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CNN 10

Significant Change in Cuba`s Economic Policy; Exploring How Retailers Deal With Online Purchases That Are Sent Back

Aired February 10, 2021 - 04:00   ET


CARL AZUZ, CNN 10 ANCHOR: Changes are coming to the communist nation of Cuba and why that`s significant is the first story we`re explaining this

Wednesday. I`m Carl Azuz. Welcome to our viewers watching worldwide. The Caribbean country that`s 90 miles away from U.S. soil has a turbulent

history. In the 20th century, Cuba went from being controlled by one dictator to being controlled by another.

Fidel Castro, who led the revolution to overthrow Cuba`s government in 1959 aligned his country with the communist Soviet Union. Cuba became a

communist country itself. Its government took control of private businesses and all aspects of Cuban life. That, combined with the Cuban governments

human rights abuses soured relations with the democratic United States.

It put a trade embargo on Cuba limiting American`s ability to do business with the communist country and pressuring Cuba to make democratic reforms.

When the Soviet Union was on the brink of collapse in 1990, it stopped its support for Cuba. The island lost billions of dollars in Soviet economic

help every year and that crushed Cuba`s economy.

In more recent years, its government has tried to improve conditions by loosening some of the economic controls while still keeping its grip on

political power. Over the past 10 years, Cubans have been allowed to buy electronics and cell phones. Buy and sell used cars and stay in hotels. The

country is in the news now because it just announced that Cubans will be able to start their own businesses or get jobs in most fields of work.

Previously, Cuba`s government would only allow private workers in certain fields like barbering, repairing tires or posing with tourists and it still

plans to prevent people from working in 124 different kinds of jobs though it didn`t specify what those jobs are. A CNN correspondent on the island

says the Cuban government will probably keep total control over healthcare and the media.

Still, the change will open up more than 2,000 different fields to Cuban workers. It`s a major economic reform. It could lead to more opportunities

and hope for Cubans but the British Broadcasting Corporation reports that the changes are likely to happen slowly. And a lot of the country`s current

private workers are in the tourism industry and that`s been hit hard by the corona virus pandemic and the U.S. embargo.

10 Second Trivia. Which of these internet browsers was launched first? Internet Explorer, Mozilla, Safari, or Netscape. In 1994, the Netscape

Navigator started helping people with an internet connection browse the worldwide web.

Netscape also introduced something called SSL, Secure Sockets Layer, which became the first internet standard for protecting people`s private

information. This, of course, gave rise to online shopping because before SSL, people were concerned that sensitive info, like credit card numbers,

wasn`t safe in cyberspace.

In fact, in Amazon`s early days, folks commonly called the company to give their payment info over the phone. Though online shopping has dramatically

changed how people shop in recent years, it carries an additional challenge for retailers. There are more returns of things ordered online than things

bought in the store. You might be surprised at what happens when you ship something back.


UNIDENTIFIED MALE: Free returns. They`re customer`s insurance policy for shopping online but what happens to those returns after you give them back

might surprise you.

UNIDENTIFIED MALE: So customers really believe that the product just goes into the black hole or ends up being resold to another customer. In many

instances, that`s not the case.

UNIDENTIFIED MALE: In reality, many of these products never return anywhere. Instead, they may end up here or even here.

UNIDENTIFIED MALE: You know easily 25 percent of all these returns get destroyed.

UNIDENTIFIED MALE: In fact, returns have become such a headache for retailers that in some cases they`re just refunding customers and letting

them keep or donate the unwanted items.

UNIDENTIFIED MALE: The cost of getting the product back from the customer is much higher than traditionally just (inaudible) getting the product to

the customer.

UNIDENTIFIED MALE: Turns out, free returns are far from it.

UNIDENTIFIED MALE: There`s a very large disparity between the amount of returns that have been from consumers that buy products online versus in

the store. In a brick and mortar store, we typically get somewhere between five and 10 percent returns but online, we get north of 30 percent returns.

UNIDENTIFIED MALE: In 2020, the corona virus pandemic pushed online shopping and returns to record highs. CBRE, a commercial real estate

service, estimates that Americans will end up returning $70 billion worth of online purchase post holiday season. That`s a staggering 73 percent

growth from the previous five year average. Here`s why that`s a problem.

