Inside the warehouses where dud Amazon orders go to be reborn

AJ Gonzalez | February 9, 2021

Wired,  Monday 8 February 2021

As online shopping thrives during the pandemic, so does the market for mystery boxes filled with our unwanted goods

Just after Christmas 2019, Neil Barker was scrolling on his phone when he stumbled across videos of Americans buying and opening pallets of returned Amazon goods on YouTube.

Curious, he decided to find places where he could buy them himself and landed on a website called B-Stock, an online liquidation marketplace where you can buy crates full of returned goods. “Like with many things I do, I don’t do it with a great deal of research,” says Barker, who lives near Northampton. After a day, he began bidding on four kitchen and floor care pallets from Madrid. “I broke it to my wife that I’d just spent £3,500, and she thought I was nuts,” Barker says.

Inside were 50-odd robot vacuum cleaners, several coffee machines, floor mops, juicers, blenders and a whole lot more, coming to around 320 items in total. Altogether, the items were worth just under £20,000 if they were all in an unopened, pristine condition. Barker began listing them on eBay and documented his endeavours on YouTube.

“It took me about three or four months to process just four pallets,” he says. “If I doubled my money, I’d be happy. I decided to be quite conservative on what I was selling them for, so I was pitching them at around 60 per cent [of the retail value].”

Barker also joined one of the roughly 500,000 buyers on B-Stock across the UK, Europe and the US. Since the pandemic started, these liquidation websites – also called reverse logistics companies – have been processing more and more returns as consumers switched to buying online.

B-Stock says that it had its best year on record in 2020, selling a massive 120 million items, a figure that was up by 55 per cent. Estimates suggest that 30 per cent of items bought online are returned, compared to 8.9 per cent for items bought in brick and mortar stores. It’s predicted that £60 billion worth of goods are returned each year. Commercial real estate company CBRE estimates that 400 million square feet of warehouse space will be needed over the next five years to handle the continued surge in online returns.

Amazon’s plan to avoid clogging up its warehouse space with returns is simple. Liquidation websites either purchase pallets of returns from retailers like Amazon, or are contracted by Amazon to get rid of the returned stock via their marketplace websites. It’s supposedly cheaper for Amazon to shift already opened, potentially broken items to somebody else than to inspect, repackage and re-list the items itself.

On liquidation inventory websites like B-Stock, registered buyers can peruse a manifest of all the returned items inside various different pallets, along with their recommended retail prices. B-Stock also allows buyers to bid on truckloads of returned goods, which they can then sell on.

It’s been a demanding few months for the stock liquidation company. “We’ve been extremely busy,” says Giorgio Vitale, B-Stock’s EMEA head of business development. “With consumers being forced to spend more online, it’s resulted in more consumer returns. Towards the back end of January and into early February is peak return season.”

The bidders on B-Stock, Vitale says, can be ordinary people who are buying pallets as a side hustle or they can be large corporate resellers. “We have buyers that will spend a thousand pounds a week or a month and we have buyers that can spend over a million pounds a month,” he explains. Many are small independent traders that want to buy a few pallets to resell and make some extra cash, he says.

B-Stock works with Amazon and a host of other retailers like Curry’s PC World and Next, shifting overstock and out-of-season apparel to entrepreneurial buyers. Vitale has seen increases in pallets in categories like home and gardening and DIY during the pandemic.

Barker went on to order an articulated lorry, full to the brim with 32 kitchen and floor care pallets valued at £100,000 later in April, and recruited the support of his brother-in-law to help him process the goods. Barker runs a tech repair shop and is able to fix some of the broken gadgets he receives in his pallets.

Not everyone has success flipping pallets for big profits. When charity shops and car boot sales shut down at the start of the first UK lockdown, 27-year-old Jay from Surrey, who runs a YouTube channel called Flipping Sloth, switched from selling treasures on the high street to trying his hand at return pallets. He managed to acquire a pallet of gaming items from a third-party seller, but it wasn’t the haul he was expecting. “Most of it was broken,” he says. “I was lucky with my first pallet because [it contained] headphones that were broken. One ear wasn’t working, so I just sold them as spares or repairs. I paid £500 for that first pallet. To be out £500 at the start of a pandemic is quite scary.”

The problem with Amazon returns in the UK, Jay says, is that it’s hard to know whether the pallet you’re buying the returns from is genuine. “You Google and you get tons of different answers. You don’t know if they’ve actually come from Amazon or not,” he says. Jay has since pivoted to buying overstock and liquidated stock, recently acquiring a pallet of 700 pub glasses from a wholesaler that went out of business and hopes to sell them on eBay in the summer.

An insider at a liquidation warehouse in the UK told WIRED that companies that work with Amazon sign non-disclosure agreements, which is why when you scroll through different liquidation websites and marketplaces the origin of the pallet is never stated.

The liquidation industry of buying and selling return pallets is still fairly small in the UK. BritDeals, which purchases returned stock and overstock from multiple different retailers, is a reverse logistics liquidation company spun out from the US. “In the United States, there are many liquidators that do this type of work,” says Albert Palacci, BritDeals CEO. But in the UK, he says that there aren’t a lot of businesses in this sector. “I see a large demand because the customers want the product and the resellers that can resale for a profit are looking for the product.”

Palacci says that BritDeals inspects, sorts, photographs and even sometimes repairs each item that comes through its warehouse in Warrington. “The buyer can buy brand new products from us, they could buy salvaged products, or they can buy products that we fix,” he says. “Why put these products in a landfill when you can sell them?”

Alex Lee is a business writer at WIRED. He tweets from @1AlexL

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