Money Matters: What happens to holiday returns?

According to retail logistics providers, about $90 billion worth of merchandise, or just over 10% of holiday purchases, will be returned by the end of February.

So does that make the post-holiday season a great time to find deals on returned holiday gifts?

It can. According to retail logistics firms, about half of returned merchandise is restocked, usually at a discount of around 30%, with discounts increasing steeply if the item is opened or damaged in any way.

But as returns are increasing, fewer stores are actually restocking items as part of their “reverse supply chain” process. Since processing returns costs more than managing sales, it isn’t always worth it to incur the additional costs associated with restocking. In the case of about five billion pounds of merchandise, returned items are simply thrown out.

And increasingly, retailers are turning to liquidation companies to resell returns by bulk in online auctions. One major auction platform reports receiving 60% more items in the first three months of the year than the last three.

Here’s where savvy shoppers can benefit from others’ holiday returns: Those items sold in bulk at auction next head to secondary markets including factory outlets and discount retailers, like dollar stores.

Small, independent sellers tend to get the bulk of these items, so if you’re in an area without many major chains, you can talk to locally-owned small shops, who may be getting ready to stock up.

Weekly Money Matters personal finance content for your newsroom is sponsored by the National Endowment for Financial Education.