My wife has been addicted to watching dumpster diving videos where people end up finding brand new expensive things thrown away by retailers. It made me remember reading somewhere that the reason they do this is because it’s cheaper for them to throw away or destroy their inventory than it is to give it away or sell at discount. HOW???
I don’t see how they could possibly save money by destroying inventory rather than putting it on extreme discount. Surely they could make more money selling at an extreme discount versus no money at all by destroying .
In: Economics
Shelf space and transportation are things that cost money.
Having a product on the shelf that isn’t selling is taking up space for another product that will.
Shipping costs to move it to another location or warehouse also costs money. So it may cost more to re-sell or move a product to another store than to simply toss it.
Many of those items that are thrown away have already been on sale or discounted heavily but still didn’t sell. So into the trash it goes.
Certain products/brands also have rules that prevent them from being discounted. This is to ensure the product is de-valued.
Some products also have expiry dates and such, after which it’s actually illegal for a store to sell said product.
I didn’t see this reason in the replies, but it’s an important one: Often the retailer doesn’t actually own the product.
Big box stores like Home Depot often only purchase the product from the wholesaler at the moment they sell the product to a customer.
Which means it isn’t Home Depot’s merchandise in the store, and Home Depot doesn’t get to decide what happens with the unsold merchandise.
This also happens with brick-and-mortar bookstores. Usually the books still belong to the publishers until they’re brought to the registers. If the book doesn’t sell, the publishers have the bookstores rip the covers off the book and return the covers, because the covers are small and don’t weigh much. The pages are thrown out.
An unsold cabinet is big and heavy, so shipping it back to the wholesaler is expensive. So wholesalers have Home Depot destroy the cabinet instead.
“Why doesn’t Home Depot donate it?” it’s not Home Depot’s cabinet, so they can’t. The wholesalers aren’t interested in vetting hundreds of charities around the country, nor arranging for transportation for the cabinets. So they get smashed and thrown into the compactor.
I worked for a company that made blinds. We threw away so much wood that was sitting there for 10 plus years because we needed the space. We discontinued wood except for white and tossed dumpsters of stuff out. Old fabrics too. No one ordered it. 10s of thousands worth of stuff. 2 15 yard dumpsters.
One concrete example: my friend and I produced a board game. The initial run was shipped in bulk to a few warehouses to cover orders from different countries. At one point we had about 20 copies in the UK, selling a couple per month. Profit per copy was about $20, the long term warehousing fees were $50 per month, and shipping them to us in bulk would’ve cost around $500. So overall keeping them warehoused was costing us $10 per month, and shipping them here to sell would lose us $100. The best option was to have them tossed.
To add to what is already posted: Some states will tax a business on their inventory. At a certain point, profitability becomes impossible if a good remains in inventory for too long.
1. Dumpster diving videos are often faked/exaggerated to generate views.
2. A company is likely taking in more deliveries of product and they need room. Inventorying a single product that went “obsolete” is not worth keeping.
3. The products that go into the trash might be defective, dangerous, or broken. Things unfit for sale, and it might not be obvious, so selling them might be a legal issue. Think expired food, or a consumer good that was recalled for safety reasons.
4. Discounting a product too heavily means people will start looking for those extreme discounts instead of buying the regular priced goods. If it’s incentivized too much, people will take steps to try and make it happen, such as hiding products in the store till it hits “clearance”.
5. You have to provide support for a item that is sold. There is a return period and warranty period, the products might not be made anymore so you can’t sell the product that no longer is in warranty.
6. Stores are often based around having a certain “Clientele” and selling things below your normal price range attracts a worse clientele.
7. It’s often viewed as “cheapening” the brand if it’s sold below price control/restrictions (Such as apple products).
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