A recent report said one Amazon warehouse in the UK marks 130,000 items for “destroy” every week.
A former worker from that warehouse said half those items were still in their shrink-wrap.
A retail analyst told Insider why it’s more profitable for Amazon to junk them than sell them.
See more stories on Insider’s business page.
A recent report on a UK Amazon warehouse throwing away thousands of products every week has exposed the company’s disposal practices to intense scrutiny.
ITV News reported that one warehouse in Dunfermline, Scotland, marks 130,000 items per week for “destroy.” The article echoed a 2019 French report, which said Amazon threw away 3 million items over nine months in France.
One former Amazon employee told ITV that roughly half of the products marked for “destroy” are brand new and still in shrink-wrap. The rest are mostly returns and in good condition.
So why does Amazon throw away new products it could still sell?
Patrick O’Brien, a retail analyst at analytics firm Global Data, said it’s because Amazon specialises in selling products for third-party sellers.
A huge chunk of its retail business comes from its Amazon Marketplace platform. In February, analysts at Marketplace Pulse estimated that third-party products made up $300 billion out of $490 billion of total sales on its site in 2020.
“More of Amazon’s business is becoming the sale of third-party stock,” O’Brien told Insider. “While Amazon charges commission on sales, it also charges for a range of services.” This includes a cost per unit to store items in warehouses, return them to sellers, or dispose of unsold items, he said.
This means if a product isn’t selling on Amazon, the cheapest option is to pay Amazon to get rid of it.
O’Brien said: “The problem for many sellers on Amazon is that if their goods don’t sell, they are faced with the possibility of having to continue to pay rent for them or to make a one-off payment for their return or their disposal.”
Retailers wouldn’t usually have items returned to them unless they planned to dispose of them, O’Brien explained. “In which case, it makes more sense to pay Amazon to dispose of them than to pay to have them returned and still have to dispose of them themselves,” he added.
An Amazon spokesman told Insider that “domestic returns costs for all products for sellers are lower than disposal fees,” but there isn’t a big difference between those costs. In the UK, it’s only 4 cents more expensive to pay Amazon to dispose of a product under 200 grams (seven ounces) than to return it.
Once any additional disposal costs are factored in, getting Amazon to dispose of it might still work out cheaper.
ITV’s report garnered negative press for Amazon, including from activist Greta Thunberg.
“Amazon is getting some very negative publicity, but it should be remembered that it is responding to the failure of retailers to sell their goods on their platform, O’Brien said, “and it is these third-party retailers who are making the decision to have items disposed of.”
In a statement to Insider at the time, Amazon did not dispute ITV’s numbers but said the Dunfermline warehouse handles disposal of products for the entire UK. An Amazon spokesperson said no items are sent to UK landfill, but are recycled and donated – with donation being its preference.
Dr Teresa Domenech Aparisi, a sustainability expert at University College London, told Insider that products sent to recycling plants could still end up being incinerated. “Not sending anything to landfill doesn’t mean that those products are being recycled,” she said.
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