To encourage online shopping, many companies have fairly simple return policies. However, the volume of returns is starting to become a problem for these businesses.
The Amazon is adopting new measures to make customers return fewer of their online orders, including charging a small fee for those who return items at UPS stores.
For decades, Amazon has built a business model based on quick and easy purchases, seemingly foolproof. Didn’t like it? Just return it. But things are changing. There are so many regretful customers and so many returns being made that returns are becoming costly for the company.
As a result, Amazon will start charging customers a fee of $1 when they return items to a UPS store if there is a Whole Foods, Amazon Fresh, or Kohl’s supermarket near their delivery address. (Amazon owns Whole Foods and Fresh and has a partnership agreement with Kohl’s.)
To try to reduce the number of returns, Amazon has also recently started including a label on products that are “frequently returned” on its website.
Zara, H&M, J.Crew, Anthropologie, Abercrombie & Fitch, and other chains are charging fees of up to $7 for returning items purchased online; some retailers are also shortening the period in which returns can be made.
Customers returned about 17% of the total goods they purchased in 2022, totaling $816 billion, according to data from the National Retail Federation.
This is a pressure for retailers: for every $1 billion in sales, the average retailer incurs $165 million in merchandise returns, according to the NRF.
Companies typically cover the shipping costs for customers to send their products back. These items sometimes end up in warehouses or on retailers’ shelves. Stores then have to re-label the returned goods to sell them, further reducing their profits.
Thus, returned products can end up in liquidation warehouses or even in landfills, meaning that, besides causing losses for companies, they can also pose an environmental threat.
Source: CNN