Ep. #027: ‘How to Solve a “Really Stupid Problem”’ — Disney Petit, LiquiDonate

Arthur Zaczkiewicz: Hi, I’m Arthur Zaczkiewicz, and welcome to Street Talk, where we hear from industry leaders about trends and insights in fashion, apparel, and retail technology. Today it’s going to be about sustainability. We welcome Disney Petit, founder and CEO of LiquiDonate.

Disney Petit: Yeah, it’s LiquiDonate. Instead of liquidating their excess inventory and returns, we want retailers to liquid donate it.

Arthur Zaczkiewicz: Love it. You’re based on the West Coast?

Disney Petit: Yeah, I’m based in the Bay Area, California.

Arthur Zaczkiewicz: Let’s jump right in. I’d love to hear your founder’s story — what specific moment or realization made you decide you needed to found LiquiDonate?

Disney Petit: Thank you so much for having me. I always love to start with: I love trash. I love thinking about products currently considered trash and how we rethink them as usable goods that stay in the circular economy. That’s something I’ve been interested in since I was a kid — I got really into thrifting, and keeping usable items in use has always mattered to me.

Prior to founding LiquiDonate, I was the fifteenth employee at Postmates, where I spent about a decade building last-mile delivery logistics. While I was there, I built a product called Food Fight that matched excess restaurant food with shelters in 700 cities across the US. From that program, I realized: if there’s a way to conveniently and accurately move food from one location to another, what other industries have excess that could be better utilized? Once we were acquired by Uber, I left to start LiquiDonate, because there’s this whole issue where eight out of ten returns end up in a landfill. Why are we sending those hundreds or thousands of miles across the country when they could be routed to a local nonprofit instead of shipped thousands of miles and thrown in the trash? This is a really stupid problem.

Arthur Zaczkiewicz: I was thinking about that stat — I believe there was a firm that studied returns from Amazon ending up in landfills, peaking during the holidays. Why is that? Is it too expensive to process?

Disney Petit: Retailers find it’s not cost-effective to refurbish and resell most returned products. Once an item has left the warehouse, the packaging is damaged, the product’s been opened, the tag’s removed — all of that makes it too expensive to bring back to a facility and repackage to look new again. There are also regulatory issues in the US that prevent retailers from reselling a product as new once it’s already been sold as new, even if it’s still in original packaging. So we have to be cautious about that.

Arthur Zaczkiewicz: So where do you fit in? What’s your role?

Disney Petit: We’re a software company, and we integrate into the returns portion of a retailer’s website. Any time a customer goes online to return something the retailer doesn’t want back — maybe it was clearance, maybe last season’s item — our software flags it as ineligible for resale. Instead of producing a shipping label back to a warehouse, we ship the product automatically to a nonprofit within about 30 miles of the customer’s home, anywhere in the US or Canada. That reduces transit distance by 90% on average and the cost of the shipping label by 50% on average. We save the retailer another 10% by reducing handling and landfill costs. Across the entire reverse logistics flow, we typically reduce cost by 60%.

Arthur Zaczkiewicz: Is it an API? How does it work, and is it a heavy lift for a retailer?

Disney Petit: Not at all. We built it to be accessible no matter what level of technical integration a retailer has. Just because you don’t have a dedicated engineer doesn’t mean you don’t deserve cutting-edge, cost-saving, efficient products. We built a Shopify app — retailers selling on Shopify can simply download and use LiquiDonate. We’ve done integrations with two of the major return management systems, Loop and Redo, so retailers on either platform can turn on our donation disposition outcome directly. We also built a web app for retailers who don’t want any technical integration, and an API with a custom adapter for enterprise retailers running proprietary returns software.

Arthur Zaczkiewicz: How are you able to slash transit distances and create so much value for retailers?

Disney Petit: We’re matching everything hyperlocally. We’ve built a nonprofit network of over 4,700 organizations across the US and Canada in the four years since we started, so there’s a nonprofit available in every city. We’ve also built a matching algorithm that determines which nonprofit needs an item at a given time — and one thing the algorithm always weighs is equity. Once a nonprofit has received something from the network, we move on to the next nonprofit, so the product doesn’t just keep flowing to the ones with the biggest marketing budgets. It also means a retailer is less likely to be cannibalized on a full-price customer — some of the failures resale has seen as a third-party channel are eliminated by the donation model we’ve built.

Arthur Zaczkiewicz: What about the consumer? Are retailers touting this to sustainably minded shoppers, and is it working?

Disney Petit: When I started the company, I called it a climate technology company. Now I call it a retail technology company, because sustainability wasn’t the win for most retailers we talk to. We have champions inside these companies who care about the reporting we provide on landfill diversion and carbon reduction, but typically, cost savings is where we win.

Arthur Zaczkiewicz: Let’s talk about the consumer for a second. I’ll give a personal example — I’m a pen fanatic, being a journalist. My brother liked my pen, so I ordered him one on Amazon — all that packaging for one pen, shipped from upstate New York to Long Island. This was pre-COVID. It was just… convenient. How do you change the consumer mindset?

