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Amazon gets more free with free returns
Amazon is expanding its free returns policy to include electronics, pet supplies, household items, kitchen appliances and more. Previously, only apparel, footwear and bedding were eligible.
In a statement, Amazon said the expansion is made possible as its logistics network continues to grow, “enabling delivery and returns at even faster speeds, and to the most convenient locations.”
Amazon counts more than 18,000 physical return points across the U.S., including Amazon Books and Amazon 4-star stores, Amazon Hub locations, Kohl’s, select Whole Foods and UPS. These include 5,800 locations that accept label-free and box-free returns that are sustainability-friendly and require no label printing or packing for customers.
Overall, the service promises “at least one free option.” Returners log in online and are given at least one location within five miles of their delivery address to send back the item for free. The item must weigh less than 50 pounds.
Under Amazon’s return policy, eligible items must be returned within 30 days of purchase, but during the holidays, purchases between Nov. 1 and Dec. 31 can be returned through Jan. 31.
Rolling electronics and appliances into the free returns mix could bump gift shoppers in the direction of Amazon this holiday and away from retailers like Best Buy that sometimes charge restocking fees. Encouraging consumers to return items to physical places may also drive cost savings as Amazon cuts down returns by mail.
However, the main reason Amazon appears to be extending “free returns” is because an easy return policy provides more confidence in making an online purchase and supports customer loyalty.
A risk, according to Joel Rampoldt, a managing director at AlixPartners, is that Amazon will have to absorb the increased costs involved in sorting, repackaging and sometimes throwing out returned items should friendlier policies drive higher return rates. Mr. Rampoldt told MarketWatch, “Returns are expensive. Not in the transport, but in what has to happen next.”
- Amazon Makes Returns Even Easier This Holiday with Free Returns on Millions of Items – Amazon
- Amazon expands free return policy to ‘millions of items’ – The Verge
- Everything You Need to Know About Best Buy’s Holiday Return Policy – Yahoo Finance
- The holiday season promises many unhappy returns for retailers – RetailWire
- CBRE Forecasts Online Returns Could Total As Much As $41.6 Billion This Holiday Season – CBRE
- More online sales mean retailers need to solve a $50 billion returns problem this holiday season – CNBC
- Amazon new free returns add convenience but sending things back shouldn’t be too easy, experts say – MarketWatch
Discussion Questions
DISCUSSION QUESTIONS: Does Amazon gain much of a competitive advantage by expanding its free returns policy? Will its many drop-off points mitigate the risks involved in the cost of returns? Should competitors respond?
Poll
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Cate Trotter
Head of Trends, Insider Trends
Despite the potential for added cost for them, Amazon clearly believes this move is important competitively. But there will be added costs that Amazon will need to absorb. For all the retailers who happily signed up to be Amazon drop-off points, your wish for incremental store traffic will most certainly come true with this latest move from Amazon – to these retailers I say, be careful what you wish for. More store traffic is great, but it’s only valuable if it creates legitimate sales opportunities – having Amazon customers clog up the aisles dragging returns through your store and leaving immediately after will not enhance the shopping experience or deliver incremental sales.
Exactly. My wife just dropped off two returns at Kohl’s. Her entire focus was the return desk and she paid no attention to the store in her two minutes there.
Mark and Ken – Kohl’s did the math and a high proportion of consumers who return items at Kohl’s mill around the store and buy something. I agree though that too much of this activity could cause disruption during the holidays if store navigation isn’t on point. Even the appearance of “crowds” can make shoppers head right back to the parking lot. Also, the more return options (and locations) that Amazon opens, the more it dilutes any benefit to return partners like Kohl’s. Tricky balancing act.
The policy feels a bit complex so hopefully the Amazon site will clearly articulate policies and options for specific scenarios. As a Prime member, I’ve rarely had any trouble executing returns with Amazon for all kinds of items (and refunds on food items). Once you figure out how to get to the chat window (not always easy and of course that is intentional), Amazon takes care of things quickly and without a fuss. If Amazon is serious about expanded returns driving loyalty, clear articulation and gauntlet-free navigation will be key.
I agree with Carol here – there is a lot of wordiness that might muddy up what they are trying to accomplish. I am also a Prime member and I have had rare exceptions when I have had to return something but, when I did, it was quick and painless.
As much as free delivery is touted as driving Amazon sales, free returns can potentially be a larger tipping point.
The biggest criticism of e-commerce among both pundits and consumers has been the hassle/cost of returns. That sentiment existed long before shoppers “expected” free shipping. In fact, I would argue that if Amazon offered this in the early 2000s, free shipping would still not be as pervasive as it is.
Time will tell, but this is a solution to a longstanding fundamental issue that is creeping up on and challenging physical retailers to counteract in some meaningful way or surrender even more sales to Amazon.
Easy answer – Yes! Removal of “friction” is Amazon’s specialty, something they’ve done time and again. This is just another example of making it easier, quicker, and cheaper for their customers. It also seems to make sense in terms of maximizing the potential of Amazon’s growing logistics capability, especially its own fleet of planes and trucks. Amazon can now optimize logistics capacity in all directions, with full planes and trucks, while raising the expectations of customers and the competitive bar.
