tv Washington Journal Andy Kroll CSPAN December 16, 2017 3:32pm-4:01pm EST
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watch the house live on c-span, he senate on c-span 2. >> c-span, where history unfolds daily in 1979. c-span was create is as a -- created as a public service but american's cable companies and is brought to you today by your cable or satellite provider. >> we're joined by andy kroll, he is a contributing writer of pacific standard and he's here as part of our spotlight on magazines to talk about a piece he wrote about the secondary market for retail goods. thank you very much for joining us today. >> thanks for having me. >> first, tell us what made you want to look amount this issue, what happens to the goods after we return them? >> it's one of these questions that we never think about but taking something back to the
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store or mailing something back to amazon, wherever you bought it from is part of our everyday life. it's basically a tradition as a shop they are america. i don't like the color, i don't like the size, i'm i'm mailing it back. there's a whole hidden economy market that's match that deals with all that stuff we send back. an editor of mine was one day thinking about buying a birthday gift and thought where does that stuff go? she put me up to it and started me off on basically a yearlong journey trying to figure out the answer to that question. host: explain to viewers what you mean by the secondary goods market is there an actual market that focuses primarily on fwooleds that people have returned ? guest: there is. an ash the a massive market. an actually economy with people who buy the goods, people who ship it.
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people who auction it automatic people who sell to it other sellers. it is a whole sort of ecosystem, food chain, whatever you want to call it that deals with that t-shirt, that swelter, that television set, that pair of running shoes that we just decided we didn't want anymore and cents back. some of the players in this secondary market or economic backwater i think i called it in the piece, we know about. ,e nome what t.j. maxx is, ross we know what those kinds of stores are. you go to t.j. maxx, you know you're getting something that was taken off the shelf at a macy's or some other department store. but then there are thousands of businesses occupants there that are completely under the radar. they auction off used underwear, i read. host: returned, right?
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we don't know that it's been used. [laughter] guest: we don't know and that's part of this markets as well what you're buying when you go into this secondary economy, you don't get the full back story. you just know that it has been bought or taken back or attempted to be bought and resold or didn't sell for various reasons. it's all over the place. there's no rhyme or reason to this hidden economy. maxx to yone from t.j. flea narcotics tijuana. host: we're joined by andy kroll talking about his piece in the pacific standard about these aftermarket goods, everything from returned bicycles to returned men's underwear, as we discussed. we have special lines if this discussion. if you are a consumer call 202-744-8,000.
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if you shop primarily in stores call the other number. is there a difference between the aftermarket products that we see returned to places like mazon or -- and the items that are in department stores in person that are returned in person? guest: it's a really important distinction. the average rate of returns in the united states is about 8% to 10%. that means about 8% to 10% of everything we buy we decide we don't want for whatever reason, and we take back. that's a huge market. the most recent numbers, americans bought $5 .45 trillion of stuff a year. this economy we talked about is about hatch-trillion dollar market. it's massive. you have to -- that 8% to 10%
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return rate. however, if you look at just online shopping. amazon, all that kind of stuff, that rate of return goes way up. 25% to 40% and it makes sense, right? we've all done it. that sweater looks great but i don't know if it will it in, i can't really tell the color so i'll order three, pick the one i want and send the rest back. amazon and other companies make it so easy now, they practically with beg to you send stuff back so this amp market economy is exploding in size. so it's a really important distinction ask that move to online shopping is fueling the growth of this hidden economy this returns market in america. host: and is it the drive this returned market, sit being driven by the activity of the consumer? you won'ted -- pointsed out 8%
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to 10% of all in-person stores but online stores, upward of 40% is returned is this being driven by our return mentality as consumers or is it the fact there is this mask -- market pushing a place for this stuff to go? guest: it's both. it is consumers and especially american consumers. in the process of doing this story, i talked to lots of folks who are academics who study return behavior in the markets. talked to pipe from home depot. they said in germany, you buy your stuff and hold on to it. the united states and the u.k., our friends across the pond are really the primary drivers of returns. we're the biggest culprits here so it's partly an american thing. we're usinged to it and it is also driven by the retailers.
