0:01

When you order a pair of sweatpants

0:04

online and don't want to keep them,

0:06

a colossal, mostly opaque system of labor and

0:08

machinery creaks into motion to find them a new place

0:10

in the world. From

0:14

the outside, you see fairly little of

0:16

it. The software interface that lets you tick

0:18

some boxes and print out your prepaid shipping label may

0:20

be the UPS clerk who scans it when you drop

0:22

the package off. Beyond

0:25

that, whole systems of infrastructure,

0:27

transporters, warehouses, liquidators, recyclers,

0:29

resellers, work to shuffle

0:32

and reshuffle the hundreds of millions of products

0:34

a year that consumers have tried and found wanting. And

0:37

deep within that system, in

0:39

a processing facility in the Lehigh Valley, a guy

0:43

named Michael has

0:45

to sniff the sweatpants. Michael

0:49

and the rest of the mighty

0:52

American returns machine, ahead on Today

0:54

Explained. Amanda

1:09

Mall, staff writer at The Atlantic. Who

1:12

is Michael? Michael

1:14

is a material handler. That's the type

1:16

of job that he does. He works for a company

1:18

called Inmar Intelligence, which is a

1:20

reverse logistics and returns liquidator

1:23

that has about more than a

1:25

dozen facilities across the country where

1:27

they handle stuff that comes back

1:30

from retailers, from online shoppers. But

1:33

he is an employee in that

1:35

Pennsylvania facility that I visited

1:37

in November. Yeah, you went

1:40

inside the returns machine, and

1:42

I would like you to take us there. I

1:44

think we all know how the first part of

1:47

this works. You get a thing, you decide

1:49

you don't want the thing, so

1:51

you go get your gift receipt, your

1:53

return receipt, you print out a return label, maybe

1:56

the package came with a return label, and

1:58

you send it back. You walk it

2:01

to FedEx or USPS or UPS or

2:03

they come pick it up and

2:05

that's it. You get a credit a day

2:07

or two later or maybe immediately. But what

2:09

happens to the package? Well, if

2:11

you're in New York City like I am, the

2:14

first thing that happens is the package gets on

2:17

78 out through New Jersey and to Pennsylvania.

2:19

There is a town

2:21

outside of Allentown called Briningville

2:24

and it is a town that

2:27

exists regionally in a lot of places in

2:29

the country, which is this sort of like exurban

2:31

area where a lot of logistics

2:33

that serves a larger, denser population

2:35

center happens. From

2:38

the outside in Mar Intelligence, this

2:40

particular facility that I visited is

2:42

sort of anonymous. It doesn't really

2:44

have a much outward branding on

2:46

it. There's just all these low-slung,

2:49

extremely large white or

2:51

pale gray building sort

2:53

of laid out over the course of acres

2:56

and acres of land. The

2:58

particular facility that I visited was 300,000 square feet.

3:00

The average regular Walmart, not a super center, is

3:02

105,000 square

3:07

feet. So it's three Walmarts? Yes. What you're

3:09

looking at is a facility that's the size

3:11

of three Walmarts and a lot taller. Okay.

3:14

And if you're driving down the

3:16

highway and you saw it, you might be like, hmm, wonder

3:18

what that is. But then like a song comes on and

3:20

you totally forget it. But you did

3:22

not forget it. You went inside. Right.

3:28

When you walk into the facility, the

3:30

first thing that hits you or the

3:32

first thing that hit me was that

3:34

it is just, there's just so much

3:36

cardboard. It's like walking into a cardboard

3:38

forest. Most

3:42

of the square footage is taken up with

3:44

storage of various types, either pallets

3:46

of returns that have come in and that

3:48

need to be processed or pallets of returns

3:50

that have already been processed and are waiting

3:52

to be shipped back out to their next

3:54

destination. And then

3:56

you hit these clearings in the cardboard

3:58

soils where people People are working

4:00

on sorting different types of returns. The

4:06

first set is drugstore returns.

4:08

They are the returns processor

4:10

for a large chain American

4:12

drugstore. When you go in

4:14

the fall and look at what has been

4:16

returned, you're going to see a lot of like,

4:18

styrofoam coolers, you're going to see beach chairs,

4:20

beach towels, seasonal merchandise that has

4:22

reached the end of its lifespan for that year

4:24

and is then headed out somewhere else to see

4:27

if it can find a new life. And

4:32

then the second section that you hit

4:34

after you walk in is rugs

4:36

in this particular facility. Drugs

4:38

and rugs. Yes, drugs and rugs.

