The Christmas gifts have been delivered, and Secret Santa is done.
Now, the work begins for Optoro, a startup company that aims to reduce the financial and environmental costs of another great holiday tradition: returns.
Americans returned $260 billion in merchandise last year, up more than 66 percent from five years ago, according to the National Retail Federation. And a quarter of that was during the holiday season.
As e-commerce sales surge and free return shipping becomes the norm, shoppers are set to return even more this year — a cycle that started in earnest on Monday, the first weekday after Christmas.
Little known to shoppers, however, is that a majority of returned items never make it back to retailers' shelves. Instead, the items wind their way through liquidators, wholesalers and resellers, many of the purchases ending up in landfills. According to some estimates, as much as two million tons of returned items — most of it undamaged merchandise — are thrown away each year, enough to fill over 200,000 garbage trucks.
Returns, in short, are not just a big loss for retailers. They are a big and growing environmental burden.
"The way we consume right now isn't sustainable," said Tobin Moore, chief executive of Optoro, which offers retailers alternative ways to resell, recycle or donate returned merchandise. "We can't keep throwing stuff away," he said. "There's a better way."
Optoro is becoming a player in the "reverse logistics" industry handling returns in the United States, one that is growing together with the rise of online sales.
And the space is attracting investors' attention. Last December, Genco, one of the biggest operators, processing about 600 million returned items a year and, raking in about $1.6 billion in sales, was acquired by FedEx.
Optoro declined to disclose sales, but said it processed about 10 million returned items a year and has raised $80 million in funding from Silicon Valley investors.
To get shoppers used to buying without touching, Web retailers have offered generous return policies. Almost half of e-commerce sellers surveyed by the retail federation — including Amazon-owned Zappos, Macy's, Target, Saks and Gap — now offer free return shipping in many categories.