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amazon if it wanted -- not to pick on amazon but it's huge and everyone knows skit everyone shops there. amazon if it wanted could make it a little more difficult to return something. by make it easily, that's how you build good will with your customers. host: crystal is calling in from pennsylvania. you are merely an in-store shore. you're on with andy kroll. caller: good morning, everybody. actually, i do both. i shop in stores and online. however, i work for one of the stores that you mentioned and i noticed this we're you we got less products in the store and i thought that most of the products came in stores that overbought but because stores weren't overbuying products this year, we weren't getting more products into the store. i also trip that a lot of the products that we get are
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irregular products, products that are sewn incorrectly or just have problems. i wanted to know what you think about that and i also want told say that i am not for president trump. thank you. guest: thanks, crystal, i appreciate it. and it's a great call to get that you work in this line of work. now part of the fun of the story is talking to folks like you who all have their own different vantage point. you're right about things that are defective and irregular. this returns market are things that are bought and returned. overstocked. the retailer bought too much so they have leftover. the season ends, they move it into the returns business. defective, damaged. it's amazing the kind of retailers you can go to and if there's the slightest dent in
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something they'll take it off the shelf and say we can't sell this. we're going to pass it down the economic food chain. on the first point, you're more on the cutting edge of that than i am about less overstock than before. however, people in this return economy say that the name, brand-name retailers are always looking for ways to minimize their returns so they -- because they lose money on that. they're looking to buy just the right amount so they don't have to resale it. that affects the other markets as well. that's an interesting development and i appreciate you tipping me off. host: we're talking to andy kroll about his piece on the secondary market for retail. those are shop primarily in stores or online can call in. we talked, sort of joked a little bit at the beginning
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about whether these items are actually used or not. specific clip in reference to things like undergarments. let me reeled an excerpt of your piece much. it says retailers and manufacturers do face scrutinies from federal sergeant -- agencies. 26 states currently have electronic waste laws in their books but there's little regulation focused scare -- squarely on the spalling gray market where goods are bought, sold, returned and sold again. where do these goods ultimately end up? is there a sustainability issue here? guest: yeah, there is a sustainability issue and i think that the returns market was creamed and it serves in a way as a good thing because a lot of this stuff might have just gotten thrown away in past years
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in decades past. so now that there's a way to resell it and pass it down the line and possibly have another home for it. i think that on the one hand is beneficial. on the other hand some of the stuff doesn't sell and it ultimately does go to waste. i think having these different players along the way. auctions and warehouse deals and all that kind of stuff is part of it. and fwothe retailers and returns folks, they do nate a lot of stuff as well. these people really do want to try to find a way to get this stuff somewhere other than a land fill. the quote you mentioned about regulation is interesting because it's not really there. imwent looking for a long time and talked to a lot of people and there's barely recognition of this match $554 billion industry of returned goods. there isn't really any regulation of it. i think the government might catch up but at this point it's
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kind of operating under its own self-written regulations and rules at this point. host: jean is calling from mckinney, texas. primarily an in-store shopper. good morning -- good morning, gene. caller: morning, and how are y'all today? i shop primarily in stores and i've actually worked for one of offer biggest retailers, which is walmart. there are a lot of returned items and things like that that they don't use. my concern is, with all of the returned items, returned merchandise, is there a nonprofit organization that gets their hands on this merchandise and are able to get it to people that may actually need this merchandise rather than capitalize on it and make a
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dollar off of it? guest: it's a good question, gene. there is a small percentage, from what i learned in my reporting for this story -- these returned goods that do go to charitable organizations. i want to say like the salvation army off the top of my head or catholic charities as well. but what you have to keep in mind is that when a retailer like a walmart, amazon or costco, fribs, makes returns so easy to do for its customers -- the their return policies are so generous, they get so many returns that it wouldn't be economically wise for them in their minds to primarily put the stuff intro a nonprofit, a charity or what have you. they need to find a way to make money off of it and that's why they have all these systems they
