A couple of months ago CNBC published this shocking (but accurate) headline: A more than $761 billion dilemma: Retailers’ returns jump as online sales grow
When retailers have a $761 billion problem on their hands it presents an opportunity for you, the consumer. I’m getting ahead of myself. Let’s start from the beginning.
Retailer’s Problem: Returned Merchandise
Since COVID hit, a lot more people are buying products online. It had been trending that way for years, but COVID sped it up. Retailers have become exceptionally good at shipping products out, but they aren’t good at taking them back and restocking them. Sometimes companies will just tell you to keep the product if they make a mistake or if you want to return it. It simply isn’t worth their time and money to deal with covering the customer support, return shipping cost, and handling/restocking the product. After they do all that, they can’t resell it as new, so they have to discount it from the original cost.
It’s not hard to imagine why all their profit margins go away.
Companies with brick-and-mortar stores like Wal-Mart and Best Buy could at least accept the products in their stores and put them on a discount rack. That’s better than having to deal with shipping. It’s also easier to deal with customer support since brick-and-mortar retailers have had return counters for decades. Amazon doesn’t have the retail locations (unless they drastically change Whole Food) to do what Wal-Mart and Best Buy do.
How You Capitalize: Idea #1
The easy way to capitalize on this is to buy the returned products off the discount rack. I think I could do a better job of this. I follow several “deal” websites, but most often the deals are on new stuff. I rarely need something immediately from a store like Best Buy. A few years ago, I needed a new stereo receiver and Best Buy had a good one that was about 30-40% off, so I bought that one. I tried to buy a refurbished Dyson wand vacuum around Christmas, but their store was empty.
I’m more likely to buy cereal boxes that were banged up at a discount than anything else. If any readers out there have tips on how they buy refurbished, I would appreciate it.
How You Capitalize: Idea #2
Often I feel like there are fewer ways to invent a $100 million company nowadays. There used to be news all the time about companies in Silicon Valley getting bought and sold. I’m sure it’s still happening, but it seems like it’s not happening as much. There used to be dozens of search engines like Lycos, Yahoo, Alta Vista, etc., but now it’s just Google. I used to follow all the tech news every day for all the exciting things that were coming around the corner. Now, “tech news” is more likely to report about “entertainment news” like Fortnite than a product or service that will make my life better. I just took a quick look at CNet.com’s home page and the top four stories center on Google, Amazon, Facebook, and Apple.
Okay, I got off-track. It’s time to get back on topic. The big way to capitalize on the retailer’s problem is to fix it. There’s a huge inefficiency in the market right now. I believe someone is going to step in and come up with a solution. If you can solve just a tiny sliver of the $761 billion problem, it’s likely to be a $100 million company.
Could you create that company? If so, it’s certainly better than saving $100 on a refurbished stereo receiver, right?
Maybe someone will create a company to deal with it. Pick up the product and send 10% of the price back to the parent company. Then they can sell the item on Ebay. Something like that. Maybe create an app and get gig workers to do the grunt work.
I tripped across an “industry” of people that would buy clearance items at places like Kohl’s and then sell them on Amazon. I looked at the business model(sort of) and it seemed very labor intensive. I’m not sure how many of those folks survived the pandemic. But that doesn’t address this issue.