Well, here’s the funny part — I don’t think most people were aware that returns to Amazon are NOT free. They used to be.
So this biggest risk here is revolt when they go back to the policy people didn’t realize they had. Because others do have it.
I’ve already benefited from this new policy. Instead of boxing up my purchase and printing out a label, I have been able to simply walk my item into a UPS store and have them scan a code on my Amazon app or email. It was shockingly simple and definitely made me even more of a fan of how easy Amazon makes it to shop online. As Amazon rolls this out I think other customers will have a similar experience and Amazon will benefit from an even more loyal customer base.
During the holiday gift giving season, the impact of free returns is even greater. It creates less risk for shoppers to buy gifts that the receiver may not like. Free returns make decisions easier. It is late in the season for competitors to match the offer. Continuing the practice of free returns after the holiday season isn’t cost effective, but it is a great promotion to enhance customer loyalty.
Expanding its free returns policy encourages customers who may hesitate to purchase something online without the ability to see and touch the item. Now they can purchase with less risk and an easy return if needed. While there may be additional costs for Amazon to absorb, the competitive advantage is likely worth it to keep them ahead of the game.
Amazon continues to set expectations for online shopping: free delivery, one- or two-day delivery or less, now free returns. All of this has created an an unreachable standard for many online sellers, who must respond or be left out of the consideration set for many shoppers. How long this will remain sustainable remains to be seen; shipping costs have to be paid by someone.
Consumers expect free, frictionless returns. This is the right move by Amazon to maximize consumer confidence, convenience and conversions.
Returns are EXPENSIVE… So let’s make it even easier and available over more categories? I’m scratching my head.
On the one hand, I understand enabling comfortable gifting and returns. Makes sense. And sometimes returns are just a natural part of the process. But it’s now to the point where returns and the subsequent handling involved are probably one of the biggest profit drains in e-commerce. Easy returns are great when that’s the needed remedy, but how can returns be avoided or at least somewhat mitigated in the first place? I personally hate the hassle of returns, no matter how “easy.” When in doubt, I’ll shop and buy at brick-and-mortar stores. I usually learn something in the process and save time and hassle in the long run. It’s a great competitive advantage for brick-and-mortar stores. Amazon is brilliant at introducing money-losing, competition-crushing ideas. Competitors need to take a deep breath before responding in kind. What is Amazon’s return rate and profitability in electronics? What is Best Buy’s return rate and profitability in electronics?
The easier the return, the more you will sell in the end. Zappos proved that years ago. With free returns you take away the hesitancy of making the purchase. You also encourage multiple purchases. Net-net, while the percentage of returns versus sales will increase, the absolute volume of sales will also. Let’s wish every customer orders five and returns four rather than orders none.
Any retailer can have a competitive edge with an easy and free return policy. It gives customers confidence in what they are buying. If they don’t like it, it doesn’t fit, etc., the customer knows they won’t be on the hook to keep the merchandise. So does it give Amazon a competitive advantage? Yes! But only if the competitor the customer is considering can’t offer the same.
Is Amazon re-arranging deck chairs? Something about this smells funny. Perhaps it’s the complicated details of the offer — mixing returns and physical locations but not in a memorable way.
Amazon returns are simple already. And they aren’t that expensive. This has all the hallmarks of an announcement that will have little impact.
I also become more and more concerned about the resource exploitation Amazon seems to ignore as it pushes harder and harder to drive more individual shipments out the door.
All this said: No. Competitors don’t need to respond.
All these types of advantages are temporary, since they are almost all inevitably copied. What Amazon gets in the short-term are happier customers. Over the long-term they get to extend their “halo” as a company always leading the market in ways that benefit consumers. Is it true? Probably not, but perception is reality. Competitors will feel “forced” to respond, and responding to force is rarely a good idea.
Let’s face it, Amazon set the bar for many of the things that customer now expect when it comes to ecommerce and delivery. An expansion of free returns is just another facet of this. I think it’s really just a formalisation of something that most customers perceive Amazon as offering anyway, but of course this experience will lead to them expecting the same from other retailers. The challenge is that Amazon is better equipped than most to manage the logistics of the service and the costs. By extending its free returns it may well gain even more market share as it gives customers another reason to choose it over other retailers who cannot necessarily do the same.
The more extensive the returns policy is for Amazon, the less risk there is to online purchases compared to in-store. The benefit of in-store is the ability to try something before you buy it. With limited return risk, consumers will be more likely to experiment with Amazon purchases.
The downside to reducing the risk, of course, is that a higher volume of returns is inevitable. But I would bet that Amazon has been hard at work automating return tracking and warehouse restocking.
Amazon has recognized that the “final mile” is not limited to delivery to the customer, but also applies to the convenience and costs of customer returns. This new initiative will have a positive affect on both current customers (easier and cheaper to make returns) and new customers (heretofore reluctant to become an Amazon customer due to return issues). A win-win for Amazon and its customers — current and new.
Again, Amazon has raised the bar by which all competitors will be judged. Failure to respond will be at their own peril.