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do now because they're pass these down the food scommain it's not a profitable line of their business but it is a way to squeeze some money out of it as opposed to just sending the stuff out in a truck to a salvation army so there is a business intended there and right now the business side definitely overshadows any kind of nonprofit charitable appropriate host: marvin is an in-store shopper from philadelphia. good morning. caller: well, i also shop online but that's why i want told point out something. namely that every time i use my credit card, the numbers get stolen. and my god, i can't understand all these people using all these credit cards and they don't have problems. like i have a girlfriend, she never has a problem. i, every time i use my credit card online, poof, it suddenly
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finds stuff in great britain. i've only been in great britain one time and that was like 30 years ago. i'm not buying stuff in great britain. anymore philadelphia. thank you. uest: i trip credit card stealing is a massive problem anytime you use your credit card. i've had my information stolen and you have to go through a hole rig ma role to fix it but with the new chips, it's more difficult to get that information. host: talk about who benefits most from this secondary retail market. who are the winners here? guest: i think the winners are a motley assortment of businesses that have started up. they're not name brand companies. they're sort of unique to
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whatever area you're in this auction that had used women's yurnleds wear. it's in los angeles, a couple of brothers who saw an opening. realize leds that there were big retailers that had these returned goods and needed to get rid of them. these brothers started a company to buy that stuff and then resell to it other small business owners. flea markets. overstock stores. all these kind of mom and pop places across los angeles. it's an 80's-figure company for them now. it's real money and they have a huge warehouse. it goes on forever. i've never seen so many used children's bikes until i went into their warehouse. there's so much american ingentty and pluck they have that has helped them be
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successful. hoich tell us how these auctions work and who they tract. guest: there are 50 of us sitting out in green lawn chairs and we're all lined up and we're looking out on just rose and rose and rose and rose of boxes. and piles of stuff. it's wrapped in shrink wrap. they have to hold it alling to. otherwise it would fall all over the play. if you have a cheap paper in your hands and it a has a list of everything that's gone up for sale. you just go down the list. that'll say lot 510. -- pieces of women's clothing. they'll say 10 cents per unit. paddle. they did that for like four
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hours. it's intimate clothing, bikes, treadmills, air excessors, christmas ornaments and sometimes it's just a box that says asorted merchandise and you don't know what's in it. you can look at the top but everything underneath that, you're rolling the dice and you home that there's a blu-ray player in there or microwave. but it could be like 15 pieces of glassware that's all broken. it's 100% sold as is roll the dice. you could get something greats or you could get a bunch of broken glass. host: jennifer is primarily an online shopper calling from canton. good morning. caller: good morning. thank you for taking my call. my question is, and you talked about it a little bit with these 50 people who are lining up on these lawn chairs. as an individual, are these auctions advertised? what would i look for if i want told get into buying these goods and services.
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my second one is a comments because i work for one of these retailers, i won't name but they're the third largest employer in the world. they are competing with am son helply and -- amazon heavily and one of the great things about amazon that makes them competitive is returns and make it so easy. 80% of my clients, that is their complete. ey use a vendor to run their dot-com service. we can't replace the items. amazon has solidified the markets on that. thank you for the call. guest: thank you for the comment, jennifer. that was really interesting. even as i finished doing this story and you put it out in the world and talk to folks, i still
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learn something about this whole returns economy every day from hearing from people like up. your first question is how do you get into this? met lots of people who go to zirnl a-- ions or re resale businesses. they buy and sell, sometimes just on ebuy -- ebay and they've made a decent living out of it. in your own community, you want to look for names like salvage dealer or salvage auction or a resale company or resale store. they're out there and they're in a lot of communities. especially areas where there are big retailers nearby or there's a big distribution center for a big retail company, costco, walmart, what have you. another phrase you might look for is reverse logistics.
