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October 10, 2023
Can Uber Help Reduce Return Anxiety?
Uber has rolled out a new “Return a Package” offering that lets Uber and Uber Eats drivers pick up consumers’ prepaid and sealed return packages — up to five at a time — and drop them off at a local post office, FedEx, or UPS. The cost is $5.
For Uber One members, the fee is $3. Introduced in 2021, the Uber One membership (which costs $9.99 a month or $99.99 annually) includes discounts on rides and orders, $0 delivery fees for eligible orders, and credits for late orders.
Customers can track their package return process in real time in the Uber app. Packages must weigh less than 30 pounds and be under $100 in value.
In its announcement about the new offering, Uber noted that according to the National Retail Federation’s Returns Happen 2022 survey that came out this past February, “79% of shoppers under 30 think mail returns are somewhat or very annoying. And with the busy holiday shopping and gifting season fast approaching, we know returns are inevitable — whether it’s the wrong size, the wrong color, or the wrong gift idea entirely.”
Wendy Lee, director of delivery product management at Uber, told USA Today, “We imagine that this is going to be a huge time saver and convenience play for many, many U.S. consumers.”
The NRF’s survey also showed that over 40% of consumers would rather sit in rush hour traffic than make a mail return. Additionally, about two-thirds of younger shoppers do not have access to a printer for printing return labels all the time.
A survey last year of 2,000 U.S. adults conducted by OnePoll for social shopping platform Slickdeals similarly found that nearly six in 10 (58%) respondents would be willing to do “nearly anything” to avoid returning items.
For 43% of respondents, returning purchases in person is worse than doing so online. The misery of in-person returns included “having the person in front of them escalate the situation (39%), getting managers involved in their returns (32%) and having to travel to the store (32%).” Meanwhile, 29% of respondents think returning items online is more difficult. Slickdeals stated, “The most hated parts of online returns are paying for shipping (42%), having the item lost or not arrive at its destination (39%) and traveling to the post office (37%).”
Among retailers, Amazon stands out for its easy return policies by offering free returns with no box, tape, or label needed, as well as drop-off points inside Staples, Whole Foods, and Kohl’s locations. In April, Amazon began charging a $1.50 fee when some customers drop off product returns at a UPS location instead of a nearby Amazon Fresh, Kohl’s, or Whole Foods.
One newer innovation is curbside returns, offered by Walmart starting in the fall of 2022 and Target this past February. Last fall, Walmart also began offering Walmart+ members the option to have returns picked up for free from their homes. Walmart writes on its Walmart+ page, “No printing, no repacking, no need to leave your home.”
Discussion Questions
Will Uber’s “Return a Package” offering appeal to enough consumers at the price ($5 for up to five packages)? Beyond minimizing shipping charges, what else could retailers be doing to ease the online return process?
Poll
Loading …BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Ryan Mathews
Founder, CEO, Black Monk Consulting
Perry Kramer
Managing Partner, Retail Consulting Partners
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For Uber, this is a way of generating some additional revenue. However, quite how profitable it is remains to be seen. Unless Uber is consolidating returns, the venture does not seem like it will be all that profitable. Despite the so-called anxiety – I’d call it more inconvenience – of making returns, the number of people are willing to pay such fees is also questionable.
A lot of younger people don’t have a desire to own a car, and prefer to purchase online. Uber’s returns service should be an immediate hit.
This is a brilliant way for Uber to cater to consumers’ expectation of convenience.
This value-added, time-saving service will appeal to busy parents and workers who have returned to the office.
Uber gets the kudos for introducing a revenue-generating service that targets convenience-loving consumers but coupled with some companies’ new restocking and return fees (hi, Amazon), the sheer multitude of fees could outweigh the convenience factor and perhaps be more than the value of the return itself.
It is a good approach by Uber even if it initially breaks even. It allows them to retain drivers by keeping them busy. It will have sustainable growth with the younger generations and is very complimentary to same day / 2-hour delivery of merchandise.
As I read the article I was shocked by the number of customers that were frustrated by or just plain hate some part of the online shopping return process. And yet the level of returns from online shopping is through the roof! What would happen to the return rate if the return process was hassle free, even with some level of fees involved?
I used to say that “free” was the most expensive word in retail. With more and more fees showing up these days, free is receding. So now the most expensive word in retail might be “convenience”. Engineering and executing convenience is proving to be incredibly difficult and expensive. And when convenience breeds the additional costs and inefficiencies involved with returns, it’s even more expensive. Uber may have found a way to add some revenue for drivers already out and about, and there will certainly be some customers who will happily use this service. But I don’t see it doing anything to solve the online shopping returns problem. It may even magnify it.
Hard to get my head around the economics but, from a consumer perspective, it’s a great idea.By the time you add the price of gas, the value of time, parking fees, and your intolerance for lines, $5.00 seems a lot like Uber is paying you. This service should appeal to both ends of the age cohorts — young people who don’t drive and older people who … well … don’t drive.
Uber’s service diversification strategies have been impressive as one of the industry disruptors that emerged out of the financial crisis in the late 2000s. Plenty of customer segments want to avoid dealing with the logistics and inconvenience of product returns and are already loyal members of the Uber services ecosystem.
One of the most friction-filled experiences for consumers is the product returns process. Uber’s product returns capabilities will help to remove some of the burden from the customers. However, it comes at a cost. On Uber’s side, it will be interesting to see how these new capabilities are managed and if the company could contain the operational costs to ensure this new revenue stream is profitable.
Oh goody, yet another way for them to lose money!! Again, we have to define “success” carefully: I don’t see how this can begin to cover costs; unless, of course people are paid,,,well not even peanuts (peanut shells?) So customers will love it. The rest of us, I’m not so sure.
One of the most dreaded parts of shopping is the returns process. However it is, whenever it is or wherever it is; consumers just dread it. There is something about the implied requirement of justifying your return that causes initial angst. Then, if you are successful at having a good enough reason, enter joy of printing a return label, sealing a box and getting said box back to an acceptable return location. While we’ve seen returns spike over the last few years, consider those that keep and donate unused items rather than endure the returns process.
Uber brings a last mile solution for returns that consumers may find helpful, especially during the holidays. Still, there is more work to be done to take the pain out of this process. One soultion I saw recently was a partial refund in exchange for no return. Another was full refund to online shopping account (vs credit card) in exhange for no return. Both of these soultions I found more agreeable than digging out the packing tape or lugging boxes to a drop-off point.
During a time when many retailers and brands are choosing to end the era of free returns as a way to cut costs, it’s interesting to see Uber roll out its new “Return a Package” offering. According to the National Retail Federation, nearly 80% of shoppers under 30 consider mailing returns to be an inconvenience. This new service directly addresses that pain point and provides even greater value to Uber’s already significant subset of customers in this demographic, driving further brand loyalty.