4:41

They process an enormous amount of

4:43

rug returns for a major

4:46

online retailer. Something

4:48

fascinating that I found out in the facility is

4:50

that, you know, bracketing, which is the practice of

4:52

buying like a size down or size up from

4:54

the size that you think you might need. It's

4:56

called bracketing. Yes. Okay. That

4:59

is really a well known practice in clothing. A lot of people do that. Like

5:01

you buy two pairs of jeans or three pairs of

5:03

jeans because one of these sizes will fit probably. Wait,

5:06

a lot of people buy three pairs of

5:08

jeans and then just return to. Oh yeah.

5:10

Yeah. Super, super common. So

5:13

much easier to go to the gene store, isn't

5:15

it? I don't know. Yes, yes, it is. What

5:17

I learned in IMAR is that

5:20

a lot of people also apparently do that

5:22

with rugs. What?

5:25

That's insane. Absolutely insane. Yeah,

5:28

it's wild behavior to do that. And that's why

5:30

a bare chunk

5:32

of this IMAR facility is dedicated

5:34

to rugs. Yes, yes. A

5:37

really large part of it is dedicated to rugs.

5:39

Like bigger than I expected it to be, even

5:41

though rugs themselves are big and therefore take up

5:43

more space than like shoes, it

5:45

is such a volume of returns that it takes up

5:47

like a decent chunk of the 300,000 square

5:50

feet of this facility. Is

5:53

shoes taking up another fair chunk? Because shoes I

5:55

would predict. Shoes? I didn't see

5:57

that many shoes when I was there. Shoes do get returned.

6:00

But they are lumped in with the apparel

6:02

section, which is the next section you hit

6:05

after rugs. You know, they're

6:07

significant. Apparel of all kinds, whether it's

6:09

shoes, accessories, clothes, whatever, is

6:12

a really, really high return rate category. And

6:14

so you get a lot of people processing those

6:16

returns. And that's where I encountered Michael. So

6:21

what you see are these, there's a series

6:24

of stations. There's about two dozen of them.

6:26

And each station is staffed by a single

6:28

worker. And in front of them, they have

6:30

a table. They have a

6:32

lot of bright lights so they can

6:34

see the fine details of everything they're

6:36

looking at. They have tools. They have

6:38

sanitizing wipes. They have box cutters. They

6:40

have scissors. They have all kinds of

6:42

things that you might need in order

6:45

to get a piece of clothing into

6:47

good condition. They have lint rollers, stuff

6:49

like that. And then they have a

6:51

monitor that tells them what they have to

6:53

do with every particular item of clothing

6:55

that they're evaluating based on what the

6:58

particular brand of clothing requires of Nmar.

7:01

There's like this whole decision tree

7:03

that workers like Michael have to

7:05

go through, depending on the retailer

7:07

that sold this product and what

7:09

they will allow. Did

7:14

you ask him what the craziest stuff he's ever

7:16

seen was? Well, I did get

7:18

some interesting stories in general from the various people

7:20

that I talked to. The

7:23

most common item that comes back

7:25

with pants is underwear. Well,

7:30

like not new underwear. Someone's underwear.

7:33

Like stowaway underwear. Somebody

7:36

whipped on a pair of jeans that they had pulled

7:38

out of the package that they just

7:40

received. They put them on over whatever undies

7:42

they were already wearing. And they decided,

7:44

oh, I don't like these. So they just took

7:47

the whole thing off. The underwear stayed in the pants.

7:49

They at least they were wearing undies, you know? Yeah,

7:51

at least the undies were present at

7:54

some point in the process. They were present for

7:56

too much of it. But at least they were

7:58

introduced into the equation. point,

8:00

which is why the individual humans

8:02

have to ensure that the underwear

8:05

does not make it back to

8:07

a new buyer. And

8:11

they've found wedding rings in pockets,

8:13

you find random jewelry, you get

8:15

an errant vape here and there.