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the kind of industry phrase that will put everyone to sleep but i would look for val advantage, secondhand, overshop. the auction they mentioned, they call themselves a salvage dealer so maybe there's a company like that be in your area too. caller: are there any interests in companies perhaps changing their return policy to compete with am son? -- amazon? our call early said that that was one of the big things that helped them corner the markets. are we seeing a move to help make these returns a lot easier? >> on the one hand, incelled blip generous return policies are fueling this returns economy. if you're a retailers, it's a little bit of a headache. where the us this stuff go? we have a contract with people. stake it -- take it off our
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hands. but that hassle, stars? i can tell, all evidence points to is outweighed by the client-customer loyalty. -- loyalty. as jennifer said a second ago that you create when you make it so easy to send stuff back. i think about amazon. i think about costco. ostco is a company i can buy a back barbecue girl -- grill, cook on it all summer and they'll refund my money. it's incredible. zappos,extreme of to is the shoe company. their return policies are absurd. they practically beg you to buy 15 pairs of shoes and send back 14 of them. just because you're going to think oh, zappos, this is just like going to the store. this is great.
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but i think if trend is much more how can we bend over backward for our companies because testimony keep them coming to our store. host: blaze calling from connecticut. primarily an in-store shopper. good morning? quoip hello. i shop online too. i have a friends who's got a business where he buys goods where florida costco and b.j.'s and stuff like that. he sells it for extremely low prices in his store that's in the middle of the suburban area. he does great, the communities does great from it and that's all i have to stay. thanks for taking my call. host: how common when we go into the stores in our neighborhoods is this likely to be part of this after-sale market?
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guest: really common. these types of stores, the one the caller just described are ubiquitous.se -- i started this piece in washington, d.c. but i winded new d.c. i also went to like half a dozen overstock stores in afrling on the and manassas. there's a store like there, a returns-fueled store. they pop it right on the side of some of the military bases here in the region. catering specifically to military families that may have a tighter budgets. these stores are everywhere. host: john is calling from arlington heights, hill. --y. primarily an online shopper. gelds. caller: very good. yeah, i do sometimes go into stores but i'm disabled now so i
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do most of my shopping online but one of the things they wanted to point out is that your guest is talking mainly about light goods. most of the purchase i take are pretty expensive pieces of get very good deals on them and recently purchase adds power amplifier. normally costs around $2,000 and i paileds just over $600 for it. that's a pretty good price and i couldn't believe that i could t that from the store that i bought it from, which unfortunately has gone out of business but that's the way i do my shopping for the type of equipment they use. personally. it's not -- i don't resale it
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unless i gets tired of it but -- there are stores like that that are selling some pretty darn expensive stuff. host: andy, talk a little bit about that. this isn't just for light goods. guest: no. i've seen stores of this kind that they have like construction equipment and power tools. home team poe is very much an element of this market and they get stuff back down the line in the returns business. another theme your caller had. if you are a wise chop chop shopper, you can find incredible deals and you don't really have to buy new ever again. i've seen the trying buy in this narcotics and it's all out there. if you have time and do research, you can find goods defeats host: a caller from florida.
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good morning. caller: yes, i have a question. can we return the president of the united states? merry christmas. [laughter] hoich you don't have to answer that if you don't want to. andy kr of course ll, the writer for the pacific standard. you can reeled his piece at p.s. mag.com and>> c-span's washingt. rise every day with things that impact you. we will discuss the upcoming vote on the final republican tax reform bill, and andy greene, with the center for american progress. also-ran corporation's seth u.s. on birth to the homeland this holiday season. c-span's washington journal, beginning at 7 a.m. eastern sunday morning. join the discussion. jefferson probably knew more
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about more things than any single man in north america, i even include franklin in that who would be his rival. byryone was impressed jefferson's extensive knowledge. adams was a smart, but did not have the breadth. andad breadth in history the law the jefferson didn't have. not because he couldn't, but because he wasn't as interested as the law. >> sunday on c-span's q&a, gordon would on his book "friends divided." about the relationship of john adams and thomas jefferson. >> adams was a realist, he did not believe all men were created equal, he thought they were created unequal. he did not believe in american exceptionalism. we were no different than other nations.
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