Returned merchandise, a major fact of life in ecommerce, is creating a new, freestanding branch of the retail industry. SkyPostal CEO A.J. Hernandez looks at the promise—and pitfalls—of this nascent market.
(Miami, FL) October 12, 2020—Second-hand merchandise, once the province of thrift shops and tiny specialty stores, is rapidly becoming a major factor in today’s retail industry. In a recent poll, 70% of women said they have bought or are open to buying used clothing. Meanwhile, a herd of major retailers—among them Nordstrom, Macy’s, Eileen Fisher, Walmart, and Patagonia—are either selling lightly used clothing or making plans to do so.(1) The used-clothing boom, notes A.J. Hernandez, CEO of SkyPostal, Inc., is driven by the liberal returns policies typical of ecommerce, which now accounts for 16.1% of all U.S. retail sales.(2) “And it’s not just apparel,” says Hernandez. “On average, 25% of all ecommerce purchases are sent back. Along with 56% of all clothes and shoes, nearly half—48%—of electronics sold online are returned.(3)”
While companies like Nordstrom and Macy’s are reselling their own returns, many retailers sell returned merchandise not item by item, but in bulk. This activity has created a whole cottage industry of resellers who buy returned merchandise and either sell it directly to consumers or wholesale it to other online retailers. Companies interested in this market, says Hernandez, should be aware that it holds varying levels of risk. Wholesale liquidation companies offer unsold lots from retailers or manufacturers and can normally verify the authenticity and condition of the merchandise. Another and generally less expensive source of inventory, however, is imported goods that, for one reason or another, are not paid for when their containers arrive in port. Such merchandise may be damaged and only partly recoverable.(4)
In addition to consumers, retailers, and resellers, the ebb and flow of returned merchandise plays a role in the life of supply chain companies like SkyPostal, where reverse logistics is a major segment of the business. “We deliver for a major sneaker company in certain countries, for instance,” says Hernandez. “We receive and process their returns, and we also grade their returns. Merchandise receiving a grade of A is returned and resold. The rest is destroyed.”
This entire overall ecommerce/return/resale mechanism, according to Hernandez, is increasingly the model for today’s global retail industry. In his own sphere of operation, Latin America, logistics can, he notes, be a somewhat complex matter. SkyPostal, however, has the experience and skill to manage it, and is trusted by major retailers and platforms, such as Rebound Returns—which handles returns for major European vendors and is the largest returns platform in the world—to do so.
“This whole structure,” says Hernandez, “is built around the consumer’s needs, desires, and expectations, as expressed in their reviews and ratings; if you have a consumer-unfriendly returns system, you will have bad reviews and bad ratings.” The better the returns process works, in other words, the better the ratings, a matter of great concern to giant retail and wholesale resellers, among others. “For all this to work,” he says, “these retailers have to make it easy to return items and then figure out how to resell them. My company’s role is to make the back-and-forth process as effortless and invisible as possible.”
SkyPostal was created in 2001 to meet the need for improved and efficient cross-border mail and parcel service from the United States and Europe to all countries in Latin America, the Caribbean, and Mexico. It is now the largest private mail and delivery network in Latin America, serving European postal administrations, major publishers, the world’s largest ecommerce retailers, international shippers, and financial institutions that require reliable and secure delivery of their mail and parcels. For more information, please see www.skypostal.com.
- Freeman, Lisa Lee. “Major Retailers Now Sell Used Clothes at Low Prices.” AARP, 4 Sept. 2020, aarp.org/money/budgeting-saving/info-2020/big-retailers-now-sell-used-clothes.html.
- Palmer, Annie. “Coronavirus Pandemic Turbocharges Online Sales, Which Were up More than 31% in Just Three Months.” CNBC, 18 Aug. 2020, cnbc.com/2020/08/18/e-commerce-sales-grew-more-than-30percent-between-q1-and-q2.html.
- “Returns Come Back To Haunt eCommerce Amid Pandemic,” pymnts.com/news/retail/2020/returns-come-back-to-haunt-ecommerce-amid-pandemic/.
- Duff, Victoria. “Information on a Salvage & Overstock Merchandise Business.” Small Business – Chron.com, Chron.com, 26 Oct. 2016, smallbusiness.chron.com/information-salvage-overstock-merchandise-business-81002.html.
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Karla Jo Helms