Amazon’s Prime Day windfall may be making the biggest headlines in retail, but the e-commerce giant is under fire again for destroying unsold or returned products at its warehouses.
While initial accusations have been coming out of Germany and France since 2018, a new recording reveals that a U.K.-based warehouse has a “destruction zone” where potentially millions of items are placed in pallets to be destroyed each year. These items are often brand new, or at the very least like-new and barely used.
Footage from an undercover investigation by the U.K.’s ITV News inside Amazon’s Dunfermline distribution center in Scotland revealed that electrical items such as smart TVs, laptops, drones, hairdryers, razors, power tools and computer drives, as well as books, jewelry, steel cutlery and even face masks, were all sorted into boxes marked “destroy.”
An anonymous former employee at the Scotland distribution center told ITV of a seven-day target to destroy 130,000 items. Undercover filming of a manager’s spreadsheet in April appeared to corroborate this claim, noting that 124,332 items were destroyed in a week’s span. Over the same period, only 27,213 products were donated to charity.
An Amazon spokesperson refuted the ITV report.
“We are working towards a goal of zero product disposal and our priority is to resell, donate to charitable organizations or recycle any unsold products,” the Amazon rep told Sourcing Journal. “No items are sent to landfill in the U.K. As a last resort, we will send items to energy recovery, but we’re working hard to drive the number of times this happens down to zero. We are committed to reducing our environmental footprint and building a circular economy program with the aim of reducing returns, reusing and reselling products, and reducing disposals.”
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Vendors often choose to store their products in Amazon’s warehouses, but the longer the goods remain unsold, the more a company is charged to store them. It is eventually cheaper to dispose of the goods, especially stock from overseas, than to continue storing the inventory.
In an interview, Amazon U.K.’s head of operations John Boumphrey, who had no knowledge of ITV’s investigation, said he didn’t know the number of products destroyed but indicated, “it would be extremely small.”
When shown the findings, Greenpeace U.K.’s political campaigner Sam Chetan-Welsh described the scene as “just an unimaginable amount of unnecessary waste.” He added: “As long as Amazon’s business model relies on this kind of disposal culture, its just going to expand and things are only going to get worse.”
Chetan-Welsh called on the U.K. government to step in and bring in legislation “immediately.”
U.K. Prime Minister Boris Johnson told ITV News that he and his cabinet would “look into” the situation.
“It sounds incredible to me, and an indictment of a consumerist society, if it’s as you say,” Johnson said.
Throughout the investigation, ITV followed trucks that included pallets of items marked “electrical destroy” from the Dunfermline warehouse to a waste management center approximately one hour away. The news correspondents also followed another truck carrying non-electrical items to a landfill and recycling site “only miles” from the distribution center.
The day after ITV revealed its investigation, another former employee who worked at a fulfillment center in Hertfordshire, England cosigned the allegations to the news network, saying that brand-new iPhones to PlayStations were among items discarded.
“You felt like you just wanted to say to them ‘look, this should be going to people that need it not going into a bin,” the anonymous source said.
Asked if he believed unsold items are dumped across other centers, he said: “In every single facility it happens, trust me, it does.”
The Scotland and Hertfordshire warehouses are two of 24 fulfillment centers Amazon currently operates in the U.K.
Amazon has sought in recent years to bill itself as a climate-friendly company, co-founding The Climate Pledge with social and environmental group Global Optimism in late 2019. The $2 billion venture investment program calls on signatories to achieve net zero carbon emissions by 2040.
Amazon confirms third-party sales are the top Prime Day sales driver
Environmental scandals aside, Amazon for now is trumpeting its Prime Day success—with the two-day shopping event marking the biggest 48-hour period ever for digital retailer’s third-party sellers. The third-party marketplace grew even more than its retail business for the second year in a row, it said.
Amazon heavily promoted its small business sellers in its post-Prime Day update, highlighting the success of the Amazon-funded Spend $10, Get $10 promotion. Customers spent over $1.9 billion on more than 70 million small business products during the two weeks leading up to the event, more than a 100 percent year-over-year increase on sales compared to the Prime Day October 2020 promotion.
Barren on sales statistics, Amazon noted that Prime members in 20 countries shopped more on Prime Day than any previous year, and emphasized the company’s “deep discounts across home, fashion, beauty, and electronics.” Members purchased more than 250 million items worldwide.
While Amazon disclosed in 2020 that third-party sellers brought in $3.5 billion during the event, that figure was missing from this year’s results.
Best-selling categories for the shopping event included tools, beauty, nutrition, baby care, electronics including Amazon Devices, apparel and household products. With back-to-school season in view, Prime members ordered more than 600,000 backpacks and 1 million laptops.
Research from tech market research company Numerator that studied more than 30,000 Prime Day orders confirmed this, saying the categories consumers said they purchased most included health and beauty (28 percent), consumer electronics (28 percent), household essentials (27 percent) and apparel and shoes (27 percent).
Numerator indicated that average spend per order declined 18 percent to $44.75 from $54.64 during Prime Day 2020. Average household spend was roughly $106.41, with 55 percent of households placing more than two separate orders.
For those who shopped Prime Day 2020, 32 percent said they spent more this year, and 33 percent said they spent less.
Among consumers who bought apparel and footwear, 33 percent said their purchase was Amazon-branded, once again affirming that the e-commerce giant is gaining more traction in both spaces.
“Tens of millions” of customers viewed Prime Day product demonstrations and try-on hauls, heard directly from creators, and more during Amazon Live livestreams throughout Prime Day, the Seattle company said.
