In Optoro’s 300,000-square-foot warehouse outside Nashville on a stiflingly hot afternoon in late August, Susan Cohan scans the bar code on a cardboard box holding 97 pink crocheted bikinis. The tops were priced at $27.99 and the bottoms at $19.99 at one of America’s best-known big-box retailers. But the suits had failed to sell. Optoro’s software tells Cohan to route the box to Bulq.com, a website run by Optoro that sells in bulk to mom-and-pop dollar outlets and online discount stores. The bikinis will fetch 20% of retail, says Tobin Moore, Optoro’s 35-year-old cofounder and CEO. “People aren’t going to be buying bikinis in September,” he notes.
Those bathing suits and the 50,000 other boxes of returned and rejected stuff sitting in Optoro’s warehouse represent a pounding headache for retailers and manufacturers. Of the $3.3 trillion Americans spent on merchandise in 2015, they returned 8%, or $260 billion worth, according to the National Retail Federation’s most recent figures. That doesn’t count items, like the pink bikinis, that never leave store shelves.
As e-commerce sites like Amazon and Zappos force competitors to match their free returns and full refunds even for damaged goods, retailers are desperate to find a way to salvage value from the stock that comes flooding back. Estimates of e-commerce returns vary from 25% of all goods bought online to upwards of 50% for apparel.
According to Moore, Optoro offers the best solution. The algorithms powering its cloud-based software suck up data about prices set by other online vendors selling the same or similar returned or overstocked items, and its scanners instruct warehouse workers to route each item or group of items to the channel that will recover the most cash.
The preferred option is sending returns back to store shelves, but that’s only possible for less than 10% of the merchandise Optoro processes. Retailers have already sifted out most of the 20% of returns that they can restock (including unopened goods in pristine condition that are still part of the season’s offerings). The next best choice: either return items to manufacturers or sell them directly to consumers on Optoro’s discount-goods site, Blinq.com, or through online stores Optoro runs on Amazon and eBay, which Moore says can bring in 70 cents on the retail dollar. One example in the Tennessee warehouse: a wireless, rechargeable Solar Stone garden audio speaker in the shape of a big gray rock that retailed for $129.99. It’s destined for sale on Blinq.com for $88.49. Optoro’s software also routes goods to other channels, including recyclers and charities.
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