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. The used-clothing boom is driven by the liberal return policies typical of e-commerce, notes A.J. Hernandez, CEO of private mail and delivery network SkyPostal.
“And it’s not just apparel,” says Hernandez. “On average, 25% of all e-commerce purchases are sent back. Along with 56% of all clothes and shoes, nearly half — 48% — of electronics sold online are returned.”
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 cottage industry of resellers who buy returned merchandise and either sell it directly to consumers or wholesale it to other online retailers, according to SkyPostal. 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 is imported goods that are not paid for when their containers arrive in port. Such merchandise may be damaged and only partly recoverable. Reverse logistics also is a major business segment for companies like SkyPostal.
“This whole structure 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,” says Hernandez. “For all this to work, 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.”