“Reverse Supply Chains for Commercial Returns” by Joseph D. Blackburn, V. Daniel R. Guide, Jr., Gilvan C. Souza, and Luk N. Van Wassenhove, in California Management Review (Winter 2004), F501 Haas School of Business #1900, Berkeley, Calif. 94720–1900.

You’re back at the mall again. That racy purple peignoir you hurriedly bought for your wife’s birthday got the classic icy smile. Or maybe a knob fell off that sleek new television. Whatever the reason, Americans are returning goods in ever-greater numbers. Product returns now amount to about $100 billion annually.

So what happens to all that stuff? Only 20 percent of returned merchandise is put back on the shelf as new. Fifty-five percent is refurbished, repaired, or “remanufactured” in some way and sold at a discount. Ten percent is salvaged for components. And 15 percent winds up at the local dump. In the end, the sellers recover only 45 percent of the value of the returned goods. That’s a loss of $55 billion.

The authors, all business professors at different universities, report that retailers haven’t paid much attention to what they call “the reverse supply chain.” Mainly, sellers try to minimize costs. It would be smarter to focus on speeding up the process. A returned computer loses one percent of its value every week, and at one company the authors studied, the opened boxes sat around for more than three months. Other items age much more slowly because the technology and styles don’t change quickly. A power drill, for example, depreciates by one percent per month.

The authors make a number of suggestions to help cope with the problem, but some seemingly obvious ones aren’t mentioned, such as selling better products—or providing aesthetic counseling to taste-impaired men.