Across all online retailers, the event generated a reported $11 billion, according to Adobe Analytics. The sales uptick was 6.1 percent higher than overall e-commerce transactions generated by the 2020 event, the firm said.
But Amazon remained the king of the day, with more shoppers looking at its own deals than at competitor promotions. Both Numerator and user-generated content technology platform Bazaarvoice said a high number of Prime Day shoppers decided to shop exclusively on Amazon. While 75 percent of shoppers surveyed told Bazaarvoice they only shopped on Amazon, Numerator had this total at 64 percent. The latter indicated that 21 percent made a purchase at another retailer.
Fifty-three percent of Prime Day shoppers only considered Amazon for their purchases, while 47 percent considered other retailers and 19 percent compared prices before making their purchase.
U.S. retailers discount high proportion of fashion items, but average markdowns are lower
Fashion retailers in particular sought to take advantage of the summer sale with discounts of their own, but they remain cautious in marking products down too much, according to retail market analysis company Edited.
“There was little change in discount depths from last year, with retailers enforcing conservative strategies to support pandemic recovery,” Kayla Marci, market analyst at Edited, wrote in a blog post. “Retailers instead focused on the breadth of markdowns, with the U.S. discounting the highest proportion of products for the event in two years.”
U.S. apparel retailers marked down 72 percent of their products throughout Prime Day, above the 67 percent from two years ago. But the average discount was 31 percent, well below the 41 percent in 2019.
Prime Day’s return to the summer slot seemed to benefit fashion brands. The number of items selling out of the majority of SKUs were up 41 percent in the U.S. and 35 percent in the U.K. year over year. Despite this, the sellouts came in below pre-pandemic Prime Day levels, down 7 percent in the U.S. and 13 percent in the U.K. vs. 2019.
“This discrepancy suggests that while consumers are prioritizing themselves for summer, fashion spending hasn’t fully rebounded,” Marci said. “The discount brackets seeing the highest proportion of sellouts were between 20 percent and 30 percent in both regions and lower than the average market discount, proving retailers don’t need to make drastic cuts and sacrifice margins to generate hype for sales events.”
Oceana pleads with Amazon to reduce single-use plastics
The Prime Day sales boon is likely to lead Amazon into another climate-related conundrum.
Anne Schroeer, director of strategic initiatives at Oceana, an international advocacy organization dedicated solely to ocean conservation, urged Amazon to immediately reduce single-use plastic packaging and give customers a plastic-free packaging choice.
“As Prime Day and Amazon continue to grow, so too does the company’s devastating impact on the environment. In December 2020, Oceana exposed Amazon’s massive plastic footprint, which amounted to an estimated 465 million pounds of plastic packaging in 2019,” Schroeer said. “Our research estimates that, in 2019 alone, up to 22.44 million pounds of Amazon’s plastic packaging waste polluted the world’s freshwater and marine ecosystems where it can wreak havoc on marine life—that’s the equivalent of dumping a delivery van payload of plastic into the ocean every 70 minutes.”
While Amazon disputed Oceana’s findings and said that its plastic footprint was approximately one-quarter of Oceana’s estimate, that would still amount to hundreds of millions of pounds of plastic wasted in the ocean, Schroeer pointed out.
She said Amazon has refused to make data about its plastic use public or to commit to plastic reduction goals.
“Prime Day sales will only make matters worse, leaving Amazon customers overwhelmed with plastic packaging, and much of it which will go on to pollute our oceans,” Schroeer said. “Prime Day customers and our planet deserve better. Amazon should take immediate measures to reduce its plastic footprint and offer its customers a plastic-free packaging choice at checkout.”
Amazon battles counterfeits, while Teamsters preps vote to back workers
Amazon is both entering new litigation and perhaps on the brink of battling a new unionization push amid the Prime Day hullaballoo and waste dilemmas.
For the second time this month, Amazon jumped into a joint anti-counterfeiting lawsuit, this time teaming with board game publisher and distributor Asmodee Group SAS against two defendants for counterfeiting the card game sets, Dixit: Daydreams Expansion and Dixit: Revelations Expansion.
The plaintiffs allege that the defendants, based in Brooklyn, attempted to offer the counterfeit products in Amazon’s store, which violates Amazon’s policies, infringes on Asmodee’s trademarks and breaks the law. The lawsuit was filed in the U.S. District Court for the Western District of Washington.
Amazon closed the defendants’ selling account and proactively refunded the impacted customers.
And while a unionization drive at an Amazon warehouse in Bessemer, Ala., earlier this year failedwhen a majority of its employees voted against organizing, one of the U.S.’s largest labor unions is thinking bigger.
The International Brotherhood of Teamsters, which represents 1.4 million workers in trucking, warehousing and other logistics industries, will vote Thursday at its annual convention on a resolution to scale up efforts to organize Amazon workers.
As part of “The Amazon Project,” the Teamsters are calling for “shop floor strikes, city-wide strikes and actions in the streets” and the creation of a special “Amazon Division” that would oversee the effort. Members from 500 Teamsters local unions are meeting to lay out priorities for the next five years.
Alongside the failed Bessemer organization, all other efforts in the U.S. to organize Amazon warehouse workers have been unsuccessful. Labor unions in Europe have had better luck, with a German trade union even select workers to strike during Prime Day.
In the wake of various allegations about how the company treats workers, Amazon CEO Jeff Bezos recently acknowledged the company “needed a better vision for how we create value for employees.”