It’s common knowledge that the holidays are the busiest time for retailers. What’s less known is that a significant portion of that hustle and bustle is not just about selling goods, but processing returns. This season, shoppers are forecasted to spend more than $950 billion —and return $173 billion worth of these holiday purchases.
While consumers may assume that returned goods are repackaged and resold, that’s rarely the case—especially for e-commerce purchases, where the cost of a “free” return (which requires retailers to pay for shipping, quality control measures and restocking) surpasses the potential resale value on most products. The volume of returns is so high that many mass retailers (Walmart, Amazon and Wayfair among them) have adopted a “keep it” policy for some items, where they issue a refund and instruct customers to keep or donate the unwanted item rather than send it back.
That’s an improvement upon another common policy of mass retailers: throwing returned goods away. Nikos Papaioannou, who manages returns of Amazon’s house-brand electronic devices, told The New Yorker earlier this year that the number of returned items his division resells is minimal. “Our approach with this question is that if the seal has been broken, if the wrap is not intact, then it’s not going back to the shelf,” he said. “From an Amazon viewpoint, the moment the box opens, you’ve lost the opportunity.”
If there’s no profit in reselling an opened Kindle, the outlook for soft goods is bleak—there’s little to no chance that something like a returned comforter or set of sheets is getting put back on the market. Returned soft goods present unique challenges for any retailer, bringing up questions about hygiene that you don’t get with something like a candle or a set of wineglasses.
Not all retailers have accepted defeat in reselling these goods, however. A growing number of companies have taken innovative steps toward circularity in an effort to extend the life cycle of products like bedding and pillows. While the home goods sector has been slower than the fashion industry to adopt circular resale strategies, companies like Parachute, Coyuchi and Annie Selke are working to move in that direction.
In 2022, Parachute introduced its first circular initiative with its recycled down pillow. To craft the product, the returned pillows are cut open, and the down is washed and dried at high temperatures to sanitize it, then used to fill shells made of 70 percent recycled cotton. “As pillows are an item that needs to be refreshed every two to three years, we thought this was a great entry point for us to test circularity for our customer,” says the brand’s founder, Ariel Kaye. She says that the pillow has been a success for the brand, adding: “We’re working now on how to scale the program through new [manufacturing] partnerships and testing new sustainable fabrications.”
Coyuchi sells its recycled product on a “preloved” marketplace it calls 2nd Home Renewed. The Full Circle cotton blanket is made from fibers woven from returned Coyuchi product that was otherwise unsalvageable. “We made a new blanket out of our own waste,” says Marcus Chung, the company’s chief operating officer. “We think our product is beautiful, and we don’t want it to be thrown away, even when we don’t see an obvious way to resell it. … So, how do we extend its life? This was a way to do that.”
Annie Selke has taken a more traditional approach to circularity, reallocating returned items that can’t be resold at full price to its outlet in Pittsfield, Massachusetts. The store, which opened in 2010, was created primarily for this purpose. “We believe in the quality of our products and feel that they can last a lifetime, so the last thing we want to do is put it into a landfill when it’s still in good condition,” says Jess Fitzgerald Evans, vice president of product development and design at The Annie Selke Companies. For those products not in good enough condition to resell at the outlet, the brand has begun working with Habitat for Humanity to collect and resell them in its ReStore locations. As a last resort, the brand will donate damaged or otherwise unsellable soft goods to animal shelters.
Before they even get started on the reselling process, home brands face a significant limiting factor: Recycling only works for materials with single-fiber sources, eliminating the use of blends, Chung points out. “Coyuchi designs are already single-fiber, so that’s part of what made this a viable option for us, but there are barriers to entry when it comes to recycling fabric,” he says. Supply chain complexities can be another barrier. The company is currently working with a fabric recycling company in Spain that recycles used linens into yarn, which is then shipped to a manufacturer in Germany in order to make the Full Circle blanket. “We’ve been actively trying to find and build a circular supply chain and ecosystem in the U.S. and not have to ship materials around so much, but the circular supply chain, particularly in America, is in its early stages, and it’s unfortunately not very robust,” says Chung.
With a resale model like Annie Selke’s discount outlet, returned items are typically put through quality control inspections where they’re assessed for damage. “Often, it’s a tiny snag or something that you’d never notice unless you were really looking for it,” says Evans. The products are then cleaned, dried and, if needed, repaired. A growing number of third-party companies, such as Bleckmann and Trove, are available to facilitate that step. “There are a lot more options in this space than there were even two years ago,” says Chung.
Both Coyuchi and Annie Selke make note of any defects or past repairs of the repackaged product, factors that inform the discounted price. “We want to make sure that the customer has the information they need to make a purchasing decision,” says Evans.
Offering secondhand or recycled options has been a way to connect with consumers on both an ethical and financial level, Chung has found. “There is a whole sector of customers that doesn’t want to buy new products,” he says. “There’s also a more price-conscious consumer, who might not be willing to pay full price for our products. This is an entry point into their brand that they can test and then hopefully convert into the main line on other items, and we have seen that crossover happen, which is really exciting. On the flip side, there is also a consumer who will never buy from a resale site. What we’re trying to do is make sure that we’re servicing customers where they’re at in their journey, both with our brand and also in their own personal journey of sustainability. We can meet them wherever they are.”