Circular Economy Circular Economy

New Amazon Programs Aim to Curtail Rampant eCommerce Return Waste

With its size and scale and proper follow-through, Amazon has the potential to make a significant dent in global product waste and offer models for other retailers to follow.

Published 3 years ago | About a 5 minute read

Image: Amazon

Amazon has launched two new Fulfillment by Amazon (FBA) programs designed to make it easier for its third-party sellers to resell customer-returned items or overstock inventory, while also giving more products a second life.

As the ecommerce giant explained in a blog post, the programs aim to provide another way for sellers to profit from selling on Amazon while fueling a circular economy. Once fully rolled out, the company expects these programs to give more than 300 million products a second life each year.

FBA Liquidations — now live in US, Germany, France, Italy and Spain, and soon the UK — gives sellers the option to use Amazon’s existing wholesale liquidation partners and technology to recoup potential losses on returned and overstock inventory.

Previously, a seller would need to have these items sent back to them or have Amazon donate the product on their behalf. Now, businesses selling on Amazon have a hassle-free way to recover some value from returned and overstock items through selling items in bulk while also doing their part for the environment.

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And sellers who want to resell returned items can utilize the second program, FBA Grade and Resell — which is now available in the UK and will be in the US by end of year; and in Germany, France, Italy and Spain by early 2022. This program gives third-party sellers the option to sell returned products on Amazon as “used” items, instead of having the items sent back to them or donated.

“Customer returns are a fact of life for all retailers, and what to do with those products is an industry-wide challenge,” said Libby Johnson McKee, director of Amazon WW Returns, ReCommerce and Sustainability. “These new programs are examples of the steps we’re taking to ensure that products sold on Amazon — whether by us or our small business partners — go to good use and don’t become waste. Along with existing programs like FBA Donations, we hope these help build a circular economy, maximize reuse, and reduce our impact on the planet."

The new programs come less than two months after British broadcaster ITV reported that Amazon is destroying millions of items of unsold stock at one of its 24 UK warehouses every year — including smart TVs, laptops, drones and hairdryers.

The revelation resulted in backlash from UK lawmakers and environmental campaigners such as Greenpeace — which accused Amazon of working “within a business model built on greed and speed.” The group described the environmental and human cost of Amazon’s wastefulness as “staggering.”

In response, Amazon says it is working toward a goal of zero product waste and that no items are currently sent to landfill in the UK.

In today’s retail climate, returns account for 50 percent of items purchased in the US alone — and amount to a cost of $350 billion a year, with 5 billion pounds of clothing and textiles winding up annually in US landfills. Coupled with the fact that over 50 percent of people don’t return products because the return experience is too cumbersome, this is essentially a $700 billion problem.

And as Greenpeace points out, the practice of destroying unsold stock isn’t new. Fashion companies have long been known to burn unsold or returned stock — even H&M, an early fast-fashion pioneer in textile recycling, was caught in 2017 incinerating tonnes of its unsold stock.

Thankfully, growing consumer awareness of the egregious amounts of products wasted through conventional retail has ignited growing demand for circular models — and more and more brands, particularly in apparel, are getting on board with their own resale and repair offerings; the secondhand clothing market is expected to top $77 billion in the next five years.

With its size and scale and proper follow-through, Amazon has the potential to make a significant dent in global product waste and offer models for other retailers to follow.

As the two new programs roll out in the US and Europe, Amazon says it has already received positive feedback from sellers. As US seller SoundPEATS Audio shared, “We think these programs are helpful for businesses selling on Amazon. Some sellers, including our business, don't have the third-party warehouse to easily accept returned inventory or hold on to overstock inventory. Before we would have to dispose of inventory, but now we’re able to give it a second life and make money off it.”

These programs are the latest in Amazon’s sustainability initiatives, including The Climate Pledge — its commitment to net-zero carbon by 2040 — and its Climate Pledge Friendly badge, which enables shoppers to easily find certified sustainable products. Amazon is also committed to giving products a second life through FBA Donations, through which the company says it has helped sellers donate over 67 million items since its launch in 2019; its discount store for used products, Amazon Warehouse; the Amazon Outlet store for discounted excess inventory; Amazon Renewed for refurbished products; and for certified refurbished and used Amazon devices, Pre-Owned Amazon Devices.