8:18

Clothing is such an intimate thing. It is so close

8:20

to us. It interacts with so much about

8:23

our daily lives, even if all you're

8:25

doing is trying something on, that the

8:27

process of figuring out if it's brand

8:30

new or if anything is wrong with it

8:32

or what might be wrong with it is

8:34

just really hands-on intimate work. So it's pretty

8:36

clear what's going to happen here if the

8:38

piece is perfect. It's going back to the

8:40

retailer, it's getting resold, but I imagine it

8:42

gets much more complicated when there

8:44

are some sort of imperfections here. Well, even

8:47

if something is perfect, it might not necessarily

8:49

go back to the original retailer. Clothing

8:54

is a highly seasonal, high

8:56

turnover product category. So

8:59

even if something comes back and is totally pristine,

9:01

the tags are on, maybe it's the secret

9:03

size that somebody bought of an item and

9:05

they tried on the first one and it

9:07

fit, so they didn't even take the second

9:09

one out of its wrapping. If it's toward

9:12

the end of that product cycle, if they've

9:14

bought those two things because they were on

9:16

sale at the end of the season, then

9:18

probably in a lot of circumstances, the retailer

9:20

isn't going to want that back because then

9:23

it will just have to send it back

9:25

to Inmar again in a

9:27

few weeks to be processed again to go out

9:29

to a liquidator, to go out to a recycler,

9:32

depending on what their preference is. Over

9:35

10,000 brand-name fall fashions arrive

9:37

at TJ Maxx every week, so it's

9:39

never the same place twice. So depending

9:41

on what the type of product is,

9:43

if it's in great shape or perfect,

9:45

but it's just not cost-effective for the

9:47

retailer to take that back or they

9:49

know they don't want it back, even

9:51

if it is perfect, a

9:53

lot of times that stuff will get put into

9:55

the bin behind Michael,

9:57

behind the material handler that is... that

10:00

is designated for liquidation. What

10:03

that means is close our souls in

10:05

bulk to retailers that

10:07

deal with overstock. At the

10:10

very high end of the market, you do

10:12

get the brand names that consumers know. You

10:14

get the TJ Maxx and the Marshalls and

10:16

things like that. The Maxx for the minimum,

10:19

minimum price. Never over

10:21

the price. Never over the

10:23

price. Never over the price. And

10:27

then there's a whole ecosystem of

10:30

middlemen, wholesalers, resellers beneath that that

10:32

will take other kinds of products

10:34

that aren't necessarily fit for a

10:36

sort of branded American

10:40

consumer facing retailer like that. The

10:45

next sort of tier of stuff is

10:47

things that are either donated or recycled.

10:50

So donation happens, you

10:52

know, not dissimilarly to how it happens when

10:54

you clean out your closet and take a

10:57

bunch of stuff to Goodwill. It just happens

10:59

on a much larger scale. Donation is like

11:02

recycling, is a little bit difficult

11:04

to say what exactly happens to any

11:06

of that stuff after it's donated, because

11:08

then it's sort of off the books. The

11:11

retailer's books, it's off in Mars books. It's

11:13

the job of the donation handler to figure

11:15

out exactly how much of that stuff can

11:18

actually be used by people in need. Available

11:20

Intel suggests that a lot of that

11:23

stuff does end up ultimately

11:25

in a landfill or otherwise disposed of, but

11:27

it's really difficult to say how much because there's so

11:29

many layers of middlemen that

11:31

it becomes impossible to track like

11:33

what happens to a particular garment

11:35

after a certain point. And is

11:37

there destruction happening in the

11:40

Inmar facility itself? Is there a

11:43

category of stuff that just can't

11:45

go anywhere? There is a

11:47

category of stuff that just can't go anywhere. For

11:49

multi-brand retailers, according to Inmar's data,

11:51

it is about 15% of

11:53

stuff that they receive back that is

11:56

disposed of in various ways. much

12:00

destruction that goes on in Mars

12:03

facility itself. Like they don't really

12:05

incinerate stuff there. There are separate

12:07

facilities for that, which is of

12:10

course another layer of middle man, which is

12:12

what makes it so difficult to figure out

12:14

what happens to any particular product is that

12:16

most things pass through many hands before

12:19

they meet their ultimate end, whatever that might be.

12:28

When we return, on today's explained,

12:30

Amanda is going to tell us

12:32

why you probably had no idea

12:34

how complicated this process was, why

12:37

retailers would rather you know not

12:39

of this whole wide world of

12:41

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16:43

explained back with Amanda Mile from

16:45

the Atlantic a matter if he

16:47

feels like Michael's a real hard

16:49

work and for guys, why is

16:51

it that so many retailers would

16:53

prefer to pretend like he doesn't

16:55

exist? Well. The entire

16:57

process of reverse logistics and returns,

16:59

liquidation, and Michael's jobs. All these

17:01

things are sort of our inconvenient

17:03

realities. For retailers, you know the

17:05

general public is concerned about sustainability.

