As the holiday season approaches, stores looking to sell off returned merchandise are turning to a new outlet: independent merchants on eBay.
Online sales have soared thanks to the coronavirus pandemic, with second-quarter e-commerce sales up more than 44% above last year’s numbers, according to Commerce Department data. That’s a trend that’s expected to continue through the holiday shopping season, according to a recent report from market research company eMarketer.
But those items bought online aren’t just moving from retailers to consumers. Increased online sales mean increased returns, according to Optoro, a Washington, D.C.-based tech company that provides technology to retailers including Best Buy, Target, Ikea, and Staples to help them process returned items in more streamlined ways for both consumers and employees.
“We’re really focused on solving this problem at scale with the biggest retailers,” says CEO Tobin Moore.
Online sales typically generate three to five times the returns of brick-and-mortar purchases, where people have more chance to examine goods before they buy, according to the company. Even before the pandemic, in 2019, more than $300 billion in merchandise was returned to stores including online merchants in the United States, according to January report from retail tech company Appriss Retail.
“They’re going out on a limb more often and taking more risks, buying things without seeing them in person, which can lead to higher return rates,” Moore says.
Companies have a serious incentive to make the returns process as easy as possible: Consumers are more likely to continue shopping at stores where they had good experiences returning merchandise. The returns process can be facilitated by online portals built with Optoro’s software that guides consumers to mail in merchandise or drop it off at brick-and-mortar locations. And stores can take items received at their warehouses and stores and more efficiently route them to their next destinations before they take up too much space, whether that means putting them back on shelves for resale, selling them to resellers, or donating them to charity. Optoro offers machine-learning-based tools to help quickly classify returns as they come in.
“We have predictive analytics to determine the route that will get the highest net recovery for each item coming back,” Moore says.
In addition to returned items, some retailers have a glut of unsold goods thanks to temporary or permanent store closures related to the pandemic.
To help move all that excess merchandise, Optoro is partnering with eBay, which is no stranger to helping America selling odds and ends online. The deal isn’t designed to let consumers buy individual returned and unsold items directly from stores. Instead, the deal lets individuals and small businesses buy boxes of unsold merchandise from stores through eBay and Bulq, a division of Optoro that handles online bulk liquidation sale, then quickly turn around and relist those items individually on eBay.
“eBay’s got tens of millions of sellers that are always looking for inventory to sell online,” Moore says in a Zoom interview, displaying a sample box of toys similar to what eBay vendors could purchase for resale.
Buyers won’t just get the physical goods in the mail—they’ll also get prepopulated eBay listings they can use to get the items quickly up on the site without having to do a lot of data entry or copy-and-paste. The process, which uses manifests of box contents including standardized codes like UPCs and ISBNs for books, is designed to help sellers save a good deal of time getting the items listed, according to the companies.
That’s a big deal for independent sellers, who only make money based on the ultimate sale price of their items, not the time they spend perfecting listings. Faster sales mean more profit or less work for sellers and potentially faster sales time for retailers looking to offload merchandise. It’s also ultimately good for eBay shoppers, since they’ll have access to more, cheaper goods.
Just as the pandemic has disrupted other supply chains in unexpected ways—like periodic shortages of goods from toilet paper to used cars—it’s actually made it harder at times for some regular eBay sellers to find items to put online. That’s because regular brick-and-mortar stops for sellers, like thrift and outlet stores, have at times been shut down by virus-related restrictions, says Marni Levine, vice president of seller operations and engagement at eBay.
“When the stores shut down at the very beginning, it was very hard for them to find inventory,” she says.
The online marketplace company anticipates that the Optoro deal will not only provide new inventory and convenience to existing sellers but will also help convince new people to start selling on eBay. It might be a tempting idea for people who are out of work or on reduced hours thanks to the pandemic, especially since buying goods for resale is something that people can largely do from home.
The companies also anticipate that making it more efficient for stores and resellers to get merchandise back into commerce should keep some returned and liquidated items out of the trash, sending it instead into the hands of consumers who want it.
“We believe that the returns and the excess inventory that is out there could go to a much better place than a landfill,” says Levine.