This start-up is making a business case for brands donating returns

“Returnless refunds,” where retailers issue refunds but tell consumers not to bother returning the products, make a perverse sort of sense for retailers only because the expense of shipping products back to warehouses and inspecting them can exceed their value. More perverse still, after retailers pay to ship returns back to warehouses, many are thrown away. Optoro, a reverse logistics company, estimates that 25% of returns end up in landfills, totalling 5.8 million pounds annually in the US.

One company is touting a solution that it claims makes the most sense for returns: give them away. Since it launched in 2022, LiquiDonate has helped retailers donate more than 15 million returns and overstock items to nonprofit organizations. Its founder, Disney Petit, a self-described “sustainability nerd,” has fond memories of dumpster diving behind stores as a teen growing up in Orlando, Florida.

“I would go to these retail stores after hours and pull stuff out of the dumpsters that was in perfectly usable condition,” Petit told Retail Brew.

Decidedly less ad hoc and more sanitary than dumpster diving, LiquiDonate has had more than 4,000 nonprofits registered to accept donations through the platform. It uses an algorithm to not only ship customers’ returns directly to nonprofits, but specifically to local nonprofits, meaning considerably lower shipping costs compared to retailers’ far-flung warehouses.

Get your ship together: Petit said that for each return, LiquiDonate retail partners typically had paid from $8–$10 for shipping. How LiquiDonate cuts that cost by about half, according to Petit, happens when consumers are initiating their returns online, although chances are they don’t even notice.

LiquiDonate piggybacks on whatever software—such as Shopify, Loop, or Narvar—that retailers are using in their returns portal. If the given return item fits retailers’ criteria to have items donated by being, say, below a certain price threshold or the customer reports its been used, LiquiDonate kicks in.

“Instead of producing the shipping label for the warehouse for it to go back to,” Petit explained, LiquiDonate generates a “shipping label for a nonprofit that wants that item within 30 miles of the customer’s home anywhere in the United States or Canada.”

With retailers’ warehouses often in another time zone or on another coast from consumers, that LiquiDonate transaction reduces retailers’ shipping costs by about half. The software also automates the tax receipt process for retailers to take the deduction for the donation, Petit said.

“We actually have retailers that are making money on returns for the first time because of the savings…that they have on the [shipping] label cost,” Petit said.

As for how LiquiDonate makes its money, retailers pay a per-item fee and a monthly fee to access the platform, but there are no costs for the nonprofits.

Better and bedder: The luxury bedding brand Luxome has been using the LiquiDonate platform for a few months. Customers are asked during the returns process if they’ve opened a product, and if so a label is generated for a local charity, not its main warehouse in Knoxville, Tennessee.

Luxome Founder Hyaat Chaudhary said he has long recognized the value of donating returns to charities, and had even written a business plan for a solution similar to LiquiDonate’s about five years ago. His plan never got off the drawing board, but after meeting Petit around 2024, he decided to make a modest investment of “less than a hundred grand” in her company.

“I basically told her…‘I’m not like a gazillionaire,’” Chaudhary told Retail Brew. “‘I would like to participate because I’m so passionate about the idea and the world needs this.’”

Luxome doesn’t offer free returns, meaning he can’t make as strong a business case as brands that do. But “actually it saves return costs for our customers,” because the shipping fees (which are deducted from refunds) are smaller when the items are shipped to nearby charities.

But while brands that charge for returns could see more dramatic financial benefits from LiquiDonate than Luxome, it doesn’t temper Chaudhary’s enthusiasm for the company.

“There’s so many brands throwing so much stuff in landfills every year, and there’s so many people in need of those things that, to me, it’s common sense,” Chaudhary said. “There is no solution like LiquiDonate that exists for brands today to really, truly incentivize brands to stop disposing of all their returns.”