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There’s a good chance your holiday returns could be one of the 5 billion pounds of items that end up here

Retailers get ready for festive shoppers

Returning an unwanted holiday present? There’s a good chance it could end up in a landfill.

5 billion pounds of returned items end up in the trash heap, according to Optoro, a tech company that helps major retailers manage their returns.

Not only are these returns environmentally unfriendly, but they are costing retailers a fortune.

Each year, consumers return about $380 billion worth of goods — $90 billion of which are processed during the holiday, according to Optoro.

Only half of returns make it back onto shelves, the company estimates. The rest, due to circumstances such as damages or opened boxes, take a different path.

About a quarter of items are returned to the manufacturer. Others go to secondary retailers.

But many returns are sold for pennies on the dollar to liquidators and discounters before ending up at regional wholesalers, who send the goods to pawn shops, dollar stores or even out of the country.

Ultimately, it’s a long and expensive process for retailers.

Related: Toys “R” Us isn’t closing stores … yet

Once a product is returned, the retailer has to foot the cost for assessing the item and repackaging it.

A like-new item or piece of clothing might be able to be resold at full cost. But most returns are used or damaged. A recent retail survey found that less than half of all goods can be resold at full cost.

And if it’s cheaper for the retailer to throw out returned goods rather try to resell them, they end up in the trash.

The returns process has become even more complicated as people continue to shop online.

The National Retail Federation estimates 15% to 30% of items bought online will be returned — about $32 billion worth.

Many retailers that were focused on building out the right technology and logistics to handle online sales ignored some of the problems that were created by e-commerce growth, according to Tobin Moore, Co-founder and CEO of Optoro.

Retailers are also bleeding money as consumer habits and expectations change.

As people get more comfortable buying clothes online and returning the ones that don’t fit, the volume of returns shoots up, creating additional transportation problems, according to Moore.

“It’s good that consumers are taking more risks and buying goods, but it’s not the easiest problem for retailers to solve,” Moore says.

There’s also a time crunch to get certain products resold. Returned electronics, for example, can lose much of their value over a six-month period.

And then there are the shipping costs.

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Customers have come to expect free shipping for online purchases. And for now at least, many companies eat the cost of returns.

“They simply accept it as a price of doing business,” says Jonathan Byrnes, a senior lecturer at MIT’s Center for Transportation & Logistics.

Cheaper solutions may be staring retailers in the face.

Startup Happy Returns helps digitally native apparel retailers process their returns by providing customers physical locations where they can drop off items they want to send back.

The company’s pitch: retailers can offer free returns without making people go through the “arts and crafts” of printing out a shipping label and mailing the return themselves. Happy Returns says retailers can save money using its service.

Kohl’s is trying out a twist on the idea of using physical locations for returns. It lets Amazon customers return purchases at its stores — and Kohl’s gets a boost in foot traffic.

But retailers can take steps to avoid returns altogether.

Byrnes says many returns are the result of incorrect information listed online. Simply putting some attention into making sure items are being represented accurately helps cut down on returns.

“It’s the number one problem for retailers,” Byrnes says. “And it’s virtually free to fix.”

CNNMoney (New York) First published December 26, 2017: 6:36 AM ET

The senator tells CNN that voters are catching on that Trump lied about his campaign promises

2018 will tell us whether adding stimulus to an already-healthy economy will have unintended consequences

A review of 2017's economy

1. Capping off a terrific year: For many investors, the best gift would be if 2017 didn’t end.

It’s been a merry year in the markets, with the Dow up an impressive 25%. That would be the best annual performance since 2013.

If a Santa Claus rally during this holiday-shortened week lifts the Dow above 26.5% on the year, it would be the strongest gain since 1995, when the blue-chip index spiked 33%.

It’s not just the 30-stock Dow that’s on fire. The broader S&P 500 has zoomed 20% this year, similarly on track for its best performance in four years. And the Nasdaq has left both behind, with surge of nearly 30%.

Unlike the chaos in turbulent bitcoin, the stock market chugged along all year without any real hiccups. Market freakouts proved to be fleeting — and terrific buying opportunities. The S&P 500 hasn’t even suffered a 3% pullback (over one or multiple days) since prior to the election. That’s the longest stretch on record. Extreme calm has sent the VIX (VIX) volatility index to all-time lows.

The euphoria on Wall Street was driven by a combination of very healthy fundamentals — strong economic and profit growth — along with excitement about the Republican tax overhaul. The lowered corporate tax rate and incentives to return overseas profits could spark a wave of share buybacks that make stocks look even more attractive.

dow stocks 2017

A critical question for 2018 is whether this experiment of adding stimulus to an already-healthy economy will have unintended consequences. The winning formula of the eight-year bull market in stocks has been steady growth, mysteriously-low inflation and rock-bottom interest rates from the Federal Reserve.

But what if the tax overhaul finally awakens inflation, forcing the Fed to accelerate rate hikes?

That could upset the “goldilocks” environment that has underpinned the bull market, making 2018 a more difficult year for investors to navigate.

Related: Corporate America’s big, fat profitable year

2. NRG Energy wears the crown: NRG Energy (NRG), a power company with a number of renewable energy assets, is the top S&P 500 stock this year, as of December 22. It’s more than doubled.

The runner-up is Align Technology (ALGN), the company behind the popular see-through Invisalign braces. Last quarter was Align’s best in its 20-year history. And chip maker Micron (MICR) was the index’s third-best performer.

Related: CNNMoney’s Fear & Greed Index

The S&P 500’s worst-performing stocks are all in the oil and gas business: Range Resources (RRC), Baker Hughes (BHGE) and SCANA Corporation (SCG). General Electric (GE), which had a terrible year of its own — recently said it’s exploring ways to exit its majority stake in Baker Hughes.

Related: How decades of bad decisions broke GE

3. Nasdaq 100’s highs and lows: Align topped the Nasdaq 100 as of December 22. It’s followed by Take-Two Interactive (TTWO), the video game developer that makes Grand Theft Auto, and the e-commerce platform MercadoLibre (MELI).

The Nasdaq had a very strong year overall, zooming past milestones on the strength of its tech stocks.

At the bottom of the list were satellite TV provider DISH Network (DISH), auto parts retailer O’Reilly Automotive (ORLY) and Walgreen’s parent company Walgreens Boots Alliance (WBA). The pharmacy could see customers taken away by an Aetna (AET)-equipped CVS (CVS) or, if rumors prove true, Amazon (AMZN).

4. Coming this week:

Monday — Market closed for Christmas Day

Wednesday — Consumer confidence for December

CNNMoney (New York) First published December 24, 2017: 8:59 AM ET