The Hidden Costs Of Amazon Shipping And Returns

Buying and returning on Amazon may seem extremely easy, but that simplicity comes at a cost.

Amazon has more than 115,000 drivers working under independent small businesses - Delivery Service Partners, or DSPs - who deliver Prime packages to doorsteps with one-day shipping. This is a large part of how Amazon delivers packages so quickly. CNBC talked to current and former Amazon DSP drivers about the pressures of the job. From urinating in bottles to running stop signs, routes that lead drivers to run across traffic, dog bites and cameras recording inside vans at all times - some of the 115,000 DSP drivers have voiced big concerns.

But once you receive your Amazon order, if there's any reason you are on happy, more than likely it can be returned. Sending back an online order has never been easier. It’s often free for the customer, with some retailers even allowing customers to keep the item while offering a full refund. Amazon returns can be dropped off at Kohl’s, UPS or Whole Foods without boxing it up or even printing a label.

But there’s a darker side to the record number of returns flooding warehouses after the holidays.

“From all those returns, there’s now nearly 6 billion pounds of landfill waste generated a year and 16 million metric tons of carbon dioxide emissions as well,” said Tobin Moore, CEO of returns solution provider Optoro. “That’s the equivalent of the waste produced by 3.3 million Americans in a year.”

Moore says online purchases are at least three times more likely to be returned than items bought in a store. In 2021, a record $761 billion of merchandise was returned, according to estimates in a new report from the National Retail Federation. That report says 10.3% of those returns were fraudulent. Meanwhile, Amazon third-party sellers told CNBC they end up throwing away about a third of returned items.

At the head of the pack, Amazon has received mounting criticism over the destruction of millions of items. Now the e-commerce giant says it’s “working toward a goal of zero product disposal.” Last year, it launched new programs to give sellers like Clausen new options to resell returns, or send them to be auctioned off on the liquidation market.

This record number of online returns has created a booming $644 billion liquidation market. As supply chain backlogs cause shortages of new goods and Gen Z shoppers demand more sustainable retail options, pain points for one sector of retail are big business for another.

The nation's only major public liquidator, Liquidity Services, resells unclaimed mail, items left at TSA checkpoints, and outdated military vehicles. It also refurbishes highly sought after electronics, from noise-canceling headphones to the machines that make microchips.

CNBC takes you on an exclusive tour inside a Liquidity Services returns warehouse outside Dallas, Texas, where unwanted goods from Amazon and Target are stacked to the ceiling before being resold on Liquidation.com or a variety of other marketplaces.

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The Hidden Costs Of Amazon Shipping And Returns