Howard Rosenberg takes a moment to sift through the inventory of America’s rejects. It’s mid-December and the holiday shopping spree is at a fevered pitch, but inside this 120,000-square-foot warehouse on the outskirts of Phoenix, a hodgepodge collection of returned items sits in rows of boxes stacked 10 feet tall. Twenty-eight-pound bags of dog food, brownie mix, toys and weighted blankets are lined up alongside vacuums, sporting goods and patio furniture.
“It’s just very random,” says Rosenberg, the founder and CEO of B-Stock Solutions, poking around the glut of unsold goods belonging to several of the nation’s largest retailers. The 53-year-old eBay veteran, who has a head of gray hair and dons a checkered sports coat his wife picked out, has flown in from San Francisco for the day. He spends little time in warehouses like this one, owned by a company called Freeport Logistics, but the items packed into them are his lifeline. His Silicon Valley company, which runs online auctions for dozens of retailers trying to get rid of millions of returned and overstocked items, sold about $2 billion worth of heavily discounted merchandise on their behalf in 2019. That helped his 160-person firm generate estimated revenue of $150 million.
In 2018, Americans bought a record $3.7 trillion of goods, according to the National Retail Federation. Ten percent of those purchases were made online. These days that almost always means free shipping and lenient return policies. As a result, return rates for online purchases can be as high as 30%, triple the rate of in-store purchases, according to Rosenberg. As much as half of all returns will be put back on the shelf, while the rest get liquidated, destroyed or thrown in a landfill, according to Forrester Research. It’s a phenomenon so big it’s now being tracked along with holiday sales milestones like Black Friday and Cyber Monday–January 2 is now National Returns Day. “The analogy I always use is that the light [the retailers] have seen way off in the distance they now realize is a train coming at them,” says Rosenberg, describing their panic when faced with mountains of returns.
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