- Americans will return more than $816 billion worth of merchandise in 2022, according to the NRF.
- Many major retailers use some kind of outside service to help with returns processing.
- Inmar Intelligence, a liquidation warehouse operator, showed Insider how it all works.
In the middle of Pennsylvania’s booming warehouse district, the Lehigh Valley, one 300,000 square foot warehouse is full of apparel, personal care products, holiday decorations, rugs, and thousands of random items — most of which have already been delivered, and then returned.
“We get this truckload full of various stuff, and then our job is to accurately account for it and separate it out,” Curtis Greve, vice president of operations for Inmar Intelligence, told Insider during a tour of the facility.
Inmar’s goal is to maximize the money still to be made on those items by determining where to send them, whether that’s back to the store, to an outlet or discount seller, donating them, or, in about 1% of cases, responsibly destroying them.
“If you go back to the 80’s, before central returns really started taking off, most of this stuff ended up getting thrown away,” Greve said.
Returns have come a long way in the last few decades, according to the industry veteran. For a long time, they were an afterthought — a nuisance to retailers that piled up in a corner. Now, most major retailers have realized proactively handling returns can help with brand reputation and the bottom line.
“Especially in categories like apparel and footwear, where there are really high return rates, customer loyalty and customer experience come down to that complete customer journey,” said Thomas Borders, VP and general manager of Inmar. “It’s not just how do you feel as a consumer when you buy the product, but on that 30% occasion when I’m making a return, how seamless is that returns experience for me?”
But many retailers need help from companies like Inmar, which has 27 warehouses processing returns all over the country, with the aim of getting sellable goods back into stock as soon as possible.
“It’s ugly, it’s hard, and it’s not intuitive,” Greve said. “Retailers are used to shipping things out — filling stores and sending out orders. Receiving returns is an entirely different process,” he explained. “We’ve already got the best practices. We’ve got the technology. Retailers and manufacturers just don’t want to invest their resources in developing those.”
Tony Sciarrotta, President of the Reverse Logistics Association, told Insider that there’s a dearth of processing capacity in the US market, especially when it comes to the human labor needed to inspect items and make sure they’re suitable for resale.
Here’s how Inmar’s facility works.
The shipments could be hundreds of packages mailed by shippers, consolidated returns from stores, or even pallets of goods that never made it to the store, or were somehow damaged in the warehouse.
Sometimes returns brought back to stores come in plastic bins like this, which truck drivers collect every week at the same time they drop off new merchandise. These are from a major drugstore chain. Inmar is contractually obligated not to reveal the specific brands it works with.
The goods are moved to the work area for the retailer in question. On the day we visited, the facility was processing returns from a major clothing retailer, a department store, and a drugstore chain. These well-lit workstations are set up for processing clothing returns. The yellow bins on wheels are full of packages mailed by shoppers.
For clothing, that means workers inspect each item for damage, smells, stains (especially deodorant) and to make sure the tags are intact.
When Inmar has a new client, every single item it sells is entered into its internal software with instuctions for what to to do with a return of that item. When a return comes in, workers go through a series of questions and checks that help the system determine the condition and where the item should go next. Every time a barcode is scanned, the software generates a question tree that ends in a decision and an instruction. The final step after an item of clothing is approved is to lint roll and repackage the item.
If items can’t be resold, Inmar works with partners to recycle or safely dispose of sensitive products, like household cleaners. Recycling goes beyond cardboard and plastic, too: Some liquid products that can’t be resold can be processed to remove the sugar in the liquid and turn it into ethanol.
None of the boxes pictured here will sit in the warehouse for more than 21 days, according to Greve. And in January when holiday gift returns are at their height, things will move even faster.