UNIDENTIFIED MALE: Entire returns a business ahead of itself is just extremely complex.

UNIDENTIFIED MALE: Big retailers already use data to improve the shopping experience on the front end. Wal-Mart believes data could play a bigger

role in the returns process too.

UNIDENTIFIED MALE: We`re constantly digging into the data to understand why customers are bringing stuff back and we actually can solve a bigger

portion of the end of the life cycle of the product by stopping a return from ever occurring. So if I know that I have an item that is low quality,

we work with the manufacturer to fix it or we quite selling it.

UNIDENTIFIED MALE: That`s because accepting a return isn`t always easy either. A warehouse optimized for fulfilling orders now has to receive a

product and inspect it. Then someone needs to decide whether it can be resold or not. In the end, an online return can require up to 20 percent

more space and labor than one made in store. Those costs are part of why Optoro, a return solution company, estimates that returning a $50 item can

cost a retailer 59 percent of its sale price. Often, the math just doesn`t add up.

UNIDENTIFIED MALE: The best return is the one that never happens but when it does it happen it`s about stopping the return or finding alternate ways

where the customer brings it back to handle the item, to handle the return.

UNIDENTIFIED MALE: And that`s where liquidators come in.

UNIDENTIFIED MALE: So this is a product that came in one of these pallets.

UNIDENTIFIED MALE: Liquidators like this one are the middle man between retailers and resellers.

UNIDENTIFIED MALE: We sort, organize, process and figure out methods to get them to the right home. And that`s -- that`s really what we do here.

UNIDENTIFIED MALE: They buy returned merchandise, then sort it and evaluate it before auctioning it to discount stores and authorized


UNIDENTIFIED MALE: You`d be able to resell them at a profit because you`d be purchasing them at a real fraction of what the actual cost is.

UNIDENTIFIED MALE: But some returns never make it to a liquidator.

UNIDENTIFIED MALE: Products ending up in landfills. Customers really don`t really even think of that as part of the purchase process.

UNIDENTIFIED MALE: Every year returns produce an estimated 5 billion pounds of waste in landfills.

UNIDENTIFIED MALE: It`s generally risky to remind consumers how potentially wasteful their consumerism is. So in general, retailers are

hesitant to lean to heavily into those kind of awareness campaigns.

UNIDENTIFIED MALE: The solution is complicated but Wal-Mart, for one, says online shopping could actually help reduce the number of returns made.

UNIDENTIFIED MALE: When a customers goes online and tells me I`m returning this item for these reasons, I`m more apt to harness the information than I

am if you just walk into a store and drop it off.

UNIDENTIFIED MALE: And it`s not just data. Tools like better sizing predictions for clothes and shoes can help reduce the likelihood a customer

purchases the wrong size. AI Catbox (ph) can help answer customer`s questions quickly and keep labor costs down for retailers. Even augmented

reality is helping customers try out products before they buy.

UNIDENTIFIED MALE: It`s been unmanaged for years. Return rates were allowed to grow the rate of sales but you effectively manage this when you

-- you can control the fate of where this is going. Absolutely.

UNIDENTIFIED MALE: In an odd way, this is a partially self-correcting problem as the return problem gets bigger for all these retailers. There`s

more financial resources available to fix the problem so there`s a happy outcome where less of this stuff ends up in a landfill just because there`s

more money to be made by keeping it out of the landfill.


AZUZ: Four score and seven years ago, well actually a lot less than that was when an artistically inclined man in New York became dedicated to the

proposition of sculpting snow. His latest effort has neighbors and passersby stopping, staring and snapping pictures.

Robert Shot (ph) says conditions were just right. First there was snow. He wasn`t traveling. He was healthy. He didn`t have to commute to work in the

city and while his sculpture may perish from the earth, his community admiration lives on.

What a great way to be a link in the past to the present. Maybe in future years, he`ll be "Biden" his time. Trying to "Trump" his previous efforts.

Bringing "Barack`s" such a "Georgous" tradition that takes a "Clin-ton" of time but still "Bush`s" him to "Reagin" a fresh each year by "carturning"

out sculptures that never get "Gerold".

Presidential puns. They demand respect. Want to give a shout out to the Comrades Schools of Science. The students watching from Wilmington,

Delaware, as we`re well aware. I`m Carl Azuz for CNN.