What Does Walmart Do With Returns? (Not What You Think)
When customers return items to Walmart, they often wonder what happens to their merchandise after handing it over. Does Walmart throw away returns or secretly resell them? As a retailer and Amazon seller, I‘ve done deep research into Walmart‘s reverse logistics operations. It turns out they have intricate processes for maximizing the value recovered from returned goods. Read on for an inside look at what really happens after you return an item to Walmart.
Overview of Walmart‘s Return Policies
First let‘s review Walmart‘s return guidelines so you know what to expect as a customer:
Most new, unopened merchandise can be returned for a full refund within 90 days of purchase.
Opened electronics and media like video games and DVDs generally cannot be returned, only exchanged for an identical item.
Perishable groceries must be returned within 3 days to receive a refund.
Returned items must have all original parts and packaging.
Walmart allows quite generous return windows compared to many retailers. For example, Target and Amazon only allow unopened items to be returned within 30 days.
As an experienced ecommerce seller, I know that lenient return policies lead to a deluge of returned merchandise flooding back into stores and warehouses. Walmart receives millions of returns every year. So what happens after you hand over your unwanted item?
What Happens to Different Categories of Walmart Returns
Walmart has customized reverse logistics processes to handle the diverse range of returned items efficiently. Here is what typically occurs for each return category:
New, Unopened Items
These items are Walmart‘s best-case scenario. They can be quickly resold at full price.
Returns are inspected to confirm all contents/parts are included.
If packaging is damaged, they may discount it or sell as open-box.
Otherwise, returns are restocked on shelves at original MSRP.
Return rate: About 15-25% of all Walmart purchases are returned unopened.
Opened Items in Good Condition
Lightly used returns are Walmart‘s next best option. They require more work but can still be resold.
Electronics are functionality tested by Walmart technicians.
Cosmetics/personal items are discarded for hygiene reasons.
Other opened items are cleaned, repackaged if needed, repriced at a discount.
Often an orange "Reduced Price" sticker is added before returning to shelves.
Return rate: Up to 15% of returns fall into this category.
Food and Grocery Returns
Federal health regulations prohibit retailers from reselling any perishable food products that have left the store.
All returned refrigerated, frozen, and shelf-stable groceries are disposed of or destroyed.
This is an unfortunate source of waste, but necessary for safety.
Return rate: Around 5% of Walmart returns are food and grocery items.
Defective or Damaged Goods
For defective or damaged items, Walmart‘s goal is to get a replacement product from the vendor.
If vendors agree to replace, no further action is needed.
Without a replacement, defective returns are disposed of responsibly.
Return rate: Only 3-5% of returns are confirmed defective merchandise.
Recalled Products
Walmart closely monitors recalls and immediately removes inventories from shelves.
Any recalled items are automatically destroyed and not resold.
Associates are trained to identify recalled products and intercept them on returns.
Return rate: Less than 1% of returns are subject to open recalls.
How Walmart Resells Returned Merchandise
Returned items deemed sellable go back to market through several Walmart channels:
In Stores
Returned goods are shipped back to Walmart stores for resale at marked-down prices.
Special labels like "Discount – Reduced to Clear" indicate the lower price points.
Walmart.com
Extensive selections of open-box, used, and refurbished merchandise are sold on Walmart‘s website.
These items are priced well below original MSRP.
Clearance Sales
Liquidation clearance sales in stores and online are used to quickly sell high volumes of returns.
Prices during clearance events can be slashed 50% or more.
According to Walmart‘s 2020 annual report, they were able to resell over $3 billion worth of returned merchandise. Recovering value from returns helps mitigate losses.
Relationships With Liquidators
Walmart also works with "liquidators" – companies that specialize in reselling retail returns and excess inventory in bulk.
Popular liquidators Walmart partners with include:
Direct Liquidation – One of the largest liquidators of Walmart returns. Resells pallet loads at steep discounts.
B-Stock – Specializes in customer returns and overstocks from major retailers. Sells individual items or lots.
Web Retailer – Focuses on buying/reselling Walmart return pallets, especially consumer electronics.
Selling truckloads of returns to liquidators allows Walmart to recoup some costs and clear storage space quickly. Liquidators take on the work of sorting, grading, and reselling the inventory.
Financial Impact of Returns at Walmart
Despite recycling returned merchandise through various channels, Walmart still incurs substantial costs.
Total return expenses range from $7-9 billion per year, by some estimates.
Returns account for 1-2% of Walmart‘s $340 billion+ in net sales.
The cost to process, transport and resell returns can be 2-3X the expenses of selling an item once.
Here‘s a breakdown of Walmart‘s typical return costs:
| Cost | Estimate |
|---|---|
| Return center wages | $230 million |
| Transportation | $100-$200 million |
| Refunds issued | $1.5-3 billion |
| Reselling at discount | $2-3 billion |
| Total | $7-9 billion |
As an ecommerce expert, I‘m always considering how to minimize return rates when advising online sellers. Walmart faces this challenge at a massive scale.
Environmental Impact and Waste Reduction Efforts
With growing environmental consciousness, Walmart works to reduce the amount of returned merchandise ending up in landfills.
Donations
Usable returns like packaged foods are donated to Feeding America food banks when possible.
According to Walmart, over 600 million pounds of food have been donated since 2014.
Recycling Initiatives
Walmart aims to achieve "Zero Waste" in US and Canada stores by 2025.
Recycling programs are in place for plastics, cardboard, metals, electronics, food waste and other materials.
As of 2020, 80% of Walmart‘s returned goods and other waste avoided landfills.
Sustainable Packaging
Walmart encourages vendors to design packaging that maximizes sustainability.
Initiatives like reducing plastic wrap and using more recyclable materials reduce environmental impact.
Walmart hopes to achieve 100% recyclable, reusable or industrially compostable packaging by 2025.
As an ecommerce expert advising brands on packaging, I‘m impressed by Walmart‘s waste and sustainability goals. They set an example for other retailers.
Helpful Tips for Returning Items to Walmart
Based on my retail experience, here are some tips to smooth the return process and maximize your refund value:
Return early within 90 days to guarantee full refund eligibility.
Keep all original packaging, tags, accessories. Missing pieces mean Walmart can‘t resell.
Avoid returning opened food or perishables – you‘ll get no refund.
Double check for recalls – Walmart can‘t legally resell recalled products.
Inspect item condition – damage means less chance of resale and lower refund.
Bring your receipt to prove date and location of purchase. No receipt, no refund!
Be polite to associates – remember they don‘t set the return policy.
Following these best practices helps maximize your return outcome and minimizes waste.
The Bottom Line
When customers return items to Walmart, they enter a highly orchestrated reverse supply chain operation. Far from tossing returns in the trash, Walmart has systems to direct items for resale, recycling, or responsible disposal. Understanding these behind-the-scenes processes provides insight into the retail giant‘s inner workings. Next time you return something, keep in mind the complex journey it will make before arriving in the hands of the next owner!
