destroyed from their warehouses. Out of how many that go in? I suspect that it’s only a very small proportion, and it only looks large because of their staggeringly massive volume. But that volume almost certainly results in a lower proportion of wastage, such that if you replaced Amazon with a whole bunch of smaller retailers, the waste would increase.
People have concerns about ‘just-in-time’ but warehousing stock has drawbacks too. If you, as a widget manufacturer, develop a new model, then you have to decide what to do with all the stock of out-of-date widgets.
You could sell them off, but that would undermine your market for new improved widgets.
You could recycle them, but that may cost more than the alternatives and, depending on what they are made of, may be impracticable.
In many cases, you will want to be sure that the old models do not surface on eBay or wherever, so the only option is to destroy them.
Of course, if ‘you’ are a government, and the widgets are £50 notes, no one would complain if you make sure that they are totally destroyed.
A Canadian program - Marketplace or W5 I think - did a show on this not long ago.
The basic problem is simple. They allow returns. People return items. If you operated a storefront, you could have a bin or rack in the store with the items marked down and people could look them over, decide if they could use them despite the open box and partial use.
If your business is mail order, then every item has to be checked- is it clean? Does it work? (If not, can it be repaired?) Are all the parts and instructions included? Is the packaging presentable and usable for shipping? If not, what parts can be recycled and how much disassembly required. (A cheap toaster for example is $C22 on Amazon, including shipping. How much would it cost to unpack it, check if it works, verify the packaging and instructions are complete, and repack it presentably? Assuming 50% of these after all this work are not resellable? And do you undercut your own goods with refurbished goods?)
It would be fine if people simply returned items that don’t work, but people return a lot of stuff for the most trivial reasons. (Some will order 3 or 4 sizes and then return all but the one size that fits) Even the logistics of charging a restock fee costs money; but generally, AFAIK, Amazon does not.
The TV investigators in the program put tracking tags in their merchandise and then returned it and followed it - into giant warehouses, then some into smaller junk dealers, but much of it into landfill. Basically, profit margins are too small to dedicate time to the effort of sorting, refurbishing etc. The cheapest path is to trash it all.
The impression I got from the program was that this is standard across North America.
To paraphrase Bishop Amalric, “Trash it all, let God sort it out.”