17:07

They're concerned about wastes. They feel

17:10

like fair being constantly prompted to

17:12

buy things. Knowledge of this sort

17:14

of behind the scenes system ends

17:16

in exactly how large it is

17:18

and how large it must be

17:20

in order to deal with. all.

17:22

this wasted product is just not

17:24

very good for the brands. Have

17:27

are all no matter what, branded as. Nobody really

17:29

wants to talk about this stuff. One thing that

17:31

really hit me when I was walking through this

17:33

facility is that. You realize how on

17:35

special all of this stuff is when it's

17:38

just. sort of like piled in

17:40

boxes waiting to be inspected ends

17:42

and deems worthy are unworthy by

17:44

you know a warehouse worker it

17:46

is stripped of a lot of

17:49

it's sort of like contextual power

17:51

that marketing ends that display in

17:53

stores or add good stock images

17:55

on web sites this is all

17:58

made up stories about the the

18:00

clothes that we're buying, the things that we're buying, and

18:02

pallets and pallets of stuff that

18:05

nobody wanted is a reminder

18:07

that a lot of that stuff doesn't work

18:09

out. How long has reverse logistics

18:11

been this sort

18:14

of integral part of our

18:16

capitalism? Is it sort of with

18:18

the advent of online shopping that

18:20

we get here? Reverse logistics as

18:22

an industry has on some

18:25

level existed as long as retail has existed. So

18:27

like since the 19th century for retail as we

18:29

know it. But

18:33

it was just as much smaller industry before the

18:36

internet because, you know, TJ Maxx existed when I

18:38

was a kid in the 90s when nobody was

18:40

buying things online. It

18:45

didn't have the enormous volume

18:47

of potential inventory that it

18:49

has now. Before online

18:51

shopping, the return rate overall in

18:53

retail was a single digit percentage.

18:56

Return rate at brick and mortar stores still is

18:58

a single digit percentage for things sold at brick

19:00

and mortar. But online, your

19:03

return rate is going to be between 20 and 30%

19:06

overall. And for some

19:08

product categories, it's going to be closer

19:10

to 50%. So online shopping

19:12

enables retailers to sell more things to

19:14

a larger audience. So you get more

19:17

inventory overall and more sales overall. And

19:19

then you get a much higher percentage of those

19:21

sales being returned. So you

19:24

just end up with a lot more extra stuff that

19:26

nobody wants. And then the

19:28

reverse logistics industry has sort of

19:31

had to expand and become much

19:33

more technical and much more data driven in

19:35

order to adapt to that in

19:37

order to accommodate all of this stuff and find

19:39

it a new place in the world. Retail

19:45

has changed so much in the past, I

19:47

don't know, 20, 30

19:49

years, you mentioned this phenomena

19:52

of bracketing where you buy

19:55

three pairs of jeans or

19:57

heaven forbid, three giant rugs.

20:00

Just to pick the favorite once

20:02

they're all delivered by some poor

20:04

sap to your domicile would

20:07

would any of this be happening

20:09

if if Retailers didn't

20:11

make it so easy and so cheap

20:13

to return stuff. I don't

20:16

think so I also don't

20:18

think that we can put the rabbit back

20:20

into the hat because what

20:22

basically happened at the beginning of Online

20:25

retail is that retailers had to set

20:27

these like super permissive policies Because

20:30

the consumers looked at shopping

20:32

online and went I don't think this

20:34

is a very good idea I don't

20:37

think I want to buy clothes or shoes

20:39

or bedding or Sofas

20:41

on the internet. I think that that is something

20:44

that I would rather see in person What a

20:46

time that inclination on consumers part was

20:48

correct. It is stupid to buy shoes online And it's

20:50

just a thing we all do now because retailers

20:53

have trained us to do it Part

21:01

of that is this die-off

21:03

of local stores a lot

21:06

of towns in America do

21:08

not have a healthy

21:22

retail landscape of their own a lot of

21:24

malls have have gone out of business or

21:26

are sort of sparsely populated because Online

21:29

retailers starting in the mid-2000s Started

21:32

offering really really low prices prices that were so

21:34

low that a lot of them weren't profitable and

21:37

then offering these Sort

21:39

of policies that allowed consumers to

21:41

feel like there was no risk

21:43

in buying online I thought we

21:45

totally get how a job kids and

21:48

a mean crochet habit could contribute to

21:50

forgetting to return those shoes For

21:52

nine months. That's why we have free

21:54

return for up to a year And

21:56

then you get brick-and-mortar retailers who have existed

21:58

for a long time and are

22:00

then under sort of existential threat from

22:03

Amazon and Zappos and this early set of

22:07

dot-com retailers. And they went,

22:09

well, if everybody is going to buy this

22:11

stuff on Amazon and Amazon's going to sell

22:13

it so cheap, I

22:15

guess we have to get on board with this. I

22:17

guess we have to do something to compete with them.