Disney Petit: Convenience wins. One thing I learned at Postmates is that trying to change consumer behavior isn’t a winning strategy, especially for a newer company — much less one trying to change how retail works. Returns have been pretty much the same since returns started. What’s changed is that customer happiness has become more important to retailers, so sometimes they’ll accept a return they shouldn’t as a customer service gesture. And returns have grown — COVID drove the biggest bump in e-commerce buying we’ve seen, and it hasn’t slowed down. Consumers are going to keep buying. My belief is that the onus is on the retailer to do better planning and coordination of what happens to the product. If a retailer wants to tell the customer their return is being donated, they can — but changing customer behavior isn’t something we feel we need to do. The onus is on the retailer who produces the product. We’re seeing EPR and ESPR regulation and legislation come into effect that agrees with us on that front.

Arthur Zaczkiewicz: There’s other behavior too — the serial returner, people who “bracket” sizes. How big is the headache of returns, in dollar terms?

Disney Petit: Bracketing — yeah. It’s $890 billion a year. It’s an absurdly huge problem — almost a trillion dollars.

Arthur Zaczkiewicz: That’s remarkable.

Disney Petit: It’s absurd. If you’re not familiar with bracketing: you buy three sizes of something — the size you expect to wear, one size above, one below, because sizing isn’t uniform — and return two of the three expecting they’ll just be restocked. The person returning them isn’t trying to cause harm; they didn’t wear them, the tags are still on, they’re not expecting that product to end up in a landfill. But it’s all just a math equation behind the product: is it going to make more money for the retailer to resell it, or not? If not, it goes in the trash.

Arthur Zaczkiewicz: I volunteer at a local soup kitchen upstate, and from the headlines, things seem to be getting worse — more people living paycheck to paycheck. How does that affect the nonprofits you serve? Are you seeing demand increase?

Disney Petit: Demand has always been very high for our service. We can’t keep up with it, which is why we keep onboarding more retailers. There’s practically infinite demand, because nonprofits are also businesses — they need computers, chairs, napkins, the things it takes to run an office, and they’re spending donor dollars on that instead of using product that’s already sitting around in excess. That’s really what our product is built to solve. We’ve donated over 16 million items, and even with that, we haven’t made a dent in the problem.

Arthur Zaczkiewicz: Stepping back to the higher level — will it take policy to really move the needle? Circularity seems like it should be simple, but the goalposts keep moving. Do we need stronger policy?

Disney Petit: I think we need more companies focused on the business aspect of the problem — making it cheaper and easier to use a circular solution than to do what retailers are doing today. There have been companies that support donation, but none with a holistic solution built alongside retailers that handles all their returns seamlessly. Retailers don’t need to see those eight out of ten items back at the warehouse, and they don’t need to pay someone to open a product that’s just going to be thrown away. The decision on what happens to that physical good is, once again, just a math problem. I believe more companies will keep building in this space to make that routing and decision-making even more seamless. We plan to keep leading it, but it’ll take more companies recognizing that alongside the sustainability and circularity story, there has to be a bottom-line business case to get a retailer to actually move.

Arthur Zaczkiewicz: What about smaller retailers and e-commerce brands — is this scalable up and down?

Disney Petit: Completely. Whether it’s one return a month or a million returns a minute, it doesn’t matter. Small and medium-sized businesses typically use our self-service tool through the Shopify app. Enterprise retailers with more custom arrangements go through a direct process with our team.

Arthur Zaczkiewicz: As your network scales across thousands of nonprofits, what’s your ultimate vision, and how will it redefine the global standard for a true circular economy?

Disney Petit: Our goal is to be the Amazon for nonprofits. If you’re a nonprofit and you need a Sharpie, a coffee cup, a computer, a couch, or a bed for someone moving into their first apartment out of homelessness — you should just be able to check LiquiDonate first. The vision is that nonprofits can divert funding they’d otherwise spend on physical product toward these items instead, since they’re in new or like-new condition and would otherwise be heading to the trash. It solves multiple problems at once.

Arthur Zaczkiewicz: What keeps you up at night? What makes this hard to rest easy about?

Disney Petit: The scale of the problem. I don’t believe there’s a future where consumerism decreases, so we need solutions today that might feel a little ahead of where retailers are right now — we need them to take that leap. Some retailers are already doing it and setting the standard. We really want “liquid donate” to become a verb — where someone returns something and just knows it’ll be liquid donated.

Arthur Zaczkiewicz: Last question we always ask: what does sustainability, or circularity, mean to you — professionally, and personally?

Disney Petit: This is my life. I think about the fact that the future deserves a usable planet, and this is one of the few things an individual can actually do to make a difference. I have a somewhat unique perspective from my past work with nonprofits, and from being an early employee at a high-growth startup like Postmates — food delivery was never my dream, but diverting usable product from the landfill and getting it to people who need it, that’s what’s going to help change the future.

Arthur Zaczkiewicz: Disney, it was a pleasure having you — I’ll have to have you back. I think you’re doing great work, and I hope you grow into the Amazon of this part of the business. Thanks for tuning in, and we’ll see you next time.

Disney Petit: It was a pleasure on my side too.