The Economics of Amazon Returns

Factual Questions
21

I worked at an Amazon Returns facility. A lot of the stuff is free to Amazon. People forget that most of what they buy from Amazon is from 3rd-party vendors, and the stuff sold as Prime is stored in Amazon Fulfillment centers to be shipped out when an order is placed.

When something is returned, the vast majority of vendors abandon it unless it was returned unopened - they don’t want to pay to ship it back to them, nor pay to have it stored for resale; even the folks that paid to have their stuff accumulated for return never claimed it - we had a whole floor of it that was basically the last scene of Raiders.

So once we log the return into the system, if it’s flagged used or damaged in any way we tossed it into a giant box that’s about 5’x5’x5’, and when the box was fulled they slap a lid on it, a sticker that will let someone down the line print a list of everything in there, and they’d resell it by letting people bid on a giant mystery box, similar to what happens at storage centers. Newbies are always shocked at the stuff the vendors don’t want back (often no-name Chromebooks).

The only things we consistently didn’t just toss was - surprise! - Amazon branded products, and stuff that clearly had never been used - either unopened, or just the packaging opened but the item looking new (the exception being sex toys, which are tossed no matter how pristine they seemed). The Amazon branded stuff went to a different dept to be refurbed.

Btw, expected rate for returns was 75 packages per hour. Less than a minute to open the box, inspect the item for wear, stains, damage or missing pieces, scan it into the system, and yep, repackage it in generic packaging if the original packaging was damaged or had customer info on it, then start the next package. If your damaged/used/opened numbers are too high, expect a chat and an inspection to make sure you’re not flagging stuff like that to bump your rate. But I’d say at least 30% was stuff returned brand new and sealed - just the wrong item or color. It was amazing how many item descriptions say your purchase could be one of five random colors, but people send it back because it wasn’t blue.

22

Anecdotally, this also happens for expensive items, which surprised me.

We bought an expensive 110v heat pump dryer from Miele this year. Ordinarily you don’t buy these new from Miele directly, rather from authorized resellers. Which I intended to do, but stopped by the Miele “Experience Center” to check it out first. As expected, they wouldn’t sell me a full price one there, but did ask if I’d be willing to buy a return for 40% off the price I’d pay at the retailer. They were described as either returned or delivery rejected for any reason, including perhaps “no reason whatsoever”. They were also sold “as-new”, with all the warranties you’d expect with that. Cosmetic damage was a possibility.

I did just that, and the dryer we got is perfect. If there is cosmetic damage on it somewhere, I can’t find it.

I think this implies the model for them is they distribute the appliances to the retailers, and if the retailers have one returned they return it back to Miele, who has to decide what to do with it from then…

23

That’s a great deal; forty percent off. And from their perspective, not much of a loss since forty percent is probably what the dealer pays.