Inside the massive warehouse that handles all your returned clothing

Many returns take 30 to 45 days to make it back into inventory, even when they're in perfect condition, the CEO of a returns-management software company said. Speeding that up is a goal of industry leaders.

Nati Harnik/AP Photo

• Americans will return more than $816 billion worth of merchandise in 2022, according to the NRF.
• Apparel is a large source of e-commerce returns.
• Shaving valuable time off clothing-returns processing is important to consumers and retailers.

Whether it's because of the gift-giving guessing game or the growing practice of "bracketing" when shopping for clothes online, apparel is a massive source of e-commerce returns.

But the biggest problems are also often the biggest inspiration for innovation in the underdeveloped but fast-growing industry of "reverse logistics." And returned apparel presents a particular problem: Though clothes and accessories don't technically expire, the reality of fashion trends gives them a relatively short "shelf life" when they can be sold at full price.

Tobin Moore, the CEO of Optoro, a returns-management software company, told Insider that many returns take 30 to 45 days to make it back into inventory, even when they're in perfect condition. That's long enough for a trend to end or a new season to start, so restocking the item in full-price inventory doesn't make sense.

"By the time it gets back to stock, a lot of it has to be marked down," Moore said, often by 20% or 25%. "So retailers are investing in technology to get those goods back to stock immediately."

Retailers have various systems for receiving, processing, and getting returns back into stock if they're acceptable. And as e-commerce grows — and returns grow with it — speed is of the essence. It also often means consumers get their refunds quicker.

Speeding up returns — for both issuing refunds and restocking shelves — is the goal of technology companies like Optoro and returns-processing-center operators like Inmar Intelligence, which let Insider in its Pennsylvania warehouse to see how it all works.

Americans will return more than $816 billion worth of merchandise in 2022, according to the NRF. Much of it comes here, by the truckload, four or five days a week. The yellow bins are full of returned packages from a major clothing brand. At brightly lit workstations, workers will inspect each item. (Inmar is contractually obligated not to reveal the specific brands it works with.)

Emma Cosgrove/Insider

Workers open each package and scan the item's barcode. Inmar's software walks them through a set of questions to help them determine whether the product can be returned to the retailer's inventory or should be sold in a discount store, donated, or recycled.

Emma Cosgrove/Insider

Workers inspect each item for damage, smells, and stains (especially deodorant) and make sure the tags are intact.

Emma Cosgrove/Insider

Lint rolling is the final step of the inspection. It serves to both check for excessive pet hair, which can signal that someone wore the item before returning it, and refresh the item if it's returning to the retailer's inventory.

Emma Cosgrove/Insider

After an item of clothing is approved to go back into inventory, the worker repackages it to sell again. Each inspection takes minutes — or less, if nothing is amiss.

Emma Cosgrove/Insider

Returns are packed into boxes based on retailer, item, and destination, then wait for transportation in Inmar's 300,000-square-foot warehouse.

Emma Cosgrove/Insider

None of the boxes pictured here will sit in the warehouse for more than 21 days, Curtis Greve, Inmar's vice president of operations, told Insider during a tour of the facility. In January, when holiday gift returns are at their height, things will move even faster.

On the day Insider visited Inmar Intelligence's Pennsylvania warehouse, the team was processing returns from a major clothing retailer, a department store, and a drugstore chain.

Emma Cosgrove

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