22:19

If this is where people want to shop, and these

22:21

are the policies that they expect and the policies that

22:23

we have to offer in order for people to continue

22:26

to patronize our business, then I guess we have to

22:29

do this. Do you think the calculus

22:31

could change? Do you think there

22:33

could come a day where

22:35

shipping seven rugs

22:37

to someone is just

22:40

wildly unsustainable and

22:43

cost inefficient to the point where someone

22:46

says, you know what? You can't do that anymore. You

22:48

get your one rug, and if you don't like it,

22:50

you could buy a second one. What

22:53

we're seeing lately is that consumers are now going

22:55

to have to start subsidizing their own habits. I

22:58

think retailers have gotten to the

23:00

point where it's like, we can't just make prices

23:02

higher. The habits that we've

23:04

instilled in people and that we require in

23:06

order to figure out what your size is

23:08

in a new brand or figure out what

23:11

kind of rug you need or whatever, those

23:13

habits themselves have become deleterious to the

23:15

company because they create so much waste.

23:19

So, on the one hand, you do contract

23:21

with a third party that is supposed to

23:23

extract the maximum amount of value from that

23:25

unwanted merchandise as possible. But also,

23:27

I think we see retailers starting to try

23:30

to put incentives in place to

23:32

specifically discourage these behaviors. You

23:34

see a lot more retailers in the past couple of

23:36

years starting to charge for returns again. It's

23:39

happening? Yes, pretty much across the board.

23:42

Even Amazon, who is sort

23:44

of thought of as the industry leader

23:46

in these permissive policies, they

23:48

have started to implement little fees here

23:50

and there that are clearly intended, in

23:53

my opinion, to guide consumer behavior.

23:56

They want you to bring

23:58

back your... Amazon returns to

24:00

a Whole Foods or an Amazon Fresh or one

24:03

of their retailers. And

24:05

if you don't, then they'll charge you a dollar.

24:08

And like that dollar is a pretty

24:10

tiny fee relative to how much it costs to

24:12

take a return. But it is

24:14

clearly a signal that Amazon,

24:16

and therefore like all other retailers, if Amazon

24:18

is feeling this, then so is everybody because

24:20

they're about as well insulated from these issues

24:23

as possible. How are

24:25

consumers responding to those changes?

24:28

Actually they're responding by paying those

24:30

fees so far. There

24:33

has not been any significant decrease like industry-wide

24:35

in the return rate based on all the

24:37

data that I've seen across the board. And

24:39

then when I asked Nmar if they had

24:42

seen any difference, since a lot

24:44

of their retailers started implementing these policies designed to

24:46

reduce returns, they said that their volume was as

24:48

high as ever. So

24:50

I think a lot of consumers are still

24:52

in the process of realizing that these fees

24:54

have begun to return and realizing where

24:56

they're being nickeled and dimed in

24:59

a more explicit way. So I

25:01

think any behavior change that we see is probably a

25:03

year or two or so in

25:05

the future. But I'm not sure

25:07

exactly how much we can reverse this behavior

25:10

because the realities of trying to buy

25:12

things in person have just changed a lot. The

25:16

way we view the convenience versus the hassle

25:19

of having to go out into an errand

25:21

has changed. Those habits and

25:23

those perceptions might change again over

25:25

time. But it took us about

25:28

20 years to get to where

25:30

we are with the commonality of

25:33

buying things online and returning the four sizes

25:35

that didn't work. So this is not

25:37

something that happens overnight. And

25:39

Michael and people like Michael will

25:41

have work for the foreseeable future.

25:44

I'm happy for him. Yeah,

25:46

good for him. He said he used to work construction

25:48

and now he's doing this and this was easier. So

25:50

I'm happy for him. I'm

25:54

happy for him.

26:00

She wrote a piece called this

26:02

is what happens to all the

26:04

stuff you don't want you can

26:06

read it at the Atlantic calm

26:08

episode 1437 of

26:11

today explained was produced by

26:13

Amanda big dog Llewellyn She

26:15

had help from Amina al-sadi

26:17

Laura Bullard Rob Byers and

26:19

David Herman Take it easy

26:21

on the rug this year.

26:23

We return with more

26:25

today explained next week You